Contract Management is increasingly recognised as a critical strategic competency contributing to organisational success. At Bywater PSCM we believe effective contract management requires a robustly coordinated and structured approach and that proficiency in developing contracts helps deliver desired contract performance and outcomes and avoid misunderstanding and disruptive contract re-negotiations.
Here are our five tips for this vital phase of the Contract Management Life Cycle:
- Ensure contract documentation is fit for purpose, including a clear specification, pertinent contract clauses and clear roles and responsibilities. The contract must reflect the nature, size (value) and complexity of the services to be provided.
- Take a pro-active approach to risk management. Capture lessons learnt from previous contracts to identify potential contract risks. Understand and take into account relevant technologies, the supply market, supplier characteristics and the criticality of the contract to help prioritise risk issues and evaluate the most appropriate mitigation actions to take
- Involve key stakeholders in the contract development process. Engage fully with technical teams and users and involve senior management. Above all ensure that stakeholders have had their input as to how the contract will be performance managed.
- Design a robust performance management regime. Identify and measure performance factors critical to the successful delivery of the contract, including sometimes our own contribution. Build a robust reporting and review process to ensure that performance is regularly and objectively reported, understood, reviewed and acted upon. All parties must understand and be committed to fulfilling their respective roles in the performance management process.
- Understand and secure the right resources. Plan effectively to identify and secure appropriately skilled and competent resources for the thorough fulfilment of all phases of the contract management lifecycle. This will require buy-in from senior management, technical, operational and commercial functions.