Contract Value Leakage: How Do You Compare?

Contract value leakage – the amount by which contracts under-perform against potential – is highly variable. It depends on which industry, what type of contract and on market factors that may lie outside your control. But even allowing for these factors, there are big differences between similar companies – and that is indicative of factors that can be controlled.

Back in 2012, IACCM research indicated average value erosion of 9.15%. Subsequent studies – by IACCM and others – have largely endorsed that number, though recently I have conducted a number of interviews that suggest things may be improving.

Taking the mystery out of value leakage

Building from those conversations, IACCM (now World Commerce & Contracting) is conducting a survey to pinpoint the continuing causes of value loss and to analyze these by industry and type of contract. The report will provide participants with useful insights against which they will be better able to assess and benchmark their performance against industry peers.

For many organizations, revenue improvement and cost reduction are at the top of the agenda. Improved understanding of value leakage and how it can be stemmed is therefore a critical issue to commercial and procurement teams. The World Commerce & Contracting study will provide an invaluable backdrop to internal review and the development of improvement plans.

With less than 8% of organizations ranking their contracting processes as ‘excellent’, there is clearly plenty of opportunity for improvement. Start your discovery by taking the survey here!