Three easy steps to reduce contract cycle time
Published: 31 May 2019
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Author: Tim Cummins
On average, the cycle time to conclude many contracts is increasing. This is counter to business needs and strategies. So what can you do about it? Here are three easy steps - at least easy to explain, but often harder to get through the innate resistance to change that's endemic to so many organizations.
1. Simplify your contracts. Make them easy to understand. One global consumer goods company reduced supplier in-boarding from an average 14 weeks to 4 weeks just by making its terms easy to understand. A multi-national telecoms provider cut the frequency of business customer negotiations by 60% through a similar initiative. For inspiration, visit the IACCM Contract Design Library at https://www.iaccm.com/services/contract-design-and-simplification/, https://contract-design.iaccm.com/
2. Start from a different place. The battle of the forms is alive and well – and in most cases just a pointless tradition. Challenge yourself and your trading partners to think and act differently. Start from a position of balance, from where you're likely to end up. Big corporations are starting to adopt the IACCM Contracting Principles for many of those contentious, hard-fought terms that bring little intrinsic value. Take a look at the principles and how to use them at https://www.iaccm.com/resources/contracting-principles/.
3. Think the opposite. Rather than asking 'what can I stop reviewing?' ask instead 'why do I need to review anything?' Become serious about streamlining the process. Analyse what you are reviewing and why. Identify methods to truly eliminate or reduce the need for review – for example, market-appropriate terms, dynamic playbooks, effective risk scoring, fall-backs, practical use of technology.
It's time to bring contracting into the 21st century and free up time from low value activities that simply delay and frustrate the business. Others are doing it. So can you. If you need help or advice – or links to those leaders – get in touch.
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• Tullow OIl
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2019-12-11 10:27:59
In the oil and gas industry we manage JVs with a joint operating agreement. I'm not sure if that's helpful at all.
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• SirionLabs
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2019-12-06 07:22:48
Hi Charlie,
The below tool gives contract management solution with capability to assign respective stakeholders as owners.
Details below:
Organization - Sirion Labs - www.sirionlabs.com
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• Ngamuru Advisory
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2019-06-15 23:42:10
In terms of the 8 different payment schemes I was specifically referring to what we call 'payment curves' (see attached graphic) as opposed to payment regimes such as cost+ (time and material), fixed price, cost + fixed fee, etc. In this light these are grouped into 5 main families with a couple of variations inside each. These are as follows:
- 'all or none' payment curves
- Linear payment curves
- Non-linear payment curves
- Alternative payment such as demerit point and visual payment curves
- Matrix payment curves
The intent of this discussion is to simply highlight that the choice of payment curve, similar to the choice of performance measure and level, can have a significant impact on the success (or otherwise) of the overall performance management framework. My blog (www.performancebasedcontracting.com) has 3 posts specifically on this topic including the graphics.
I hope this helps and answers your questions. However, please let me know if you have any further questions.
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• Australian Red Cross Lifeblood
•
2019-06-21 01:28:00
Here are a couple that I just quickly came up with:
1. Can you recall the last time that you engaged with our team. Was it;
a) In the past 7 days
b) In the past 4 weeks
c) In the past 3-6 months
d) More than 12 months ago
c) Who is this?
2. When you engaged with our team, did you know the name of the person you were contacting?
a) No, I had to look someone up using either the contract, website, intranet, LinkedIn
b) Vaguely, I have spoken to a few different people in the course of business
c) Yes, I have regular communications with a consistent point of contact
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• Huawei Technologies Co.
•
2019-06-10 04:12:06
hi
For IT services agreements I generally rely on the framework of ITIL ( Information Technology Infrastructure Library) - this informs on the various processes within IT and will give you a starting point to understand what needs to go into your playbook. It deals with both the vendor/customer aspect as well as for procurement.
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• Victorian State Government
•
2020-08-04 01:54:46
Contact Andrew Jacopino IACCM member
•
2020-08-06 20:28:25
I would be curious to know this as well. My main question would be around how to measure the outcome.
• University of Tennessee
•
2020-08-07 00:10:31
The University of Tennessee has done significant research in this areas and has online courses, white papers and books on the topic. The result of their research is known as the "Vested" methodology/business model and it has been successfully put into practice by over 50 organizations in over 80 deals. You can find several case studies on UT's dedicated website on the topic at www.vestedway.com
Let me know if you have any questions...you can ping me on Linkedin and we can chat if you have questions.
Kate Vitasek
(lead researcher and faculty for UT's Vested work)
• Avon Cosmetics Ltd
•
2020-08-07 08:04:32
Thank you Paul Kruspe and Kate Vitasek, I will follow up on your recommendations.
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