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The declining role of contract managers

April 16, 2013

I frequently write about the growing importance of contract management as a business discipline. There is extensive evidence to support this, including IACCM’s recent interviews with 50 of the Global 250 corporations.

But growing importance for the discipline does not automatically translate into growing importance for the function or the individual practitioner. Indeed, the growing spotlight simply serves to illuminate the weaknesses in the current practitioner community, whether lawyers or contract managers. This leads to alternative models for the delivery of contract management services.

I am going to briefly answer three questions:

  1. What is happening?
  2. Why is it happening?
  3. What should the current contract management community be doing about it?

What is happening? I see two big trends. One is that companies from emerging markets are investing heavily in technologies that support more automated approaches and also ensure portfolio analysis as methods to oversee and ensure commitment management and performance. In longer established companies and those where the focus is strongly on high value projects, the project management community is showing far more leadership in addressing contract and commercial issues. Project management training and focus increasingly includes a strong commercial focus and there is far more openness to innovation in contracting.

Why is it happening? Quite simply because the incumbent legal and contracts community is too slow and resistant to change. They appear far happier to continue fixing problems as they arise rather than looking for permanent cures. Top management and our colleagues in functions like project management increasingly see us as part of the problem rather than offering a solution. Business cannot afford the costs or delays inherent to a function that is reluctant to innovate, to drive quality and to contribute clear value.

What should the current contract management community be doing about it? Focus on corporate goals and be rigorous in contributing to them. Everything around us is changing, yet we appear resistant to the research and analysis that is now the order of the day. Indeed, contract managers rarely look for a research-based approach to their work. They do not think in terms of data analysis or look to eliminate repetitive activities. In many cases, they push back on the idea that technology could transform what they do and how they do it.

If I sound frustrated, it is because I am. I see a community – buy-side and sell-side – that could be delivering so much value and securing its position as a strategic enabler of the business. But in general, it is not. The groups that are interested in change and improvement are the client groups, like project management. They are the ones who want to discuss new contracting models, ideas such as relational contracting, the impact of terms and term selection on behaviors, the economic impact of improved contract management ….

The position is not irreversible, but it is time for the existing contract management community to wake up to the challenge and opportunity that is currently passing it by.

 

4 Comments
  1. One may indeed see the role of contract managER declining but at the same time see the role of contract managEMENT growing fast. This is not only due to automation. In my view contract (lifecycle) management is an essential part of a great number of roles (proposal manager, bid manager, commercial manager, project manager, program manager, contract negotiator, contract administrator, quality manager, record manager, compliance manager etc. etc.). Of all these roles ‘contract manager’ seems to be the least well-defined (see discussions in IACCM LinkedIn group etc.). One might argue that in many instances there is no need in having a separate ‘contract manager’!

  2. Fanele Sicwetsha permalink

    i could not agree more with this input colleagues. in the South African Contracting environment, i think as from around the year 2006, we saw a growing trend where Contract Management was the buzz word, in the puclic sector for instance, we saw many contract management units eremeging in a number of organizations up to the point where provincial contract management forums were being created.

    sadly though, the hype seems to have died down largely because of what is being said here. i think i must point out that our resistance to change and adopt to evolving business requirements does indeed cause our colleagues to view us as stumbling blocks rather than critical business enablers, we need to arrest this situation urgently as contract managers if we are to continue to play a critical role in assisting our organizations to achieve their business goals through prudent contract management. it is no all doom and gloom though, because the need still exists, the Auditor General’s annual findings say it all. so let us be encouraged and adapt and ready to mitigate the operational and regulative risks that are confered on organizations by the contracting process.

    Kind Regards

  3. Kim Teron permalink

    Tim, I think your observations are bang on here. I’ve seen the same thing with procurement practitioners. I’ve worked in legal offices and find that what you say is generally true of lawyers’ offices as well as they are avoided as much as possible and when needed are seen as a necessary evil. They are not known to be quick, generally. I think this is the key – being quick. Cycle time is incredibly important to the value proposition. The other key is understanding and taking into proper perspective: risk. Contract managers can be too heavy-handed (or perceived as such) and can harm the relationship necessary to operational client groups. Contract managers need to be very keen listeners to the needs of their clients but this is a two-way street, in that contract managers should also be educators too. Negotiating and managing contracts can be a disruptive and creative process. Not all clients are up to this either so it is up to contracts managers to be able to assess these situations and provide a thoughtful approach to each client’s needs.

  4. Amit Kapoor permalink

    Tim – Appreciate your courage in bringing this matter to the surface. I have always felt that proximity of the Contracts Management community to the project / business drivers that necessitated the contract in the first place is low. Simple things like being on weekly project management calls to see what is happening or expected to happen as regards delivery or direction of the project is not done / considered as not required. The proximity of the contracts management function is higher towards legal and the sponsoring group. I agree that the project management function has the ability to deal with contractual matters – however I doubt if that is the first thing they think about. What contract management can offer by early involvement at the operational end of the project is being able to articulate or position contractual implications / opportunities at an early stage influencing the decisions on the ground, rather than allowing it to be discovered as an afterthought that has to be worked around with, by some other function. That way you could nip this problem in the bud. It is true for almost every function that in its absence, people will find a way to deal with function. After all, contracts management isn’t rocket science.

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