A distinct and respected specialism
“The root cause of the weaknesses in contract management is failure over many years to establish contract management as a distinct and respected specialism with a strong ethos and well-defined responsibilities. Our accompanying report confirms this to be the position across government. Contract management roles have carried lower status and profile than posts on major policy development or projects, and in procurement teams. We consider this a dangerous position for outsourced services.”
This is another extract from the recent report by the UK National Audit Office on Government contracting. The comment could equally be made of most private sector companies.
Many may look at this statement and ask ‘so what?’ They would challenge the idea that ‘weaknesses in contract management’ are dangerous. ‘Show me the evidence’, they demand. And of course, historically they have been safe because the weaknesses ensure there is no data and the lack of data ensures the weaknesses continue.
But the world is waking up. Driven by the work undertaken by IACCM, there is growing realization that poor contract management carries a heavy economic cost. This may be due to lost revenues, lost savings or cost overruns – and cumulatively, it represents a lot of money. Austerity programs seem to be creating Government interest and awareness of this potential far faster than in most commercial sector organizations.
It is frustrating now that we have the data that action is not occurring faster. But it comes back to this issue of weakness and the consequent skills. Low status groups do not attract powerful or strategic leaders. Therefore we lack any bottom-up drive for executive awareness. Many of today’s contract management groups are embedded in other functions that have little interest in raising the profile of this activity or of the people who perform it. They lack the motivation, the budget or the remit.
So progress is slow, but it is happening. And reports like this from the NAO will certainly accelerate that interest.
For me, the big point is contained elsewhere in the NAO report and that is distinguishing contract management as a practice and function from contract management as a capability or competence. Many people are involved in performing a contract management role; relatively few need to be practitioners. My interest – and indeed the interest of IACCM – is in assisting organizations to define and implement that overall capability and competence. This is about far more than simply training a few people to be contract managers; it is about creating a leadership team accountable for ensuring the economic results that good contracting can deliver.