Contract Management Benchmarks

Published: 21 Jan 2015 Average Rating: 3.6 / 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

The Co-Operative
2020-07-08 10:48:57

Logistic Services

Who has examples of lost value through sub-optimal sourcing / contracting and ongoing management of logistical services from a "buy" side?
Replies: 1

World Wide Technology
2020-07-06 22:55:33

How to show value of contract scoring

Our contracting team has developed a scoring model to rate the overall compliance of a potential contract with standard contract language guidelines provided by our le...
Replies: 4

BC Hydro
2020-05-28 19:38:24

Pricing Trends for major equipment and engineering services

Is there any research available here on pricing trends for major equipment, related transport and engineering? If someone could point me to a report or reliable source...
Replies: 2
2020-02-28 11:26:47

Visualisation of the KPI section of a Contract

During our current contract one of the main issues that we encounter is confusion over the interpretation of KPI reporting and the consequences of any failings. We are...
Replies: 1

The Bank of Nova Scotia
2020-01-06 14:10:40

Defining KPIs and Creating Dashboards

Hi All, I am a fresh member of the portal. Looking for some insights in regards to defining KPIs. We are a team of 3 Contract Managers and our manager has asked us to ...
Replies: 2

Saudi Electric Company
2019-11-11 10:09:34

Contractors Performance Criteria

Dear All, regarding the Contractors Performance Criteria is there any recommendations or benchmark thanks Hussein
Replies: 1

PRS for Music
2019-10-28 12:12:30

Bench marking a service

Hi All Is there any standard in terms of stakeholder satisfaction in IACCM contract Management? We have sent out surveys (which our stakeholders had input into rega...
Older entries »
Replies: 2