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Contract & Commercial Management: some questions need to be answered

January 28, 2015

Continuing this week’s theme of the ‘big issues’ facing contract and commercial management, Martin Loenstrup made a comment that included a number of questions he rightly suggests must be answered.

So in today’s blog, I will provide my thoughts on those questions.

– will compliance play a role in justifying Contract Management in 2015? I think compliance is always a key part of the role of any robust risk management regime. However, the real issue in my mind is the extent to which contracts / commercial professionals are simply monitoring compliance, versus evaluating the consequences of non-compliance and making or assisting in judgments over this. Some professionals see their role as being about the management of deviations or exceptions from the standard; some even see that role at a strategic level, as the champions of the evolving policies on which compliance standards are based. This is a very wide spectrum of difference, ranging from the high value strategic role in managing change to a low value administrative role in preventing exceptions.

– is the collaborative approach just a highflying ideology or just still ahead of time? It is happening, whether or not contracts staff care to acknowledge it. Again, do we simply dismiss this trend and say we have heard it all before, or do we take the time to understand it and help the business appreciate how it can occur? We go back to my earlier comment – are we strategic enablers, or administrators?

– is contract/commercial management yet another definition of similar roles depending on industry and geography? These terms are unfortunately confused because they do vary significantly in their role and meaning depending on geography and industry, even by company. But the scale of those differences tends to be exaggerated, because it often serves people’s interests to position themselves as ‘different’. However, from the perspective of professional status, greater consistency is critical and that has been – and remains – core to IACCM’s purpose and achievements. We perhaps confuse core methods and techniques and code of practice (which are core to any profession) with the issue of specialist knowledge (which varies by job role). However, right now, we are observing a growing divide between the typical commercial role (broader, more about business judgment) and contract management role (more transactional, oversight of specific deals).

– should Contract Management be located as a separate department in the organization or is this actually a limiting factor? The answer depends very much on purpose. Clearly, if the role is administrative, it can be anywhere. If the focus is on adding value, the extent of that value will be constrained by organizational reporting line. Our research points quite clearly to the impact of reporting line on the quality and value of output.

– is the new trend of Contract Management certifications worth the money or do we need a global standard to avoid individual and varying quality? We have a global standard – that is what IACCM brought to the world. In this age of globalization, most professions are trying to move towards global standards. Contract and commercial management was possibly the first ‘profession’ to have such a standard. It is therefore ironic that we are seeing emergence of ‘local’ variants which threaten to undermine the status and standing of contracts and commercial practitioners by once again raising questions over what they do, what they know, whether they have meaningful qualifications. Many times, the providers of these certificates are opportunistic,, for-profit organizations, riding on the back of the work that has been done to raise the profile of this field of practice. However, others have a valuable contribution to make in bringing new ideas, new methods and local availability of training. IACCM’s approach is to collaborate with such organizations, to maintain a global certification standard but to support the availability of local delivery.

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