Loading...
 
 

If performance matters, why are contracts ignored?

Published: 14 Jan 2020 Average Rating: unrated Print
 

Author: Tim Cummins

Speed matters. So why do so few organizations take steps to reduce contracting cycle times? A few are achieving improvements of 20-30%. Most are not even looking.

Margins matter. Among top performers, a focus on contract and commercial management has yielded margin improvements as high as 2.5% in the last two years. That's measured, verified improvement – not just wishful thinking.

How do they do it?

Quite simply by making CCM a business discipline with accountability for delivering value. These top performers apply business intelligence; they segment their contracts and relationships; they apply standard models and techniques; they undertake analysis at several levels, to spot opportunities.

And not surprisingly, they invest in skills.

They assess their CCM teams, they educate and equip key stakeholders. Management demonstrates its understanding of the importance of CCM.

It's interesting to note, many of these leaders make limited use of technology – yet. Only now, with sophisticated understanding and a coherent, integrated process are they thinking of investing in tools and systems. That's because they plan to stay ahead.

As for the rest ….

Most organizations remain blind to the cost of weaknesses in contract and commercial management. Many are distracted by endless internal debate over who owns what, who is to blame for poor performance, complaints that senior management doesn't care or that staff lack the authority to make change happen. Plus, of course, there's always the 'we are too busy' excuse to fall back on.

IACCM research consistently points to the sub-optimal results, the missed opportunities. But more importantly, it offers answers and indicates how improvements can be made. Capability assessments, skills profiling, benchmarks, training, analytical frameworks – the answers are available and some are benefitting. But it could be many more.

It was (I think) a McKinsey report that once observed the leaders and long-term survivors in any industry represent only about 15% of the total. That certainly seems true in the field of CCM. But maybe 2020 will be different ….  I hope so.

 
 
 

Related Discussions

Please sign in or register to post on this forum

Seplat Petroleum Development Company Plc
2020-03-30 21:29:36

Legal department approach to risk

I have been having a running battle with the legal department in the company where I work for over nine months, on the need to have a simplified contract document o...
 
 
Replies: 1

BAE Systems (Canada) Inc.
2020-03-11 18:13:36

Actions my organization has implemented to lower the costs of a contract

My organization primarily deals with providing our customers with tangible products with the odd service contract we will receive. We have implemented an overall ter...
 
 
Replies: 1
Anonymous
2019-08-06 08:53:51

EPC Contract Payment Mechanism

I am looking for pro's and con's of introducing a mile stone based payment mechanism for an EPC Contract compared to Progress based Payment mechanism
 
 
Replies: 1

Marshall Denning
2019-06-12 10:55:59

8 payment schemes

Jacko mentions there are 8 different payment schemes - do we know which?
 
 
Replies: 1

Novo Nordisk
2019-03-29 09:26:07

Graphics changes in negotiated templates

Have you tried using simplification techniques (text and visuals) in templates that may be changed during negotiation? I successfully launched a simplified confidenti...
 
 
 
 
Replies: 3

Paradesha Farms Handmade Natural Soap Co
2019-02-01 22:12:02

Visual contracts to support collaborative contracting

During the IACCM Australasia Conference in Sydney Australia back in 2016, I was introduced to a new mindset in commercial contracts, namely, 'collaborative contra...
 
 
 
 
 
 
Older entries »
Replies: 5