Putting the right effort into contract management

We wrote last week about salaries in government procurement and contract management roles, and one of our readers made a very interesting comment that I thought it worth exploring further.

‘October’ (I’m thinking that’s not their real name...) said this.

In my experience within the public sector it is not an issue of a lack of pay. I have seen contract administrators who are on a low scale successfully run large contracts and I have seen well paid contract managers doing very little. I think it is generally more to do with a lack of investment in dedicated resources. It is not unusual to find a large contract being managed as part of someone’s job, with the main focus of the job role being elsewhere. This is clearly madness -  however I think we as procurement professionals need to sell the benefits of cost avoidance due to strong contract management to our senior teams. This is not easy, as they tend to see any investment as an increase in expenditure.

This really struck a chord. Way back in 2008 when I did some work with National Audit Office on contract management in government, we certainly identified both capability AND capacity as issues. And  October is quite right - there are some very capable people even at junior levels in the public sector. But too often, contract management isn’t seen as a ‘real’ role and is tacked on to the  day job, as it were.

I may have told this story before as well, but I was involved in a very major government project where we were paying around £1 million A WEEK to a professional services supplier. My first thought on getting involved was obviously to talk to the contract manager.

But there wasn't one. Because the parent department of this organisation “didn’t think it justified the cost”.  That was a cost potential of perhaps £1,000 a week for a mid level person to manage a £1,000,000 a week. (Just a few regular checks on expenses and timesheets quite honestly saved many times the cost, once we did get someone in place).

But some of this does come back to the fundamental problems we’ve had in the procurement profession in terms of defining the real value around contract management (true as well when we move into more strategic supplier relationship management as well, but that’s another matter).  It is often hard to show what good contract management is achieving.

Perhaps we need a bit more naming and shaming? If anyone knows  of a major public sector contract that isn’t getting the contract management resource applied to it that it deserves and needs, let me know and we can at least draw attention to it. (Strictest confidence guaranteed of course).

Anyway, the purpose of this post wasn’t to promote our Papers, but we did publish a three part series last year entitled “Building the business case for contract management”, which you can download here, and might prove useful if you are in that situation of needing to convince colleagues of the merits of doing this properly.

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