Loading...
 
 

Contract Management Benchmarks

Published: 21 Jan 2015 Average Rating: 3 / 5 Print
 

Author: Tim Cummins

Did you know that monitoring compliance remains a key focus for contract management groups and the most common area for reporting? Would you have guessed that only about 8% of organizations typically succeed in always imposing their standard terms or that, for the average company, around one third of contracts are completed without any negotiated amendment?

These are just a few of the many statistics emerging from the 2015 IACCM Benchmarking Study, which looks at a wide range of performance and management data related to contract and commercial management. At a time of growing executive interest in contract and commercial capabilities, having benchmark data is becoming increasingly important.

How many contract managers does it take to write a contract?

Part of the challenge is around efficiency. For example,  At one extreme, a contract manager may be overseeing as many as 250 separate contracts, while at the other there may be an entire team dedicated to a single mega-deal. Benchmark data gives answers across this spectrum. For example, it tells us that the average bid and negotiation cycle time for low complexity agreements is under 6 weeks – though for bottom quartile companies this stretches to over 8 weeks. We also gain insight to other factors, such as the fact that 'international' contracts typically take 25% longer to close than purely domestic agreements.

Is my contract management organization delivering value?

In leading-edge organizations, executives are becoming far more interested in contract and commercial effectiveness. That means they want to know whether their contracts are delivering the right outcomes and optimizing financial results, as well as protecting against risks. Here, benchmark measures are quite varied, but include comparisons of how time is spent, the reports provided to management and the skills of staff. Our data tells us that the quality of market research is generally low, with less than 20% having significant insight to competitive terms and contract structure. Many organizations still deploy substantial resources on low complexity contracts, whereas in high performers more than 70% of contract management time is spent on high complexity deals. Another benchmark is training and skills development, where there are dramatic differences in investment, with staff in bottom quartile organizations receiving an average of less than 2 days training a year.

Some useful benchmarks relate more to market trends. For example, we often hear that the average duration of contracts is reducing, yet according to the survey that is not the experience of most organizations. Just 24% report this trend, against 31% who say the term of their contracts is increasing. Another confirmed trend is the steady shift towards web-based and distance learning, which is now twice as likely to be used as classroom programs. However, even though we now have access to on-demand programs, the overwhelming favorite for training remains on the job experience and learning from colleagues.

Where can I get this benchmark data?

The IACCM benchmark studies currently in process are detailed below and remain open for input. Click on the link to access the survey. Participants will receive an early copy of results:

  1. Performance Measurements:  This survey looks at headcount, contract complexity, measurements used to gauge both individual and functional performance and a range of efficiency indicators (e.g. cycle times, number of contracts per professional etc.)  
  2. Primary Areas of Activity: This survey looks at scope of role, where responsibilities are performed, time allocated to different activities and use of outsourced or offshore services. 
  3. Value Proposition: The survey you are about to complete focuses on the value that you deliver to the business. It looks at reporting line, objectives, challenges you are facing, the use of automation and skills
 
 
 

Related Discussions

Please sign in or register to post on this forum

DST
2017-11-20 21:56:21

Percentage of a company's contracts that contain SLAs?

Is anyone aware of a survey, whitepaper or article referencing the percentage of a company's contracts that contain SLAs? My assumption is that it would either include...
 
 
 
 
Replies: 3

Rivas Zorggroep
2017-10-28 19:43:12

Standard deviation of this average?

Where can the complete report or specifically the standard deviation of this average be found? Thanks.
 
 
Replies: 1
Anonymous
2017-08-23 09:33:18

CLAIMING FOR WILLFUL MISCONDUCT

Dear House, How can a Party demonstrate WILLFUL MISCONDUCT of the other (defaulting) Party. What are the evidences required to make recovery for damages accruing from ...
 
 
 
Replies: 2

RadiSys Corporation
2017-06-12 14:35:49

Research on CLM Software- can anyone share their research/comparisons?

Hi all- I'm in the early phases of researching CLM software solutions, and wonder if anyone has done a comparison of offered solutions and can offer that research? I...
 
 
 
 
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...
 
 
 
 
Replies: 3
Anonymous
2017-02-16 22:07:36

Departmental Maturity Assessment

I will be assessing the maturity of my contracts/commercial department. Does anyone have any thoughts based on their experience? In particular, were there any resource...
 
 
Replies: 1
Anonymous
2017-02-16 07:02:26

KPI's for EP Contract

Could anyone suggest KPI's for a Engineering and Procurement Contract?
 
 
Replies: 1
Anonymous
2017-02-09 21:36:57

Contracting KPI's

Can someone suggest key Contracting KPI's in IT outsourcing projects.
 
 
 
 
 
 
 
 
Older entries »
Replies: 7