Contract Management – Building the Business Case (part 2): Identifying Opportunities

Part two of our three part series,  “Building a Business Case for Contract Management” (sponsored by BravoSolution) is now available here. It’s titled “realising value opportunities though effective contract management”.  The first paper looked at the overview of the topic – this one focuses on the value side of the contract management equation.

Most procurement people know that contract management is important, and most will acknowledge that their own organisation could do it better. But this has been the case for years – why have so many struggled to make real improvements?

Well, improvement needs investment in most cases. Whether it is additional resource needed, tools and solutions like specialist software, or training and development of existing staff, it does need funding. So the general understanding that there are improvement opportunities needs to be translated into a hard business case, that can get investment funding out of the most recalcitrant Finance person!

In this series, we’re therefore aiming to help you make that case. And in this, the second of the three papers, we’re looking at the core of the business case – the opportunities that can be realised through effective contract management. In the third paper, available after the summer, we will look at the risks that can be better managed through improving performance in this area.

So here’s an extract from this new paper, where we look at the difference between making general and specific business case points.

“The business case may be at either a general level or for a particular contract. At a general level, the Procurement Director or other executive may be making the case for an organisational-wide investment in contract management, perhaps structured as  a major project or perhaps as part of a wider procurement transformation programme. Or it may be that the business case is focused on one specific contract - how do we justify putting resource into managing a new outsourcing contract, for instance.

Clearly, the opportunities identified can be much more specific in the latter case. Harder numbers may be available, or quite detailed examples can be provided, showing where the contract management activity will be focused and what the direct deliverables and benefits might be from that contract.

If it is a wider programme and investment that is being sought, the opportunities may be expressed more generally, although it may still be possible and useful to highlight some direct examples of contracts where benefits are predicted.

Inevitably, our descriptions and suggestions here will be reasonably general. So if you are applying them to a specific contract or set of contracts, then bear in mind the advantages of making that business case as specific as possible”.

And we'll have another extract next week.

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