The role and purpose of contract management

Published: 19 Sep 2014 Average Rating: 4.3 / 5 Print

Author: Tim Cummins

This week I have focused on the findings of the UK National Audit Office in its investigations on the state of contract and commercial management.

Few of its observations will come as a surprise to practitioners in this field. Indeed, it reflects many of their pent-up frustrations in the misalignment of contracting discipline with business value. The relegation of contract management to a subordinate and largely administrative / quasi-legal role has significant cost and revenue implications, as revealed by many IACCM research reports.

The NAO describes these issues in the following way:

Government fails to recognise the value of contract management. The purpose of contract management is to use commercial mechanisms to improve services and reduce costs. Too often contract management has been seen as delivering the deal that was agreed when the contract was signed. This has meant that contract management has been seen as a way to avoid things going wrong, rather than unlocking value.

Government needs to recognise that value is achieved over the life of the contract. This means designing policies it has the capability to deliver, planning for the contract management stage earlier, and paying it more attention.

Senior managers in central government departments have not taken contract management seriously. Central government has yet to adapt to the commissioning role it aspires to. Departments have not adapted governance to the expanding role of government contracting: they have lacked the basic infrastructure of oversight, senior engagement, challenge and scrutiny. Systems of governance have focused on approving new projects, as if government's responsibility ends when the contract is signed.

Senior managers have not demanded visibility over their contracts. Senior managers have not always acted as if they recognised that departments are responsible and carry the risk for the services they have contracted. Managers have rarely demanded combined portfolio information to scrutinise and challenge operational contracts. Senior managers have often only engaged on contracting issues to firefight problems. As a result, they have put little pressure on teams to improve the information they rely on to manage the contract.”

The highlighting is mine. I challenge private sector organizations to demonstrate that these same weaknesses do not largely apply within their operations. The truth is that contract and commercial management are typically weak and often ignored as disciplines. As the National Audit Office points out, it is time to change.


Comment or read more of Tim's blog


Related Discussions

Please sign in or register to post on this forum

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...
Replies: 3
2015-01-27 10:15:01

What is Your Agenda or Contention with Contract Management

The above bullet points are currently a source of contention in the corporate office. The problem is that those that do not have a day-to-day touch point do not under...
Replies: 4

KEO International Consultants
2020-05-26 13:02:59

Negotiation effectiveness

What are the fundamentals and effective tools to be taken into consideration before negotiation meetings. Please share negotiation cases initiated from both parties. I...
Replies: 1

2019-06-13 06:49:19

Procurement and Purchasing

Hi all, Can we have a clear explanation for the differences between the terms of Procurement and Purchasing, and also the right position of the Supply Chain, is it a p...
Replies: 4

General Electric
2019-02-11 10:18:29

Does a Contract/Commercial Manager require a Law Degree?

Hello All, I have been working as a Commercial Manager for 6.5 years, responsible preparation and negotiation commercial contracts for high value complex transactions(...
Replies: 6
2018-06-25 17:01:56

Benefits for a CCM to report to the CEO instead of the CFO

Dear all, I have the opportunity now to negotiate internally my direct report to the CEO of the company instead of the CFO who is currently my direct manager. My dot...
Replies: 3
2016-07-11 02:02:35

disadvantages of Pass-through Cost

Can anyone tell me the disadvantages of having more than 50-60% Pass-through Cost when a company is executing a ERP implementation project and is acting as system inte...
Replies: 3

OneSpan North America Inc.
2015-03-03 13:27:55

Employment Agency Recommendation?

Hello - I was wondering if anyone is or has worked with a employment agency/headhunter that they would be willing to recommend. My company was recently sold and I w...
Older entries »
Replies: 2