Contract Management – Building the Business Case, part 3

The wait is over! Part 3 of “Building the Business Case for Contract Management” is now available, with thanks to sponsors BravoSolution. That means you can download and study all three papers in the series – which together give a guide to how procurement people can take some ownership for contract management and persuade their colleagues to invest in resource, tools or training to support improved performance in this vital area.

In this final part, we look at the risk management element of contract management. That can often be even more persuasive then at the ”opportunity” side of things (discussed in paper 2). It’s a sad fact that contract management often only gets priority after the horse has bolted (who mentioned horses?)  Effort is put in after a supplier causes major operational failure, or evidence of fraud is discovered, or there’s a realisation that a supplier has ripped us off for years, or horsemeat is discovered in our burgers...

Risks arising from poor contract management can be commercial. operational, reputational or strategic. But effective contract management can mitigate and reduce those risks considerably. Making that point as part of the business case is key – and if you can come up with some real life examples to support that, even better.

We also touch in the paper on using numerical methods for estimating the cost of risk and therefore the value of managing it. Looking at expected outcomes and probabilities can give additional credibility to that business case, and justify the right investment.

Across the three papers, we’re not making the case for procurement to own every aspect around management of every contract in the organisation. But going back to the first paper – if we don’t take some over-arching ownership of the contract management process, who will? We need to define how procurement can take that lead, and ensuring that the organisation has the right tools and skills to manage key contracts is part of that role. Hence the need for investment, and therefore the need for a compelling business case.

Anyway, you can download the paper now, free on registration (and the two previous installments of course),here from the BravoSolution website.

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