ContractManagement

ContractManagement

It keeps many organizations busy: there is a contract, but it goes wrong in the execution. Many contracts do not deliver organizations what they had expected from it. Purchasing takes values ​​such as low cost, value creation, efficiency, legality or risk management, but the organization does not get these values. Many contract relationships begin promising but end in a disappointment. Thereby much economic value is being lost and organizations face major risks, including in the area of ​​compliance and legitimacy. In the Netherlands it is not managed much better than in other countries: only half of the contracts there is any form of management and the other half of those cases there is solely measuring of results. Three-quarters of the contracts is not adequately managed at runtime. Many contracts do not deliver on what they had expected. Contract management is the preventing of the ‘leakage’ value from the contract. It is part of a chain: procurement is about value, after which the contract must be implemented and managed, finally follows supplier development. Important to realize is that there is no standard formula for contract management. An organization that wants to set up better contracts, will have to oversee the entire playing field and organize processes so that they fit within the context in which it operates.