Finding your way to a career in contract management
Published: 15 Jan 2014
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This article appeared in Contracting Excellence magazine on 15 Jan 2014
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Author: Interview with Dipesh Tailor, IACCM Advisory Council; and Steve Levett, Director of Levett John Ltd and Ben Arguile, Managing Director of Argil Search
How do you break into a contract management career and progress successfully? It's challenging and can be discouraging, but recent IACCM research suggests encouraging trends that might renew the hopes of candidates who are willing to work hard and move beyond the challenges.
Dipesh Tailor, IACCM Advisory Council Member, interviewed two recruitment specialists: Steve Levett (SL), Director, Owner of Levett John Ltd and Ben Arguile (BA), Managing Director of Arguile Search. What follows is their response to IACCM research revealed in a webinar titled, Ask The Expert - A Career in Contract & Commercial Management. What should research results be telling us?
They focused on the fierce competition for the very few graduate training schemes currently available, and the huge demand for commercial managers who've been through those schemes. Both believe that too few boards of directors understand the unique, all-encompassing role the commercial contracts function plays in winning business, securing profits and saving money.
Q Dipesh 88% of contract managers would recommend Contract Management as a good starting point in the career.
- Do you believe Contract Management is a good start for someone considering this field as a career? Or do you think only those with relevant experience should enter the field?
- What challenges do you face recruiting for a contract manager who wants to get into the field for the first time?
A Steve Contract Management is an excellent starting point for a young, intelligent and ambitious individual. I advise candidates to concentrate on companies with an established graduate program or companies that offer demonstrable training development programmes. The challenge is facing talented competition. Entrants should have at least one degree, law being the obvious one.
A Ben That statistic proves the breadth of skills offered by Commercial and Contract Management as a discipline is helping employers see the value of those skills. Early grounding in contract management exposes entrants to the most important functions of a business and typically produces a very rounded, commercially savvy professional whose skills add value across the business. My best advice is to find a good graduate or training program with a big business. The best way is to apply directly. Defence and IT companies tend to have the most comprehensive graduate programmes.
Q Dipesh 88% of respondents to the IACCM survey claim the organizations they work for do not have a Contract and Commercial Management graduate scheme (plan). This suggests a low number of schemes exist.
- Does the above statistic seem correct to you, given your experience in recruitment?
- What would you recommend a Contract andCommercial Management graduate programme consists of?
A Steve Yes. Graduate programmes in BAE Systems (an aerospace company in the UK) and Fujitsu (a multinational information technology equipment and services company in Tokyo, Japan) are highly recommended.
A Ben I would certainly agree that too few commercial and contract graduate schemes exist. The market relies -- perhaps unknowingly -- on a handful of companies to develop graduates into commercial managers. Competition is huge for the commercial managers who have been through these schemes.
Every commercial professional needs to understand risk, be able to evaluate how real it is, and the potential impact of that risk. Clearly, technical skills are important, but technical skills are only the foundations.
The best commercial people have excellent relationship skills, an ability to influence effectively and they can quickly work out the business pressures. They need to see the bigger picture and be able understand how the terms and conditions interact with the specification and the pricing structure. A graduate scheme needs to address all of this, and while some can be classroom/workshop based, many will likely develop from working closely with experienced colleagues.
Q Dipesh Research points out the following:
- 32% of contract managers have a good to unlimited career path (a good career path meaning there are 2 – 3 levels available)…
- 45% of contract managers have a limited (2 levels available) to very limited (1 level available) career path
- 25% have no clear career path
Based on these results, do you believe Contract and Commercial Management offers good career paths?
A Steve Yes.
A Ben It offers an excellent career path, but commercial and contract managers also need to influence their options themselves. Although commercial managers may have limited career development options internally, they could improve that situation substantially with a well-timed external move. One of the really interesting things about Commercial Management is that it is possible to get almost to the very top of the profession without taking on line management responsibilities.
Q Dipesh 67.8% of contract managers got their jobs from a manager within the organisation they work for. This suggests that to become a contract manager you need to be an internal employee; external employees stand less chance of getting into the career.
- Would you agree with the analysis?
- What could be done to further promote Contract Management externally as a career of choice?
A Steve In my experience this only occurs at a junior level and therefore internal employees do have the greatest success, although most large companies (specifically IT Services/Outsourcing) tend to opt for a law degree as a minimum so they do seek external applicants also.
The ratio of students attaining a law degree to then receiving placements and/or training contracts in private practice or corporates is fairly low. Consulting with respective colleges of law to promote Contract Management could be an alternative.
A Ben As I see it, there are a number of ways of getting into Commercial Management:
- Joining a commercial graduate scheme
- Starting your career in procurement and moving intocommercial.
- Starting as a QS in Construction/Rail/Civils and moving into commercial.
- Or -- as is suggested by the survey -- being moved internally from another discipline by a manager.
Outside of the ways we listed, no doubt Commercial Management is a tough profession to break into. If you are to secure a first role as a commercial professional as an external candidate then a law degree or an LPC is a huge advantage.
Q Dipesh An observation made from the survey is this: If you analyse this by segmentation, buy side contract and commercial managers located in EMEA working for $40BN + organisations with 3 to 5 years experience in the oil and gas industry have the highest proportion of good to unlimited career paths.
Conversely, sell side commercial and contract mangers located in the Americas working for $1BN to $10BN organisations with 2 years or less experience in the IT and Telecoms industry have the highest proportion of no clear to limited career path.
In your opinion are there are any industries or geographies providing good opportunities for contract and commercial managers?
A Steve In terms of career progression within the same company, stating the obvious, but the larger organisations with a more substantial and mature commercial contracts community do offer the best chance of more than one promotion - though invariably, one may still compete against external applicants.
A Ben The biggest markets for us are IT & Telecoms and Defence & Aerospace. Oil &Gas, Civils and Rail are also huge markets. The USA and UK are mature markets for commercial, but the rest of EMEA and Asia are gaining fast. There is a buoyant market in the Middle East for European workers.
Q Dipesh What training requirements would you recommend for Contract managers?
A Steve In an "ideal world" induction training would cover 2 weeks of cross-fertilisation within sales, project, legal and finance departments to learn/see how these interact with the business and, more importantly, how they interact with and see the role of commercial contracts.
On-going training should encompass a number of business matters. Update on UK law is an obvious one, finance (GAAP, pricing [modelling] for example), project lifecycle, supply chain etc. Continuous personal development (CPD) on a matrix system should cover the salient points of contract management (pre and post) as well as extra training on presentation/negotiation/drafting skills etc.
A Ben IACCM certification is the gold standard for us, and might be the only certification purely for commercial and contract professionals. As far as a candidate's appeal to the job market is concerned the best thing any candidate can do is build a curriculum vitae (CV) that shows they can apply their skills in a broad range of settings. Having a track record in multiple sectors and being able to demonstrate both pre- and post-contract signature experience is a real benefit.
Q Dipesh We have seen from the survey that getting into Contract Management is wide and varied. Do you think this is good for the industry of Contract Management or should there be more structure to enter the field? Why?
A Steve Entering any field from other areas of the business is a good thing in terms of personal opportunity and best practice. I believe any formalisation/structure is fine as long as it does not limit or exclude individuals or groups.
A Ben I think this breeds diversity and that is a good thing. However, I would like to see more businesses set up graduate schemes. The industry can never have enough talent feeding in at entry level.
Q Dipesh Contract managers have difficulty in defining their role and demonstrating value. What advice would you give to Contract managers to overcome this?
A Steve Different sectors use both pre- and post-signature in a varied fashion. Some focus more on legal; some on finance (pricing); and some on general business. So the answer isn't necessarily a "one size fits all". What is apparent -- and has been for a number of years particularly in post-signature roles -- is the defined ROI of a Contracts Manager (or lack thereof). No mathematical solution exists that can provide an absolute monetary figure – whether it is a pre- or post-signature environment -- although same could be said for every other profession with the exception of sales and some procurement positions. So, how do you contribute to profits or savings?
In terms of both role and value, the answer -- somewhat paradoxically -- should become more obvious and definitive as the contract becomes more complex. It seems that the more complex the negotiations or contract, the more obtuse the responsibilities of a contracts manager becomes. Responsibilities become more pivotal "all-facing and all-involved" with every facet of a contract both internal and external.
There is no quick fix, however I would like to offer a few points to explore:
- Get feedback If a contracts manager is having difficulty in defining his or her role and value-add, then flip the question. Ask the business/account director what they see as your role and ultimate value - invariably they're paying for you!
- Ramp up existing value Over the years almost 75% of interim roles I have covered were for post-signature experts. In almost every case, the client didn't allocate post-signature support and something went severely awry. I'd say nearly 100% of these placements resulted in recovering the the contract and retaining customer satisfaction, savings, observation of lack of compliance and governance within the business, and a lot of cases ramped up within the existing contract. That is ROI!
- Prove your worth The "challenge" is that invariably the business only acknowledges this all-round expertise when something has gone wrong; therefore your role/challenge is to prove that your actions within your everyday routine are both of a supporting, educational and preventative nature resulting in profits and/or savings.
- Dump modesty, sell yourself! It sounds fairly simplistic, but the more you can say "if it were not for me or my contribution or customer relations…etc." and then show some monetary gain or saving, the stronger your business case will be for additional staff or retention during redundancy rounds! If you can't do that, then you're far too modest and you won't survive!
A Ben The achievements of a commercial professional can sometimes be difficult to quantify. It is hard to define exactly how much more profitable a particular deal proved to be and point specifically to strong commercial and contract management as being the driver for this, although this is often the case. In terms of the job market, one of the most reliable measures of a commercial professional is how they are regarded by their peer group.
Q Dipesh It could be said that Contract and Commercial Management is at a crossroads. Would you agree or disagree?
A Steve Don't necessarily agree or disagree, I see it more as a recurring cyclic event:
Today, companies have sometimes switched responsibilities. Some may be transferring some of the Contracts Management skills/responsibilities into the business while others are actively increasing their staff and giving the Contracts Management teams more responsibility from the business. And they might switch back. I think we can better define it as an evolutionary change.
Also, differences exist in the usage of basic terminology. In fact, many are confused about what commercial contracts manager means. The meaning depends on the type of business. As examples:
- Commercial manager means finance (accountant) or pricing in some sectors (noticeably in both Telco and IT(OS))
- Commercial manager can also mean salesperson
- Contracts manager can mean the person who facilitates the contracting process rather than the management of the contracts document. This happens in the FM sector principally.
- Contracts manager can mean legal too.
I don't believe the commercial contracts community is at a different crossroads than it was five years ago. The community has strengthened somewhat with the IACCM and proactive CDs within companies, but in order to determine which road it does take, it needs the board to be educated as to the unique all encompassing role the commercial contracts function provides in winning business, securing profits and saving money!
Having the IACCM as a fully authorised accredited body will help tremendously and, as a result, the IACCMaccreditation would be seen, recognised and valued in the same terms as CIPD, CIPS etc.
A Ben I agree. It is not exactly a crossroads. Certainly the industry has changed but it is an evolutionary process. In some companies commercial reports into finance, in others legal. Some businesses divide commercial and contracts into pre-signature and post-signature, while others involve the commercial team in the whole life cycle.
Our clients regularly go through restructures and they fundamentally change the way they are set up. In turn we have to react to our client's needs, but commercial professionals with excellent technical and relationship skills are always in demand.
ABOUT THE AUTHORS
Steve Levett - Director (Owner) of Levett John Ltd (www.levettjohn.co.uk), a specialist recruitment company covering commercial contracts and in-house legal professionals on both permanent and interim assignments. He has been a recruiter for 13 years and within this niche area since 2005.
Ben Arguile, Managing Director of Arguile Search (www.arguilesearch.com), a specialist international commercial and contracts recruitment business. He has been involved in the commercial and contract recruitment market since 2006. He worked for a multidiscipline recruiter for 9 years, running the Commercial and Contracts Division. He wanted to create a business that focused 100% on Commercial and Contract Management, so he established Arguile Search.
TO CONTACT THE AUTHOR, please mail your question to Info IACCM or connect using the IACCM Member Search (login required).
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• Century 21 Vanguard
•
2015-03-03 16:26:08
Hi Suzanne,
You might want to start with Suzanne Birch at IACCM Resourcing sbirch@iaccmresourcing.com. Also, you can post your resume on the IACCM Job Post page under the resource tab. Good luck!
P.S. Next week Suzanne Birch will be hosting a Women's Networking Group webinar on 'Marketing Yourself through Social Media.' You might want to sign up for it. Check out the events calendar.
• Phillips 66
•
2015-04-14 08:41:32
You might want to check with Global Resources depending on what you want to do. They do a lot of placement of professionals into Corproate settings as consultants. My company has used them and I know peopel that work for them.
Replies: 2
• Fire and Emergency NZ
•
2019-06-14 06:59:15
Good evening Abdullah - I'll contribute an observation on the first one. Perhaps others who have been doing contract management and procurement for longer than me might have a different view, or say it more eloquently, but here goes....
Purchasing is a subset of procurement. It is the giving effect to a lot of the procurement work that you've done earlier (i.e. establishing what you want, identifying suppliers etc).
That said, I think that you can purchase without doing procurement, and in fact, I'd go so far as to say that you can even get the same outcome.
However, only by procurement can you demonstrate that you've got the right outcome. If you only purchase, and don't understand your needs, identify the market and consider the offerings against your needs, you can't demonstrate that you've got the best outcome for the business.
And this is where I think we as a group can demonstrate our worth to the business. We can show with procurement the outcomes that we've avoided (goods not matching requirements, getting better pricing outcomes, repetitional damage etc) by running a fair and robust process ensures that the business is better off.
On many occasions I've seen my team has moved someone from their initial fixed ideas into better outcomes by taking the time to show them what's possible and what good looks like. Do that enough times, and you have more and more allies in the business to encourage others to use your services.
Regards
Darren
• IACCM
•
2019-06-14 17:41:27
Hi, Abdullah,
Check out this article in the IACCM Library, 'Procurement' and 'Purchasing' Are Different:
www.iaccm.com/resources/
•
2019-06-14 17:45:20
Having looked at this topic, there is actually already a lot written on the question of the difference between purchasing and procurement. As they observe, for the typical person they are probably the same, but apparently 'the experts' in procurement know the difference! Though once you start reading, there is plenty of contradiction...
When it comes to Supply Management, it is yet another variant and clear as mud whether it is actually different from Procurement. Supply Chain Management is certainly a more holistic activity of which procurement is part, but that's about all you can really deduce.
The net is, these terms are used with a high degree of variability and tend to mean whatever anyone wants them to mean; the only common factor is that they are all associated with the act of buying!
Tim Cummins
• Ginkgo Management Consulting
•
2019-06-24 04:21:43
Hi Abdullah
Years ago Procurement and Purchasing were often used interchangeability. These days they have very different meanings. Procurement refers to the end-to-end activities from strategic category management, through to the operational analytics of spend and performance, to the tactical buying and sourcing activities which can happen in-house or in shared services.
As the Procurement function has 'grown up'it has become far more strategic, so although the term Procurement refers to all the activities conducted by the function, it also implies more strategic perspectives. The scope is also overlapping with other related functions like Finance (Accounts Payable as part of the purchase to pay process) and supply chain (Supply Planning, product innovation and supplier performance management). The increasing focus on digital in Procurement is also seeing more collaboration with other functions for example, RPA (Robotic Process Automation) and machine learning, process automation and contract management, and predictive analytics.
Purchasing is clearly the administrative activity of raising a purchase order, managing the goods/service receipt notice and approving to pay. More advanced companies use on-line catalogues to support this along with automated workflow routing and defined delegations of authority. Put simply, Purchasing includes the tactical purchase and approval activities to support buying.
When we speak about supply chain today, we tend to talk about a value chain. Some organizations are now including supply chain and Procurement in one organization given the overlaps, but predominantly they continue to be separate, but related functions.
Supply chain will include demand planning and forecasting, distribution planning, warehousing and logistics, manufacturing (which may also be a separate function), supply planning and often new product development.
Where Procurement gets involved most is in supply planning and supplier performance management, for instance, using contracts to enforce performance, and collaborating with supply chain and marketing for product and service innovation by tracking supply markets and innovations.
Conceptually, the Procurement function has shifted from managing costs to providing value. Using advanced analytics of COGS and SG&A data, digital tools and advanced supplier market research, the function is working far more collaboratively with other functions. As business cadence increases, functions are becoming more linked and lines between which function does what is blurring.
Hope this helps.
Replies: 4
• KMD
•
2019-02-12 05:39:08
Dear Daniel - In my view any legal training/education will help you going forward and demonstrate to a new employeer that you have legal competencies in place.
If I was hiring my interest in you being such a strong technical profile would increase if you had legal merits to show.
Hope this was of some help !
/Ole
• Occidental Petroleum Corporation
•
2019-02-12 17:40:50
Daniel - I recommend you go for it. However, I have two perspectives on this based on experience; and one personal perspective that underlies my decision to take the same course of action you're contemplating. I worked as a US Federal Contracting Officer for almost ten years - the first seven before I attended/completed law school. Subsequently, I have worked in the private sector including large, global agreements in the IT industry.
Experience perspective 1: Some attorneys and paralegals felt threatened in some manner because I had a law degree. Their perspective is that they are "legal" and I should only be dealing with commercial matters, leaving the "legal" issues to them. I've actually heard some in legal oppose the hiring of Contract Management professionals who also possess a law degree. Finally, I also had at least one manager who apparently felt threatened that subordinates (I and five other Contract Managers) had law degrees from colleges and universities from around the world and had told me that he would not agree to hire an "attorney" for a role I had on my team.
Experience perspective 2: Other attorneys and paralegals I have worked with were more self-confident and not threatened by the fact I had a law degree and was licensed to practice law. Instead, we worked together to leverage my legal knowledge/skills to help manage their time. I would escalate issues and have regular touch-point meeting so that they were informed as to ongoing issues and permit us to collaborate and discuss difficult legal/contractual issues. It also gave me more flexibility to negotiate agreements that protected the legal and business interests of the party I worked for without having to go back to "mommy/daddy" each time an issue arose in the negotiations. At the same time, we also had a working knowledge of the limits of my authority and a good working relationship where I could quickly escalate and propose a solution for them to consider and ask questions about - something we called the "4Cs", ("Communicate, Collaborate, Consult and Crosscheck"). I had learned this from a wonderful attorney who had been the general counsel where I had once worked.
Personal perspective: I decided to go to law school because as a US Government Contracting Officer I had to regularly discuss issues with our attorneys. Not having a sound understanding of the broad areas of the law that applied (not just contracts) sometimes caused me confusion when the attorney would try to explain something - particularly when it ultimately impacted the contract or the enforceability of a provision in the contract. I decided to go to law school to gain a better understanding. It resulted in me have a much deeper understanding of contract principles that must be applied and of the concepts we all rely on (whether or not we realize it) when we draft, negotiate, operationalize and enforce our contracts. I recommend you go for it.
• Neptune Marine Service Ltd
•
2019-02-26 05:23:02
Hi Daniel,
If you can afford the time & cost for the legal degree (LLB or JD)- then will be worth considering that.
From my personal experience, some sort of Commercial/ Contracts/ Business law certifications or diploma will give the required knowledge and upper edge for the jobs.
Regards,
Gaurav Seth
• AusNet Services
•
2019-02-28 18:24:20
Hi Daniel, I don't believe a law degree is necessary. It depends on the role.
I am legally qualified and I echo Mark's comments. I find that I am better able to articulate the risk I see with my legal friends.
The main thing is do you want to do it? A law degree will give you additional skill such a negotiation etc. It will also give you confidence in the law around contract law, construction, tort and tax.
But a law degree will also give you so much detail on those areas that you won't need all in your role.
• Seeking opportunities
•
2019-03-01 05:23:07
Hi Daniel,
I was also a Commercial Manager at GE for approx. 4 years and with the company 11 years. Since my redundancy just over a year ago, I have been trying to find a like-for-like Commercial Operations function like we had at GE but a number of Commercial Manager roles sit either in the Finance function or the Legal function, not as their own Commercial Operations function.
I'm contemplating doing a Juris Doctor to gain legal qualifications on top of my BBus and MBA Exec as I don't want to go down a CA/CPA path. Otherwise I am exploring the IACCM certification.
Hope it all goes well for you with the decision,
Tania
• Itron, Inc.
•
2019-05-01 21:42:38
Depends on how your organization is structured but typically no. In fact there is a good argument that they should not be lawyers as that role has different specialties.
Replies: 6
• Australian Red Cross Blood Service
•
2019-07-29 06:42:41
CCM needs to be far more multidisciplinary than the traditional finance function which was focused on the bottom line.
Strategy, risk, compliance, technology, legal, safety, communications, marketing all being amongst the skills that CCM professionals need to develop and maintain.
I would go into the conversation with the CEO asking what it is that the CEO wants greater transparency over and then demonstrate how this can be achieved by leveraging the CCM role out from under finance.
• Self employed
•
2018-06-29 06:56:03
Its fast becoming established in many (albeit usually larger) companies to have CCM as its own function reporting direct into CEO/MD, so you can say you're following best practice. To echo your comment, this recognises the independence and increasing importance of the function and ensures CCM has equal voice.
CCM under Finance is a bit of an anachronism, however try to ensure there's no implied criticism of your CFO in this move...ideally get them to support the change?
•
2018-06-29 12:17:03
Thank you very much for your advice, Phil.
Replies: 3
Allianz Technology
2017-06-06 07:06:35
Performance of Contract Management
I'm curious to get inputs about the performance assessment of contract management.
While other roles have defined metrics (for instance, procurement roles can be meas...
I'm curious to get inputs about the performance assessment of contract management.
While other roles have defined metrics (for instance, procurement roles can be measured by savings, number of contracts and other achievements), I find it difficult to measure the performance of contract managers.
Contract Managers get involved tasks in several areas, such as governance, negotiation, change process, deliverables and obligations' tracking, exit management, and many more, I'm not being able to define consistent metrics to measure performance (notice that I'm not talking about performance of a supplier or a contract, but of a contract manager).
Any inputs? How contract managers are evaluated in your corporation?
• IACCM
•
2017-06-06 14:15:02
Dear David,
The performance of the Contract Manager role and the performance of the Contract Management Process in general is one of our key points in each one of our recent IACCM anual conferences and networking events, as the matter takes us to the question: "How should we measure and demonstrate success?"
Indeed, while transactional performance is clearly important, it rarely offers the insights that we need, if we are to raise our status and our contribution.
Our thinking and our measurements must start to focus on driving benefits at a portfolio level and relate directly to achieving the strategic goals of our business.
Value will be delivered through a process based view, through monitoring the outcomes of what we do, through generating measured innovation and continuous improvement.
This depends upon capturing and analysing performance data, through challenging established rules and procedures, through inspiring the new models and approaches we have discussed this week. And it also depends on courage - developing leadership and influencing skills.
Keep in mind one of IACCM survey findings: 'Contract Management is one of the least automated processes... and this results in inefficiency and weaknesses in PERFORMANCE oversight, as well as in the absence of management reporting and information'. Here we value the importance of Contract Management Automation and that´s why we are focused on this topic in recent Ask the Expert sessions and in our future events (Australasia and The Americas conferences).
Best regards,
Pablo Cilotta
• Sysintellects
•
2017-06-06 20:34:54
Dear David, have you thought about listing out every task that contact managers are responsible for in your corporation then, assigning a numerical value to each task. Then, assigning a score to each task to analyse and create a quantified report on your overall contract management performance?
e.g. you mentioned governance, negotiation, change process as a few of the tasks. Perhaps you could write these tasks in a spreadsheet and assign values like so:
Total Value = 100
Governance - 30
Negotiation - 20
Change Process - 10
Deliverables Tracking - 10
Obligations Tracking - 10
Exit Management - 20
Then, for each contract manager, you could assess their performance based on a score. Score could be for example, between 1 and 10.
e.g.
Score Values = 1 through 10
Performance Assessment for: Joe Smith (Sr. Contract Manager) for Q1
Governance - 30 - 8
Negotiation - 20 - 6
Change Process - 10 - 9
Deliverables Tracking - 10 - 9.5
Obligations Tracking - 10 - 7
Exit Management - 20 - 9
You could average each of the score values and weigh it against how important each of the tasks are (based on their numerical value). From a high level point of view, based on these numbers, you could create a percentage of "contract management performance efficiency" per quarter/month/week/day for each of your contract managers.
This is just one idea. As full disclosure, I work with a contract management software vendor where we help our clients effectively manage their contracts online. We don't have this particular feature built out on our software yet, but would be open to discussing further and building it our for you in our Analytics & Reporting function, if you'd be interested.
Feel free to contact me directly at nazar.abdul@sysintellects.com
Hope the above ideas help!
• Academy Sports + Outdoors
•
2017-07-31 16:44:04
The less standardization you have on your services the greater the difficulty will be in establishing useful performance metrics that span your portfolio. For example, a BPO contract or a customer IT services agreement will have many specific considerations that can lengthen the time of negotiation and result in contracts that vary substantially from other contracts in the same portfolio.
Replies: 3
•
2016-07-11 21:14:46
There are a few disadvantages from the pass-through approach. First, the party bearing the cost is not in direct negotiation with the source of the cost. As such, some costs that might be more aggressively addressed are not fully addressed. The discussions around how to best manage and mitigate the costs will exclude the party who is ultimately most interested and invested in those costs. As such, there is seldom much innovation or break-through thinking generated in these discussions.
There are other disadvantages arising under pass-through approaches related to the contractual terms, which also impact costs.
• SPL
•
2016-08-05 13:22:39
That's what SI's do. You go to an SI to be a one-stop shop. It is inevitable that he wont be able to do it all himself so much will be subcontracted. Where this is done at zero margin (!) we call it pass through. It does make me wonder why an SI would want the admin and risk burden of such a large pass through without any reward and, I agree with Anonymous that you are distanced from the party actually completing the work, so you don't have direct control over half of your project.
Hire a good PM and split the SI contract into two and deal direct with both.
•
2016-09-12 00:11:09
Not sure of the size of your proposed project nor of your organization. I just finished leading negotiation of a large, multi-year ERP implementation project that will span several countries and be vital to our company's future. We have a single SI who has the resources to complete the work themselves (we reserved the right to review and approve any proposed subcontractor/subcontractor resources prior to their use). Not sure why you have an SI that wants to, if I understand correctly, use one or more subcontractors to perform a significant portion of the work.
If you are using a smaller Systems Integrator, then I would want to make sure that the SI is responsible for consistency in how the work is performed and that consistent methodology is used; and that ultimately the SI is FULLY responsible for the work delivered. Depending on the size of the ERP work and your organization, you may want to hire a Project Management team or at least Project Manager to help oversee the timely completion of the work.
As to you question about whether or not the project is worth executing - without knowing the business case, the cost and understanding the risks, I'm not sure anyone can answer that, but I would be cautious with such a large percentage being subcontracted.
Replies: 3
• IACCM
•
2015-01-27 18:37:02
Communications is a repeated source of success or failure in contract management (as with so many other pursuits!). Unfortunately, communications are treated as a step or action item. Successful contract management programs often cite their sustainable communication strategy, and not merely an occasional tactic, as the key driver of their success.
It would be interesting to see whether any members have examples of sustainable communication strategies that they can share across the IACCM membership base.
• Academy Sports + Outdoors
•
2015-01-28 17:51:16
I've noticed generally that younger, less mature organizations have a less enthusiastic view of the contract management function, whereas a large, mature organization usually has realized at some point that it is essential. To a certain extent, I think that we in legal or contract management roles are unreasonable if we expect that others will really "get" what we do. Normally they just want answers or results. But time and time again I've seen the greatest successes come in situations where the legal/contracts function sits down and works directly with the business leads as partners. Once the business leads feel supported, they will become evangelists, that is, provided that the support we give is creative, responsive, and timely.
• Zensar Technologies Ltd.
•
2015-02-04 03:06:41
Contract Management needs to be driven as strategic initiative, with top down approach to see success. Integrating the activities of contract management with existing quality audit process and project execution norms may give the required boost or importance. Continuous improvement with revision in tools and checklists, creating extensions of contract management process within the stakeholders like sales and operations, by providing enough ammunition through trainings and continuous dialogue to resolve issues. Management attention and involvement in the process can be increased by helping in provisioning of visual metrics depicting risk analysis, risk profiling without consuming the precious hours.
• Fokker Aerostructures BV
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2017-01-06 11:14:24
I would like to reply (after two years :)) to the second comment here below which starts with a great observation on the effect on maturity of organisations on how they perceive contract management bu then states that "Normally they just want answers or results. But time and time again I've seen the greatest successes come in situations where the legal/contracts function sits down and works directly with the business leads as partners. Once the business leads feel supported, they will become evangelists, that is, provided that the support we give is creative, responsive, and timely."
Actually my view is that if this would be sales-side contract management this exactly describes the way less mature organisations look at contract management. Contract management 'only' as supporting function and not as performance monitor, 'checks and balances' of sales and delivery, profit maximizer and risk reducer which goes much further then working together with other functions but actually keeping them on track.
Replies: 4
• Ministry of Defence
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2019-10-22 13:59:48
In my team its cross functional; procurement, finance, project management. Whoever the beneficial user is may the best person to advise if the requirement is being delivered to time, quality etc. Suggest you might want to think about creating a cross function contract management team.
• KMD
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2019-10-26 04:55:01
Dear Ted, it pretty much depends on your organisational ambition & objectives with the Contract Management function. In my oppinion many organisations don't realize the potential (strategic advantages and benefits) of Commercial Excellence - if the organisational understanding & culture around Contracts & Commercials are at a low maturity level you can see Contract Management placed as a sub-function in eg. Legal or Finance (being a somewhat defensive approach), while the few org. (as I know it) who realize the potentials are placing it higher in the organisation, some even spilt it out to a stand-alone veritical (making sure that the context of being a "support function" is embedded, implemented & maintained) of course balanced with the organisations overall aspiration, purpose and "nature". BR Ole
• BC Hydro
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2019-10-31 00:03:28
In our organization, Contract management resides within the business; however Supply chain (Finance) own the process. Over the last 5 years we have been fully integrating Category Management and as a result putting in more strategic, long term agreements with an overview to the category rather than the need. Putting in such a strategic shift in business has saved us millions in our new contracts by looking at all the driving forces behind the need. Now that we have a robust Category Management program in place which covers 80% of our spend - we need to ensure that a enterprise wide practice is in place to make sure we are getting what we need, when we need it and are paying the right price otherwise the contract is simply a piece of paper. That is why Supply chain owns the process but the business is responsible for managing the work and providing the required resources to do so.
• PRS for Music
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2019-10-31 15:42:32
Hi Ted
In my company the contracts team sits in Operations as the contracts they manager supports our deliverable pipeline. However, we have close links with our legal team and procurement sits in Finance. Looking at some of the replies it seems there doesn't seem to be any best practice.
Cheers
Jan
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Replies: 4
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