You’re starting contract management too late.

Pop Quiz: When should contract management start?

Well, it’s not tough to work; once the contract has been formed, the agreement (contract) can be managed.  Hence from a literal basis contract management starts after contract award.  Simple, and consistent with responses I get when I ask this question of procurement professionals.

Whilst technically correct, this is too late.

The mentality of leaving contract management until the contract has been formed is at the forefront of many of the issues.  It robs the potential of procurement and creates a platform for expensive variations and the constant management of solutions that are not fit for purpose.

The problem with delaying the consideration of contract management is that it puts procurement practitioners in a mindset that contract management is a separate function to procurement; one which happens after the contract has been awarded.  This often results in contract management being an afterthought rather than integrated into the process.  Under this paradigm practitioners adopt a myopic view focusing on one stage at a time until the contract has been awarded, then handballed over to a different department, or sometimes another agency to then manage.

Remember the key to procurement is not to follow the processes and simply engage a provider, but to achieve outcomes.  Outcomes which can only be effectively realised after a contract has been in operation for a length of time.  The key to this is the meshing of the processes leading to the formation of the agreement and the management of the contract. Whilst this can be done through the use of mechanisms such as transitional plans and contract management plans, my contention is that the best outcomes are achieved when contract management is considered at the very start of the procurement process.

What can we do to get better outcomes?

Practically this can be achieved by involving Contract Managers in the procurement journey, from needs analysis, procurement planning and as voting members on evaluation panels.

Why?  Well the contract manager is normally the recipient of poor procurement outcomes, badly drafted agreements and ambiguous or irrelevant terms. Contract managers have the foresight of potential issues – not because they have a crystal ball, but because they’ve a history of managing these agreements. 

The contract manager, especially if they are destined to manage the outcome will generally be more than willing to provide input and take steps towards a workable solution.  Involving the contract manager also equips them with the knowledge of aspects such as the agency’s needs, stakeholder requirements, scope of works and the outcomes the procurement is aiming to achieve.

Some quick considerations:

  • Consider contract managers as stakeholders at the start of procurement
  • Invite contract managers to provide input on what’s been effective and what issues they’ve had in the past
  • Attend lessons learned sessions from other projects and procurements
  • Continually think consider and ask questions such as “what could we do differently this time?”; “Is there anything we can add into the contracts to provide clarity?”; “To streamline the process and make life easier?”
  • Consider not only procurement risks, but risks in the management of the contract – create what if scenarios
  • Create clear scope of works, which can be comprehended with parity across the stakeholders

Press the pause button and prior to progressing your procurement, stop and make sure you have considered the input from those who will or have managed this type of contract.  Contract management shouldn’t be an opportunity to fix errors or to find a workable solution; it should be to add value on top of that already established from good procurement.

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