Ten Steps To Drive Greater Value From Your Contracts

Many will be familiar with IACCM’s work to identify the scale of value leakage from contracts and to identify the major causes for loss. Unless you work in the Construction and Engineering sector, you may not be aware of similar work undertaken by international consultancy EC Harris.

At this week’s IACCM Asia Conference, Mike Allen (Partner and Regional Lead at EC Harris) presented ‘Global Disputes by the Numbers – and Contracting’s Role in Avoidance’. To an even greater extent than IACCM’s research, Mike’s work has pointed at weaknesses in contract management lying at the heart of most disputes – and therefore highlighting that improvements in contracting competence can potentially yield a rich return.

In concluding his presentation, Mike talked about a number of the improvements he is observing among market leaders. These reflected many of IACCM’s conclusions and I thought I would consolidate to produce a ‘Top Ten’ – steps to be taken to reduce the scale of value loss through better contract management.

1. Standardize your contracts
2. Simplify terminology
3. Ensure rigor in review
4. Capture data and knowledge
5. Ensure broad availability of lessons learned and good practice
6. Design a process that involves the right people at the right time
7. Develop trained contract managers rewarded for discovering and using best practice techniques
8. Encourage collaboration and knowledge sharing – internal and external
9. Integrate ‘contract’ and ‘relationship’
10. Understand your counter-party – their approach and competence at contracting