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What Drives Collaboration In Collaborative Business Relationships?

Published: 15 Mar 2011 Average Rating: 3 / 5 Print
 
This article appeared in Contracting Excellence magazine on 15 Mar 2011 view edition
 

Few need convincing that a collaborative business relationship is what is required to extract mutual and incremental benefit from long-term, high value commercial transactions. Collaborating in a business context means helping each other derive more business value. Rather than bickering about what share of the existing business benefit pie the customer and the supplier are to receive, a collaborative business relationship facilitates the creation of incremental business value to mutual benefit.

Ian Deeks, Ten Squared Limited

Few need convincing that a collaborative business relationship is what is required to extract mutual and incremental benefit from long-term, high value commercial transactions. Collaborating in a business context means helping each other derive more business value. Rather than bickering about what share of the existing business benefit pie the customer and the supplier are to receive, a collaborative business relationship facilitates the creation of incremental business value to mutual benefit.

Furthermore, the recent publication of the BS11000 standard framework for Collaborative Business Relationships provides the building blocks to achieve such a relationship. What is missing is an understanding of the disciplines (or functions) behind collaborative business relationships, how they inter-relate and which function drives collaboration.

In order to achieve a collaborative business relationship, three disciplines are required of both the customer and the supplier, these being:

1. Relationship Management;

2. Delivery Management (by this I mean Project Management in the case of a project or Service Management in the case of an ongoing service); and

3. Contract Management.

Dealing with these in reverse order for reasons which will become apparent, let’s start with Contract Management.

Contract Management is a mutual activity, as both the customer and the supplier will have rights and obligations under the contract. It is a “zero tolerance” activity, because every change to the contract, no matter how small, needs to be contractually handled. And, not surprisingly, the prime focus of Contract Management is managing compliance or non-compliance with the contract. To use a simple example, which I’ll use for the other disciplines too, let’s suppose that a contract prescribed that a particular deliverable be provided on blue paper. Let’s further suppose that the parties subsequently agree that this deliverable be provided on pink paper. The role of Contract Management would be to record this change, regardless of whether this would have an impact upon the delivery timescales or the price. Contract Management maintains the contract baseline and manages to this baseline.

Turning now to Delivery Management: both parties again need to undertake these functions, albeit that the supplier would necessarily be focused on delivering the project or service, whereas the customer would be focused on assuring the delivery of the project or the service by the supplier. From a project or service perspective, Delivery Management is a “zero tolerance” activity in that every change to the project or service would need to be considered from the point of view of whether the change impacted the deliverability of the project or service. However, the activity is not “zero tolerance” to the same extent as Contract Management: it may well be that the change from blue to pink paper has no or negligible impact upon the project or service deliverability and so the change can be ignored from a Delivery Management perspective. Delivery Management manages the project or service baseline and manages delivery against this baseline.

Because the focus of Relationship Management is on the business relationship between the two trading parties, the maximisation of the mutual business benefits for the parties is its prime concern. It follows therefore that Relationship Management should drive the relationship between the parties, rather than Contract Management or Delivery Management, although both of these latter two functions have supporting roles to play in assisting and informing the Relationship Management function. So in short, Relationship Management puts the ‘collaboration’ into Collaborative Business Relationships, ably supported by Contract Management and Delivery Management.

The fact that three functions are required does not mean that there need be three different people to undertake the different functions. What is important is that there is a recognition of the different functions that need to be undertaken in order to achieve a Collaborative Business Relationship and the interaction between these functions. This will ensure that Contract Management and Delivery Management do not constrain the relationship – they are the means rather than the end: the relationship is the end.

Ian Deeks

Ten Squared Limited

24 February 2011

 
 
 

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