The Role Of A Contract Manager

It is three years since I wrote the original blog that sought to answer the question ‘What is the role of a contract manager?’ Since then, more than 50,000 people have read either this, or the sequel that I wrote in 2009.

Is this level of interest a good thing? On one level, it can be taken as disappointing that there is apparently such uncertainty over what a contract manager does.  But it is also possible to view this level of interest as a positive development – and inded something that is fundamental to the status of the role.

Within any organization, there are always battles over precise areas of ownership and responsibility, but in general, the fundamentals are understood. Lawyers deal with law, finance professionals do accounting, pricing, financial analysis, procurement does purchasing, engineers do engineering …. and contract managers ‘do contracts’. But whereas people are clear about where they go when they have a legal issue or a question on pricing, it is not so clear when and if to involve a contract manager.  And it is this, I think, that lies at the heart of why so many continue to ask the question about our role.

There is no question that organizations need specialist professional groups, or access to external expert advisors. These experts provide counsel on critical aspects of business strategy and policy, and in some cases are the drivers of product or service innovation or business capability.  But no organization exists in isolation, so no matter how talented those experts may be, at some point their ideas and their policies must translate into tangible commitments and requirements that are intelligible to the market. And since those commitments and requirements are often complex and subject to change, they require expertise not only in their initial formation, but also during on-going oversight and management.

Contract management is a discipline that continues to grow and evolve. Rather like project management, it exists because interrelationships and interdependencies have become more complex. The nuances of commercial relationships today stretch far beyond the knowledge base of functional experts such as lawyers or finance managers. This is not to crtiticise those experts in any way – it is merely to point out that the roles are different. Just because vets are knowledgeable about animals, it does not mean that they are experts at farming. Yet certainly farmers depend for their success on the existence of vets.

The extent to which a business needs contract managers varies. In organizations that have market power, or in economies where the tradition is more relational, it is rare to find people with the title of contract or commercial manager.  But as I have explained in other blogs, many of those traditional factors are breafking down. The duration of competitive advantage continues to reduce; the extent to which relational economies are exposed to the external world continues to increase.

Contracts began as simple instruments to record needs, commitments and obligations. Over time, the nature of the relationships that organizations form has become steadily more complex and this has translated into long negotiations and the need for processes and people who can reconcile a multitude of viewpoints, capabilities, requirements and principles, to ensure that the parties understand what they will provide or receive and then to oversee performance.   

It seems probable that the need for contract management will continue to increase and the role of the contract manager will continue to evolve. Perhaps the most important aspect of this is the need for the contracts professional to ensure that others in the organization understand and appreciate the value they bring. Critically, this means they must focus on supporting and enabling others to be more self-sufficient in contract management – and they must absolutely avoid being seen as a control point or barrier to getting business done.