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Contract management is NOT a sub-set of Procurement

November 22, 2015

It’s not uncommon for business functions to lay claim to ownership or proficiency in another domain – but that doesn’t make it right.

In the case of contract management, the procurement, legal and project management functions are among those who assert it is ‘theirs’, that it is in some way a sub-set of what they do. That is, they make that claim until things go wrong – at which point it conveniently becomes someone else’s fault.

i am making these observations because people frequently question whether contract management is a discipline in its own right. They do not immediately register its importance for each party in a trading relationship, its role in ensuring benefits are realised and obligations are fulfilled. Quite obviously, it is not about Procurement – it is about establishing an effective relationship under the right terms and then overseeing their performance – and that requires a contract manager within the customer and a contract manager within the supplier.

it is of course quite possible that this contract management role can be a sub-set of another job – such delegation occurs in many areas of business organization. The problem comes when those with a delegated authority fail to realise the limits of their knowledge and expertise.

It is attitudes and behaviours like this that cause so many contracts to go wrong or to under-perform. No one has ever prevented any of these functions building proficiency – indeed, I have personally made many efforts to rouse their interest. The fact is, contract management is not core to their perceived purpose or expertise. They mostly want to own it, rather than actually do it – because in reality, contract management today is a complicated field, requiring the sort of skills and knowledge that is not taught in the law, supply management or project management syllabus. And that is why contract management has become a discipline in its own right, with its own body of knowledge, tools and methods.

I am not suggesting that practitioners in law, procurement or project management know nothing about contract management, nor that they should have no role in it. They should simply appreciate that just because they know something about the subject does not make them an expert – any more than a contract manager (who is trained in aspects of their role) is expert in their disciplines.

Contract management aggregates across many specialist fields and interests and, in a sense, is a servant to all of them. One reason it is being claimed by these different groups is because, unlike many of them, it is less threatened by new technologies and job losses. It will therefore continue to be an attractive career path in its own right – and not simply a sub-set of another discipline.

For anyone wanting to pursue this path, IACCM offers a globally recognized portfolio of training programs and certification, backed up by extensive research and continuing professional development programs. They are available worldwide.

 

 

 

3 Comments
  1. John Jorgensen permalink

    …procurement AND sales need to ensure that they get the implementation right in the contract structure, thereby optimising the chances of success in the trading relationship, and minimising the degree to which contract management becomes an ‘issue’ in the way described, particularly ownership. To that degree, as part of negotiations, lifecycle management and relationship management, contract management is absolutely a component of procurement skill-set…..I can see a Venn diagram coming….

  2. Or, as one academic recently observed, is procurement becoming a sub-component of contract management? As you highlight, it is the success of the trading relationship that matters – and that is a lifecycle activity, covered by the contract. Procurement is a phase in this lifecycle.

  3. Richard Patterson permalink

    With a half decent contract, contract management is and must be a lot closer to project management that ‘procurement’. If that is not the case, then look at better standard form contracts! Of course, though, a key part of contract management may well be the procurement (and contract management) of subcontracts!

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