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It’s Time To Focus On Change Management

April 8, 2010

“We often don’t talk much about change during a contract negotiation because … well, it often isn’t a very comfortable subject.”

Those words were spoken by a senior executive at a forum I ran last year and they came back to me when I read a recent IACCM member question on the association’s message board. The question was: “I am looking for ideas on how organizations train their Program Staff on handling Change Management with customers and/or suppliers. Particularly if you have any lessons learned on dealing with cultural issues surrounding customer’s views of contract changes from varying cultures perspectives.”

The truth is that change management mostly gains attention when it is adversarial and used as a stick with which to beat the other side. I regularly hear complaints; I rarely hear stories of excellence. Some companies are adept at drivng margin through change; others are adept at arguing that no change is out of scope and thereby resisting increases in contract price. In some cases, entire industries (and contracts / legal departments) flourish on the battles over change – construction being the most obvious example.

Change management is an area of rapidly growing importance. As professionals, we all attest to the fact that change is happening more rapidly and that its impacts are often dramatic. We regularly observe that defining relationship goals and setting a firm contract scope has become more challenging – and that many agreements lack the precision we would like. When asked about the key terms that we should be spending time negotiating, change management is in the top three. Yet when asked what it is we actually spend time negotiating, it struggles to make the top twenty.

As professionals who claim that one of our core roles is anticipating and managing risk, how can be so relaxed about the management of change – which must surely be one of the most fundamental risks in any contracted relationship? Strategically, do we really believe that the best contracts and relationships are those where we either trick the other side, or create the environment for confrontation and dispute?

I suggest that this is just one more example where the contract and negotiation profession is today frequently failing to do its job. Even assuming that we have grasped the importance of change management, contracts staff may be stifled by other stakeholders (for example, Sales are frequently disinclined to address topics like change because of the Pandora’s box it may open); or we may lack the courage to establish the truth about our ‘cultural fit’ with the other side (in which case we really have failed in our fundamental duty of risk recognition). Sometimes, of course, it is simply that we are not allowed near the other side to mount the exploration!

The truth is that in today’s major contracts, negotiation only ends when the relationship is terminated. The circumstances surrounding our most important trading relationships are never static and therefore change management must become a core capability and discipline. But it cannot be unilateral; change involves both (or all) parties to a contract and having a mutually agreed mechansim with accepted procedures and consequences is fundamental to a mutually successful outcome. The scope and goals will often not be precise, or will alter with time. Our skill must be to manage the consequences of that uncertainty in a way that ensures continued harmony and mutual benefit.

So rather than simply recognize that change management should be a major negotiation topic, what are you going to do to ensure that it actually becomes one?

4 Comments
  1. Watch our web site, http://www.8over8.com, for a white paper on this topic, titled Managing Change on Major Capital Projects. The lack of collaboration between owner and contractor is really the final frontier for the construction industry but a bit like Siberia – everyone knows where it is, but no one wants to go there.

    • How can we get a copy of the white paper titled “Managing Change on Major Capital Projects” you ere refering to ?

  2. I congratulate for posting such a wonderful posting on “Change Management”. A similar topic on “Change Management” which may help you to learn more.
    http://blog.commlabindia.com/elearning/change-management-training

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  1. Managing Contract Changes « Commitment Matters

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