The Role Of A Contract Manager
(Author’s note: The basic responsibilities listed in this article remain valid today. However, the role has matured and in many organizations is focusing increasingly on areas of greater strategic importance, based on analytics and business enablement. For an update on this article, see also https://commitmentmatters.com/2014/01/28/the-role-of-a-contract-manager-2014-update/)
I note that many people still seem puzzled by the role of a contract manager. It is a frequently asked question and recently generated significant debate on the IACCM website (Contract Management Forum).
Among Contract Managers themselves, there is widespread belief that the title (and its variants, such as Commercial Manager) masks massive variations in job role, status and responsibilities. Hence it is often felt that external hiring (especially across industries or geographies) will be difficult, if not impossible.
How great are those differences? In fact, our research suggests that the core responsibilities of Contract Managers (and by deduction, Contract Management Departments) are very similar. Drawing from the postings on the IACCM Forum, these might be summarized as follows:
(Please note, while in the interests of clarity these responsibilities are written from the perspective of a contract manager supporting sales (which is where there is a longer history for the role), they are easily converted to a description for Procurement, where the tasks are very similar, but more likely to be restricted to a post-award role.)
Responsibilities include:
o Contracts (various: including formal, short form, and annual contracts)—Drafting, Evaluation, Negotiation and Execution:
· Non Disclosure Agreements, Sales / Purchasing Agreements, Sub-contracts, Consulting Agreements, Licensing Agreements, Master Agreements, review of customer proposed terms and conditions
· Distribution Agreements (resellers, agents, joint marketing etc.)
· Commercial and Public (Federal, State and Local Municipalities) Contracting
o Serve as the point of contact for customers on contractual matters. Act as contractual “middleman” between company employees and customers, ensuring timely review and approval / reconciliation of variations.
o On all standard and nonstandard contracts, provide redlined recommendations and often negotiate directly with customer attorneys or purchasing staff until consensus has been reached
o Maintain contractual records and documentation such as receipt and control of all contract correspondence, customer contact information sheets, contractual changes, status reports and other documents for all projects.
o As needed, provide guidance on contract matters to project managers or other operational staff, including training to new project managers and other employees in contracting practices and procedures.
o Develop and implement procedures for contract management and administration in compliance with company policy. As appropriate, contribute to or influence company policies.
o Monitor compliance by company employees with established procedures. Identify areas of recurrent pressure.
o Work with Risk Management Department / Finance to coordinate contractual insurance requirements.
o Work with Finance to ensure adherence to broader finance and risk requirements such as revenue recognition, pricing and discounting policies,, export controls etc. May include ‘financial engineering’ and understanding / evaluating economic impact of terms and term options.
o Support Product Management / Marketing to ensure company products and services are offered with appropriate, competitive terms and conditions
o Monitor competitive terms. Monitor customer satisfaction with our terms and conditions and contracting practices. Recommend changes.
o Ensure that signed contracts are communicated to all relevant parties to provide contract visibility and awareness, interpretation to support implementation.
o Handle on-going issue and change management
o Monitor transaction compliance (milestones, deliverables, invoicing etc.)
o Oversee Service Level Agreement Compliance
o Ensure contract close-out, extension or renewal.
The emphasis within this list will vary. For example, some groups have little or no responsibility up to the point of contract signature; and others little or no role after signature (though there is a marked trend towards consolidation of pre- and post- responsibilities within the same group). Reporting line also makes a difference, with groups reporting to Legal tending to have a narrower set of tasks (potentially little responsibility for non-legal aspects of the contract or related policies and procedures, especially in terms of any financial accountability). Geography has certainly been a major factor in the past, with few Contract Managers visible in non-Common Law countries. However, this is also changing as business globalizes and contract forms and procedures grow more consistent.
One of the biggest differences between organizations lies in the extent of authority and accountability that Contract Managers have for making contract changes. Another big difference is the extent to which the Contracts organization has solely deal-based responsibility, versus a more strategic role in overall company policy and commercial / contractual strategy. For example, does the function simply implement and protect other people’s rules, or does it advocate change and participate in key policy discussions?
Today’s ‘best practice’ contracts groups are those with a holistic responsibility for the contracting process (pre- and post- award). They are increasingly involved in establishing contracting policies that support market and business strategy – and this is something that cannot readily be done if resources are fragmented. As a Professor of Economics at one of the major UK business schools recently commented: ‘The value of contracts is in the outcomes they produce’. He also observed that today’s contracts are becoming more complex and the risks of failure more severe.
Too often, companies have had no one providing the oversight for achieving those outcomes or managing that complexity and risk – and that is why the role of Contract Manager is emerging as a critical competency in today’s organizations. It is also why Contract Managers themselves need to start focusing less on what makes them different, and more on recognizing that there is a common and consistent core of activities that underlie their role and professionalism.
For more information and research on contract and commercial management, or to explore training and certification, visit www.iaccm.com – the home of the not-for-profit organization that represents the field of contract management globally.
(See also an April 2009 update to this article – The Role Of A Contract Manager – Revisited)
Trackbacks & Pingbacks
- The Role Of A Contract Manager - Revisited « Commitment Matters
- AdamsDrafting » Blog Archive » Lawyer and Contract Manager: Compare and Contrast
- This Year’s Top Ten « Commitment Matters
- The Core Of Contract Management: The Discipline Makes Progress « Commitment Matters
- Commitment Matters Blog: 2010 in review « Commitment Matters
- The Role Of A Contract Manager « Commitment Matters
- The Role of a Contract Manager: 2014 update | Commitment Matters
Commitment Matters 
From a non contract managerial role within the Engineering, Procurement and Construction industry my expereince in viewing the role of the contract mananger function on several government contracts has led me to understand this role as being one that adds clarification to the meaning of the language found in the contract scope of work when confusion develops over the scope of work definitions within the contract. He/she is the local in house representative of the company which generally determines from the companies perspective if taskings by the client are within the contract scope of work or not. These interpretations have a significant impact on contract performance and at what cost levels those performances occur. Occasionally some decisions are exceedingly complex and require that the contract manager obtain legal assistanace from the corporate legal department. Ultimately decisions can rest outside of the company altogether and may be made by the goverment contracting officer. There also seems to be an appeals process when exceedingly complex issues arise and result in a disagreement between the client and service providers opinions of the decisions made by the local governement contracting officers pertaining to opinions about in or out of scope work requests by the client.
There are several reasons why these issues are significant. Often the client is working within very limited time constraints and therefore the knowledge of the contracting manager has a significant impact on service level time requirements and as a result costomer satisfaction. A good contracting manager who has a thorough understanding of the contract will be able to come to most decisions more quickly and accurately and in these cases adds value and reduces risk by limiting the probability of failure of performance to time requirements.
Returning to the subject of contract performance and at what cost levels and how this relates to the role of the contract manager. In many cases the contract manager’s decision may be that the new work request is outside the defined scope of work defined and when there is no difference of opinion by either the client or the governement contracting officer then costs will need to to be determined for the requested work and often these outside scope work requests are a source of increased margin for the service provider(s). In conclusion, the situations mentioned above represent significant impact by the contract management department and manager to the Engineering, Procurement and Construction contracts I have been involved with during my time as a government contractor on several different federal contracts.
hemingway said he would edit everything he wrote several times…cutting out absolutely every word that was not necessary to achieve his message and idea.
Read both articles. Very comprehensive. I think you could very usefully continue your good work to date with an article on the ‘most critical competencies’ for an Effective Contract Manager.
If the ‘value of contracts is to produce an outcome’, what key competencies do Contract Managers require to achieve desired outcomes?
Thanks
Peter Murphy
Peter, thanks for this observation. I agree that we need a pack that describes the role to be performed (which is of course in the end more a process statement than a specific guide to organization); the skill and knowledge required for its performance (we do in fact have a well-tested set of 42 skill and knowldge characteristics that IACCM uses for its skills assessment and certification programs, so I will publish those for debate); and finally the metrics (again, we have ideas, but no overall consensus on what these should be). I guess to round it off we ought also to discuss tools, but that is a changing scenario.
Good post Tim, thanks. I agree that one of the greatest variables is that of authority and accountability, so I understand why the responsibilities have been written they way they have been.
It might be worth making a note, however, for anyone out there contemplating using this as basis of an actuasl JD, I would strongly recommend making sure that every responsibility had an identified decision maker relevant to your organisation, and to specify if this CM or an other function eg Sales, Legal, Executive Mgt etc.
And on a smaller point, especially for those where separation of contract and financial responsibilities is the model, I would want to see that Contract Management had a positive obligation to ensure that the business case numbers properly and accurately reflected the contract terms, (eg, at most basic level: revenue and cost ramp-up and ramp-down periods and bespoke SLA regimes.)
regards
Alan Meldrum
Alan, you make several important points here. And of course, the question of a decision matrix is key. See also my post https://tcummins.wordpress.com/2008/02/24/the-shifting-role-of-contract-management/
Tim, I am sure this is implied somewhere in the broad outline in your article, but I think it should be further emphasized. A key role that a CM needs to play in a transaction is to enable an effective and intelligent transition from the negotiation team to the delivery team, and this is really important in a services deal. Its important that the CM arrange a handover so that the key messages and concerns of the customer (many of which tend not to be apparent from a plain contract reading) are relayed to the folks who will actually deliver on the commitments made and understandings and expectations set with the customer.
Cheers, Joginder
Hi Tim, The article depicts the regular role played by Contract Management wrt to my experience with a telco operator. But the experiences vary much with both telco service provider and Switchgear / Substation company.
In the Switchgear company, for instance, Contract Management is responsible directly to ensure that Confirmed Sales is Delivered, Project Managed and Contractually managed ensuring all technical, commercial and contractual Kpi’s are governed, monitored and complied.
In the telco service provider, Sourcing are primarily responsible for pre-contract management, meaning that we ensure best contracts are applied to Suppliers etc. Post contract management responsibility sits with Service delivery organization where Sourcing is only consulted when there are contract issues with Supplier. Sourcing also lacks visibility on the Customer contracts.
So in essence, where Contract Management sits within the organization is of paramount importance. Companies that bridge the pre and post contract management responsibility and function effectively, will eventually realize the best benefits.
Trust this helps.
Rgds // Joseph
There will be variability in the precise role, due to industry, complexity and cultural variations, as well as pure internal politics and choice. The effort to describel a comprehensive set of roles is therefore in many ways more a description of the contract management process. But within this, it should offer guidance on the elements to be considered for a CM job description – and to be sure that those bits that are left out are being covered somewhere else.
I think the core functions/roll has been difined in the TIm’s article, however each industry may have specific need, thus requiring different role from a contracts Manager.
Great to attempt a generic role description but hugely challenging to provide one that’s truly useful for the countless role permutations (supplier role Vs customer role; low-value, routine spend Vs mega capital project…etc). So, here are just a few, general comments (offered from a procurement role perspective):
• As a general observation, the role is much more performance-driven, strategic and ‘joined-up’ in many organisations than the description appears to suggest, with very close, strategic links to e.g. cost and ‘technical’ (line) disciplines.
• Much of the launguage makes the role appear more ‘administrative’ than it is – e.g. “point of contact for customers on contractual matters (and) contractual ‘middleman’ between company employees and customers on contractual matters.” This suggests little in the way of professional input! A more apt description might be “Managing all contractual queries/communications, with responsibility for timely response incorporating input / buy-in from relevant disciplines”
• Finally, Performance Management is a key missing! Performance management activities (agreeing performance measures and active involvement in performance monitoring processes) are increasingly a key part of the role – both from the supplier and customer perspectives.
Hope this is helpful!
Karen
These are excellent comments and I agree that we must tighten up some of the descrtiptions and make them far more pro-active. I hope that on-going discussion will also give us more insight to the organizations where the role is ‘more performance driven’because our experience i s that this remains the exception – and ghence there is a notable lack of the metrics you would expect from groups that really are driving positive results.
On your initial point regarding role variations, I completely agree. I have to some extent ignored this for the sake of simplicity, but in my mind, a key role for the owner of ‘the contract management competency’is to enable effective contract management throughout the organization – which means they must deliver empowerment that ensures efficiency, speed, quality etc. In many transactions, there is no requirement for the physical involvement of a CM. The size and scope of the department must reflect the nature of the business need and complexity (in other words, need for capability versus need for experts).
Thanks again for your excellent observations.
Hi Tim, first off all thanks for the article and inviting me to comment on it. I am participating this kind of processes as subcontract manager and my role does not include directly managing the contract, instead of this I am attending like the project manager of the projects which are being procured. but i am working with contract managers very closely. My best practices about the contract management are;
* to get support to understand the legal terms
* to get notices regarding the contractual milestones such as LC timings, notification timings etc.
* invoicing and financial notifications
* to get support to defend the rights of the organization
thanks again, I will continue to type later.
Hi Tim
Thanks for the article.
I will summarize the role and responsibilities of the CM in the oil & gas companies:
Develops tendering strategies, administers tendering and contracting process from advertisement through contract close-out in close liaison with the tendering committee and user departments complying with the established policies and procedures and in the best interest of the organization. Identifies materials and services of repetitive nature and establishes long term call-off agreements.
The following is the key result area
• Develops, reviews policies and procedures pertaining to contracting and auctioning process and proposes amendments when required.
• Sets annual goals and objectives for the section and establishes KPIs to measure progress.
• Review the contracts request from the other departments within the organization, and develop tendering strategy and submits proposals to relevant Tender Committee for approval.
• Administers pre-qualification process and short-lists bidders.
• Supervises preparation of tender document.
• Participates in tender opening process, monitors bid evaluation and selection process.
• Submits proposals to Tender Committee based on Technical and Commercial Evaluations.
• Evaluates revision requests and revise contracts if found appropriate.
• Provides liaison between end user, tender committee and the bidders
• Mediates between the end user and contractor in case of any dispute.
• Supervises contract execution and monitors progress ensuring that the provisions of the contract are complied with.
• Administers auctioning of surplus/disposable material as per established policies and procedure.
Regards,
Mohammed
Good day to you Tim,
The contract management rol as you presented in the above article is rather clear, complete and very useful. It is also in conformance with the contract management model we deploy in our organisation. There is a difference however. You mix contract process management aspects and contract execution aspects. For example “Develop and implement procedures for contract management and administration in compliance with company policya” is a process aspect and there are more process activities in your article. My advice would be to separate process activities from executional activities. As I see it, a contract manager follows the rules and policies of her/his company and may contribute but is not issueing these. That is a company responsibility probably to be performed by a process manager.
Regards, Henk de Olde.
Henk
Thanks for your comment. This is an entirely valid observation. In truth, I view the list more as a set of process tasks that must then be allocated into roles.
However, in my view it is important that the CM function feels accountable for driving change, even if only by observing the need for such changes and promoting them. They have unique insights to market trends and requirements and should view improvements in this regard as fundamental to their professional ethic and status. Otherwise it is rather like saying that doctors have no responsibility for the outcomes of their treatment, so long as they followed the rules. In order to be a profession, we must show that we care about the continuous improvement of our remedies and treatments – which means we must a) agree broadly the scope of role we perfrom and b) contribute collectively to the body of knowledge that underpins performance (and of course in doing that also commit to learning from that body of knowledge and demonstrating our competence to perform).
Condition b) is a separate topic – but of course is the reason that IACCM has spent so much time developing a core body of knowledge and accompanying certification standards (which have so far been adopted by around 6,000 professionals).
Tim
Tim
A really good postm but I’m intrigued by your assertion that in Procurement the role is likely to be limited to post-award ….
Cheers
Linda
Linda,
My comment was not intended to imply that it SHOULD be limited to post-award, simply that our research shows that a) relatively few commercial sector procurement groups have a dedicated CM team and b) where they do have such a team, it tends to focus on post-award. I know there are exceptions and I will be pleased to hear from them!
I appreciate the situation in public sector is different, at least in UK, Australia and US.
Tim
For ten months and until two weeks ago I was playing the role of the Project Subcontracts Manager at a construction site for a Regasification-Liquified Natural Gas (LNG) project. After reading this article and the various comments about ‘the role of a contracts manager’ it is very clear to me that the definition of the ‘role’ varies depending upon where is being played, even within Pre-Award and Post-Award phases of the project. The ideal situation, which in my case did not happen, is that the Project Subcontract Manager should be part of the whole Pre-Award and Post-Award process in order to be in a better position at the job site to support ‘Construction, Cost Controls and Finance’; and keeping in mind from the very beginning of the project the activities of Project Completion, Final Acceptance and the Subcontract Close Out.
Today, I am sitting in an office looking back and thinking on how to improve the work process and to add value to the next project coming up; and still processing final invoices/Final Lien Waiver Release for the subcontractors terminating punch list work.
This narrative illustrates a completely different role of a Contracts Manager.
While I am comfortable that the article with the comments thoroughly describe the functions of contract management, it lacks an overall mission statement.
In many companies CM is viewed by Sales and Marketing as an internal obstacle that must be overcome. As an ex Sales person I often spent more time working internal issues vs customer issues. This is the opportunity that can be filled by CM teams. To facilitate “timely closure of a contract while caring for the risks of the company”. Sales must be convinced that their CM has a sense of urgency to close the deal, but at the same time internal stakeholders issues must be factored into the desired outcome of the contract negotiaton.
CM can add tremendous value if they view their mission in this way and will be welcomed to the table by Sales and the internal stakeholders.
I want to echo the comments that Karen made. With the understanding that the role of contract management varies, I do think the job description/language needs to convey the aspect of the contract manager as an active/pro-active forward thinking role (compare to the contract management role that is designed to be reactive to situations). Perhaps it is the tone, but I do think language is needed that conveys the idea that Contract Managers have a seat at the table or at least at mindset that suggests so.
That is, part of the description needs to convey that the contract manager (particularly in a post-award environment) is responsible for actively scanning the business environment, staying informed with the team(s) through regularly scheduled meetings, actively participating in governance meetings with the client and monitoring, tracking and escalating issues by providing recommendations, remedies, analysis, and etc to manage contract issues before they become risks.
In terms of standard and non-standard contracts, I also believe that Contract Management value goes beyond providing redlines (again depending on the company and industry) we have an obligation and the skills to directly interface with all stakeholders to provide risk mitigation measures around business terms and help shape the deal in ways that can make the contract more manageable, understandable, clearer and perhaps provide a measure of protection for both parties.
Ben
As with Karen, I agree fully with your observations and as we look to re-work my initial list and descriptions, I hope the consensus will be to establish these pro-active standards.
I see the role increasingly focused on defining and then managing key areas of relationship governance. This does, as you say, demand cross-stakeholder coordination. However, we must remember that sometimes we work with high levels of repetition and inefficiency because (like lawyers) we tend to operate situationally, rather than observing patterns. Hence you will note that my list does promote the need for considerable pro-active involvement by the CM function in the identification and promotion of change (therefore at a policy and strategy level) – to ensure policies, practices, rules etc. are aligned with overall company goals and to facilitate successful contract outcomes at the individual deal level.
Hello Tim;
Great job on the article. It was both informative and thoughtful.
One industrial “vertical” where the role, autonomy and expertise of a Contracts Manager is critical to the overall health of the business is in selling to the “public sector”. The procurement, procurement integrity and ethics regulations in the public sector business are numerous and arcane. Ignoring these requirements can mean a sudden fall into procurement hell, followed by expensive legal fees, government audits, civil and criminal fines, suspension or debarment from future public sector contracting, and jail time for the offending corporate officials. Here, a contracts manager who knows his or her business is worth his/her weight in gold. And since public sector entities interface with the private sector primarily through “Contracting Officers”, a private sector counterpart is immediately understood and appreciated by the government customer. Best of all are those private sector contracts managers with U.S. Government security clearances, who can go on-site into classified areas and work face to face with their government counterparts. A government sub or prime contractor blessed with one of these employees should be very careful to treat him/her well, provide continuous opportunties for training, and listen to his or her recommendations!
Tim
Based on some work I did related to this for Network Rail (which I have since refined at BP), I think that Contract Management can best be defined in terms of three groups of activities: Delivery (or Performance) Management, Relationship Management, and Contract Administration. More recently I’ve also seen a document on Contract Administration from the OGC that draws similar conclusions (a quick search on the web for OGC and Contract Administration should locate this).
What tends to cause confusion is that someone with a job title of ‘Contract Manager’ within a particular company will often only perform a subset of these three activities. Go to another company and the same will be true, however the subset of activities will again be different. So for example, in one company the ‘Contract Manager’ will primarily be concerned with Delivery Management (making sure that the supplier meets their contractual SLAs, milestones etc) whereas in another company, the focus will be more on contract administration (storage of the contract, tracking contract expiry dates, managing changes to the contract etc) or relationship management (activities aimed at getting value form the supplier relationship which is often over and above the suppliers strict contractual obligations).
As the exact definintion of contract manager could be any combination of these main groups of activities. I think that the best advice is to describe all of the activities that can come under contract management (split by these three categories), and then within a particular company do a RACI to determine what the person with the ‘Contract Manager’ job title (or indeed ‘Vendor Manager’ or ‘Delivery Manager’ job title to name but a couple of alternative variants) will be responsible / accountable for.
Regards
Roger
I can’t see any major errors or omissions with this role description
The list looks great, and the only material thing I would add is liaison with Legal in contract negotiations & with regard to contracting policy.
I agree that in most cases, the title “contract manager” doesn’t do the role justice and implies a ministerial function with much less responsibility than is usually given. “Contract Negotiator” or “Contracts Adviser” is probably more accurate, but the title is mainly cosmetic. More substantially, contracts departments should emphasise to management the scope of the company’s overall business that’s visible to them and their general expertise on a broad range of matters that affect or are affected by the way the company contracts with its customers and vendors. This may be more easily said than done, but in most cases I’d like to think it’s more a question of marshalling & presenting the evidence than anything else.
Tim, three comments:
1. Fairly comprehensive description, but
2. The tie-in to P&L influence and strategic planning is missing; that is what gets the function recognized as something much more than transactional, particularly on supply side and in corporate setting. A typical manufacturing company “spends” 50-60% of revenue – a significant opportunity that many (large?) companies have recognized.
3. I would not characterize support of Procurement as “post-award”; rather support of the supply side (vs customer side/sales) – Contract Managers looking in different directions, albeit aware of each other’s roles, particularly on projects such as construction with flow down of T&Cs.
Tim – the Role Description accurately describes the ‘traditional’ aspects of a Contract Manager’s responsibilities. However, with the current situation both in the defence/government market place and financially the more strategic aspects of a Commercial (as opposed to Contracts) role should embrace new ways of contracting, new commercial constructs, even greater understanding of working together with the customer and collaborative working. This sort of strategic thinking requires a commercial mind as well as the usual business development and company strategist.
A fascinating topic!
Hi Tim,
Thanks for the opportunity to comment.
I think that what is not clearly defined is the actual “position” of the Contract Manager. Is he the corporate Contract Manager (long term staff position) or is he the Project Contract Manager (project duration only). In my current role (duration of the contract) procurement are responsible (in the most part) for agreeing all of the terms of reference with a subcontractor and when this exercise is completed I then take this information on board and develop a subcontract agreement to suit those terms of reference. Believe me this is not an ideal situation to be in. The exception to this is reimbursable contracts where I deal with the terms and conditions from start to finish. On a responsibility level decisions that involve agreement on variations are very limited, these are left to project senior management. On other projects I have enjoyed having the authority one would normally expect of a Contract Manager, it was after all a corporate position.
In short there needs to be a definition for a Contracts Manager, Manager of Contracts and Project Contract Manager.
I agree with the definitions and everyone’s comments but one area that I believe is critical is the support from management within the corporation or company. If company management believes in the important role of contracts within the organization and pushes that down through the organization, the role of Contracts is more effective.
Insuring that all personnel know that the only one that commit the company (in my case) is the Contracts/Subcontracts Department helps us to do our job more efficiently, whatever the job description.
Hi Tim,
Good article, I am in agreement with the role description. How much of these activities any one individual is actually responsible for is very much dependent upon which organisation he/she is working in.
I’ve always seen the contract/commecrial role as one where we should be influcencing and driving the commercial strategy. This however is not always possible and to a large extent I think depends on how well the function is represented and understood within the organisation and also the strength of the individual.
I don’t know if you have done such a survey but I think it might be interesting to see at what levels within the organisation Commercial have a seat at the table. Unless we are represented at a senior level on the correct board/management level meetings, we will find it difficult to truely influence the strategy.
Regards
Aswad
Good morning Tim. I read the article and agree with with its contents. Well thought out and based on my experience it follows my perception to my roles and responsibilities as a Contracts Manager. However, one of the points stated in the article in my opinion needs clarification:”Monitor compliance by Company employess with established procedures”–monitor compliance of what? Should it not also address the “contractor” to maintain compliance with the agreed terms and conditions of the agreement to include commercial and payment terms; milestone dates and milestones payments, if applicable, and other such similar issues! In addition a contract management reponsibility in the enginnering, procurement and construction industry is to support engineering and construction groups in their daily monitoring of the scope of work activities such as “changes”, “backcharges”, formal contractual correspondence to the contractor and other similar issues. Regards,
Tim, thanks for both articles. And to those who have commented to date, thans for your own insights into the role of contract management.
In my company we are establishing a contract management community, encompassing 3 key areas. Acquisition – focussing on securing the business and signing the contract. Delivery – the delivery of the business / project. Procurement – the acquisition and ongoing management of suppliers.
One area that I believe requires further work and clarification is the delineation of responsibilites between contract management and legal and in some cases between contract management and the finance function.
Regards…Jim
Hi Tim,
A very good article and contribution to define the CM role. I would like to share some of my deliberations which, first of all, come from my experience and can complement your ideas.
This is extremely difficult to define contract management role. Contract management is unique in each organization depending on different factors, such as internal organizational structure, authority, reporting line, etc. And above all, there is a human factor.
As to the contract manager as a person, in my view he/she should have a good knowledge not only in legal area, but also in financial and project management. The contract manager role should mainly deal with contract interpretations and awareness. He/she should provide the guidance to the project manager or other functions in risk and issue management, performance management, etc. The contract manager would provide the different scenarios under the contract and it is for the project manager to decide which of the consequences are better for the project for the time being. The contract manager should be seen as an advisor, but not a decision maker or police.
A lack of clear understanding of the contract management duties creates sometimes overlap between the contract management and other functions. The most obvious is contract management vs. project management. I would define that a contract manager is responsible for the contract process as such (and I would agree with the list of responsibilities from your article). This should be distinguished from the management of the project which should be left with the project manager. Performance management is one of the areas where contract management and project management overlap. I would therefore restrict the contract management role to the contract to avoid the overlaps.
To me, contract management should be clearly distinguished from other functions. Contract management is a part of the business process of a particular company. To define the contract management involvement, the company should answer the question: what should the contract manager be responsible for? For example, finance is responsible that the figures fit, project/service management, foremost for performance, etc. There should be understanding of CM area of responsibility.
I would assume that it is impossible to define a contract manager role as in practice it will always vary. I would rather define the “ideal” contract management covering the whole contract process from A till Z. Having this in mind as well as benefits of contract management, the companies can choose on which stage to involve a contract manager for their particular company with their internal structure.
As an option, instead of defining of contract management I would give examples of contract management roles in practice. For example, it can be a political role with great authority and decision making, a technical role which will record and monitor, a policing role with “heavy” reporting duties, legal role which will draft contract related documents and approve, a negotiator or blended. If we can define the business processes structure in each industry, we can then provide the benefits of each role. However, I think making a choice of a contract management involvement should be left to each company. If the contract management role is wisely implemented, it will benefit, otherwise it will be seen as a burden. The contract management role is well implemented where it complements the other functions, giving advice and tools for other functions with regards to contract.
A further option for definition is not to define a contract manager role, but a contract management as a process. I have seen in some companies, that the contract management is performed in different parts by different functions. To define it as a process will give better flexibility to the companies to use existing resourcing and benefiting from contract management.
Regards, Tatiana
Having worked with international agencies to finalize technical tenders for ICB I would add to the above that in addition to the contract management-legal link and the contract management-financial link there is the actual contract management-technical link, i.e. the technical aspects of the contract that ultimately deliver the product or service. In contract execution/management it is often the blurred lines between these 3 areas that create problems.
Tim
My experience or contract management relates to outsourcing contracts. Outsourcing involves taking on client IT estates where the commercial risk varies from contract to contract and where risk is seldom fully evaluated when the contract goes live. This can be due to incomplete due diligence, last minute negotiated inputs, management and delivery of non-standard solutions and products, mis-alignment of expectations and ambiguity arising from the negotiations but particularly in my experience the biggest item is lack of an inventory.
In Telco environments pre-packaged products are market deined and ‘launched’ with tried and tested processes all of which works to minimise/eliminate risk. Consequently contract managers are not typically required.
In outsourcing the contract manager role becomes essential with the primary responsibilities:
1) to deliver the contractual obligations of the contract and
2) to deliver a viable P&L for the business
1) This will require the CM to agree, build and manage a client engagement model through which he/she will;
– manage transiton of the outsource
– build and inventory (to both manage the commercial ledger, billing and deliver MI as required by the client)
– novate and manage all existing supply contracts
– negotiate and agree ‘true up’ requirements once the inventory is understood
– set up a delivery to unit to deliver the custom SLA as contracted
– manage transformation (if required by either the client or the Telco to change the cost base)
– develop, price and deliver, new and innovative solutions as required
– co-ordinate the resource of the organisation to underpin all of the above eg Project management office, TDA, SDA etc
2) This will require the CM to:
-build a ‘ledger’ function around the inventory; manage all cost of sales, produce a ‘billing engine’ aligned to the services contracted, bill the client and provide supporting MI
– derived from the above produce and manage the trading P&L, balance sheet and life time contract plan
– re-negotiate all inherited supply contracts
– migrate, where possible 3rd party products to own products (and lower cost base)
– re-design and engineer inherited solutions (to lower cost base)
– optimise size and shape of team to deliver cost savings
– cleanse the inventory
– work with account teams to drive new business using the engagement model agreed
The contract manager must strive to achiev quality and delivery, and draw all necessary policies to ensure that taxe payers money are properly spent must especially in government contract
Tim;
In response to your email, and after reading this article, I would say that you’ve captured a the most important aspects of a CM role. It obviously varies from company to company, industry to industry, and certainly country to country. However, I believe there are some key salient points or functions common amongst all, and indeed, are common whether on the “buy side” or the “sale side.” I am currently on the “buy side,” but have spend about 50% of my career on the sale side so I’ve experienced that commonality implicitly.
I’d like to share a few items or attributes I felt were possibly missing which I think are a very relevant, especially in the technology industry.
– Contract archiving, categorizing, distribution, disposition (EoL, Assignment, M&A, etc.). This would include partnering with IT procurement teams for contract database selections, needed functions, trials, etc.
– Contracting trends or precedent recommendations to corporate legal counsel (especially when the teams scope is more holistic and strategic, not directly reporting to corporate legal). This function is especially apparent with the CM is a function in a product or purchasing division vs. corporate counsel.
– Conflict resolution/contract interpretation.
– Chief coordinator with key stakeholders…a program/project lead like role with CxO access and interface skills required.
As I looked back as your article, some of these points are touched on in a different context. Yet I hope my experience and thinking is still helpful. While some may not like it, I’ve often quipped that my role is a “cheap attorney.” I’ve stated this to both attorney and non-legal professionals. It is often quickly accepted as the reality. As the function develops, and with the ever increasing demands of “pay for performance” and IP protection, contracting needs seemed ever to increase. No company in a fiercely competitive industry can afford all the attorneys they may need to do “contract management.” It’s my opinion that the value of this role will only continue to expand.
Thanks for the article.
James
I am an attorney working as a contracts administrator. I was transferred to a state where I’m not admitted to practice law. I believe that performing common contracting tasks (as described in your article) violates one or more of the Rules of Professional Conduct related to the Unauthorized Practice of Law. The Rules are pretty much common to most states. I see very little discussed in contracting blogs (or your article) regarding UPL and the problem this presents to attorneys working in the contracts administration field. As you probably know, nearly every state has adopted the RPC’s. Non-admitted lawyers and nonlawyers may perform only ministerial functions unless they are working under the direction of a licensed attorney.
I believe most companies and non-lawyers ignore the Rules because they are unaware of them, coupled with the fact that bar associations are not aggressivly enforcing UPL rules in the area of contracts administration. There seems to be little risk of being charged with UPL violation (based on a quick Google search producing no reports of UPL actions being taken against contracts managers). It appears that most UPL actions are brought against attorneys practicing ourside of their admitted-jurisdictions. Thus, an attorney/contract administrator working outside of his or her admitted-jurisdiction may be vunerable to a UPL charge. Unlike nonlawyers, lawyers are subject to bar sanctions and discipline both in the state bringing the UPL claim and in every state where they are admitted to practice.
It would be a good idea for attorney/contracts administrators to seek admission to the state bars in the states where they are working. Many states bars have reciprocity provisions or in-house counsel licenses that allow applicants to avoid retaking bar exams. The irony is that states generally require reciprocity applicants to have recently practiced law a substantial number of years (e.g. 5 out the last 10 etc.). Contracts administration is not considered the practice of law according to the state licensing boards I’ve talked to. To make things worse, companies may refuse to allow a contracts administrator to work for its legal department or to refer to himself or herself as in-house counsel (which would help the an applicant meet the recent practice time requirement).
The attorney/contracts administrator may be required to perform work reserved to those admitted to practice law. He or she is ethically required to be admitted to the bar where he or she is working, but may be prevented from applying under reciprocity rules. Once admitted, he or she may be considered a nonattorney for the company he or she works for. Ironic.
thx
Bill
Bill, you raise an excellent question and I hope others will comment.
Bill, I was always curious about that. I am currently a individual who holds a J.D. yet I am looking into entering the contract management field. I have heard about contract managers who have their J.Ds, but are not admitted to practice and always wondered about how that would work. I think it is a dilemna. Maybe it has something to do with the relatively few number of people with their J.Ds who indeed do contract management from a company perspective, rather than from a firm or other established entity.
the info is helpful….
Edward A
Linda might misconstrued Tim procurement role is limited to post award. In most EPC, procurement role can get dynamic right from the get go — from the planning stages of the project: Plan, Conduct, Administer,& Close procurement. Each process can involve effort from group or person, based on the requirements of the project.
Hi all, I got hired as a CM and will be starting in a few days so thanks for the article and the comments. i am a francophon trade Lawyer (not very use to the common law corporation system) and I’ve never worked as a CM before. I will only intervene at the post award level and will be please to have recent information on the issue. The fact is that the more i read the above comments, the more i am confused as it sounds that the Contract Manager is vested with a wide and complex range of responsibilities depend on the industries and fields. Could someone highlight some basic notions for me? Thanks.
It’s hard to come by experienced people about this topic, but you seem like you know what you’re talking about! Thanks
I find the description very comprehensive and entire discussion very useful.
I believe in today’s world the role of CM has become even more complex. CM is not just an administrative or procedural animal but far more dynamic catalyst in decision making. Today CM apart from his own core competencies in pre-award and post award areas, need to have all round knowledge in the areas of Technical knowhow, Taxes, Tariffs, Law, insurances, costing, planning, project management, IT, etc. to be able to gauge (proactively) it’s impact on the deal.
Any profession gains its position in the corporate world depending upon how much it contribute towards/influence the decision making and performance. Contracts management as a profession will gain more and more recognition in the world business/corporate scenario depending on how effectively we project the multi-skilled role of CM. IACCM has been taking rightful steps toward bring the awareness.
This really is the 4th post, of your site I
really browsed. Yet I really love this 1, “The Role Of A Contract Manager Commitment Matters” the
most. Thank you ,Adalberto
Great blog. Thanks for sharing this knowledgeable information.
Hi Tim…we perhaps represent complementary associations. For those who’ve inquired about comprehensive job competences and standards, I’d suggest you consult with the National Contract Management Association’s website at ncmahq.org to review the Contract Management Body of Knowledge (CMBoK). I think you’ll find it helpful and enlightening. Kudos for bringing the subject to light, Tim! Thanks!
Russ
Thank you for highlighting the views of NCMA. As you rightly say, there are contrasting visions of the contract management role, with IACCM having a comprehensive ‘body of knowledge’ and certification programs that represent an international commercial contracting perspective, also increasingly being adopted by those in Government contracting. Many who have joined IAACM in the United States are of course familiar with NCMA because they are former members of it.
Tim
What I’d like to see more of if the professional recognition and development of Contractor side Contract Managers who receive little or no focus. When large contracts are issued, the contractor must have a ‘general manager’ that knows how to deliver to the contract terms etc. This skill set is greatly undervalued and client side Contract Managers would do well to ensure large contracts have this leader in place.
Thank you this is an excellent article, especially as you have links to describe in detail most of the best practices.
A resourceful information. Thanks for sharing this post.
I have read the role of the contracts manager.
I now know that the cm is vested with a wide and complex range of responsibilities depending on his’
industries, I also know that you must have all round knowledge in the areas of technical knowhow.
This will help me with the role of contracts manager.
Thank you for this in site in the role of cm.
Gareth / Security
Robert,
Kindly guys assist me to understand the role of a contract manager in the banking industry.
Thanks and Kind Regards
Robert
I am Revathy Premanand, residing in Chennai, I want to get good training in Contract abd complaince Management as i m very interest in this portfolio….plz revert me back with your valuable feedback.
Thanks and regards,
Revathy Premanand.
Thanks for finally talking about >The Role
Of A Contract Manager | Commitment Matters <Loved it!
Hi Guys,
I am new to the contract management role, and I have been asked to summarize a vendor contract for the executive team, can anyone tell me what salient points I should note/look for?
Thanks
Laurson
Thanks a lot! Gives a solid first understanding.
Thanks for the excellent article on what a contractor manager does! I really like how you mention ‘financial engineering’ and that contractors need to be able to evaluate the economic impact of terms. Having someone dedicated to handling pricing policies sounds like it could be really beneficial.
This is the exact post that I’ve been needing. Thank you so much.
Contract Lifecycle Management Software