What is contract management?

Contract management is an interdisciplinary field where the contract manager optimizes the handling of the contract throughout the lifecycle with the help of a number of processes and activities in order to increase value and minimize loss. 

This work requires both technical, legal and business skills as well as abilities to communicate and collaborate across disciplins, organizational borders and different cultures. 

 

The main goal for contracts is to solve a business need. Many different parts of the organization participate in formulating this business need in the contract.

However, organizations often lack sufficient knowledge about the processes and activities that need to be carried out in order to harvest the benefits of the contract. Moreover, many also need to clarify how the different roles and responsibilities are to be allocated during the life cycle of the contract. This results in loss of value and increase the risk of tension, disagreement and conflict – internally as well as in the relationship between customer and supplier. 

Contract management is about optimizing the handling of contracts – from cradle to grave. Companies and organizations therefore have to master contract management in the same way they master procurement, project management and financial management.  

Being able to introduce contract management into an organization depends partly of the knowledge, competences and commitment of the individuals as well as on whether the corporate management and the organization can handle this as a team.

In order to solve this task, more and more organizations are choosing to hire or educate people with particular knowledge of contract management, often called contract managers. However, often the role as contract manager is fully or partially integrated into other job functions with contract-related activities, e.g. in the role as strategic procurement manager, project manager, tender consultant, bid-manager etc. Therefore, being a contract manager does not have to be in the job title but can be part of the function you perform. But what does it take to fulfil the role as a contract manager - by title and/or function?

The interdisciplinary role of the contract manager

Contracts include both economic, technical and legal aspects. As a good contract manager, you must be able to see and accommodate all of them during the planning phase as well as in the execution phase.

In addition to your professional skills, it also requires that you have analytical sense, good communicative skills, and the will and ability to familiarize yourself with "the professional worlds of the others". At the same time, you know that the organization is not full of robots, but people who need to be motivated and feel ownership of the contract. Therefore, your tasks are multiple when managing the contract towards its goals.

 

The business perspective 

Your business perspective must first and foremost be in place. As a contract manager, you see the contract as a tool to meet certain business goals.

What is the business case? What are the opportunities and risks? How is the business case translated into business goals and requirements that can be formulated in a contract? How can the market meet the organizations business needs? How do you write an adequate and precise tender material? How are the tender processes handled?

How can you, as an offeror, submit a competitive bid that appeals to the customer's business and strategic needs? How do you make yourself attractive as a customer so as many suppliers as possible will bid? How can you make a commercial review of the contract clauses, so they are suited for the market standards, capabilities and needs? How should evaluation criteria be developed and applied? How can negotiations of legal and commercial clauses be optimized? What key indicators show that we are on the right track? 

 

The legal perspective

Your legal perspective is always present. You ensure that everything is right and fair - from the bidding phase and the relevant rules in this regard, to allocation and contract preparation, as well as in the subsequent management of the contract. 

You know the basic legal rules about contracts and how to negotiate contracts and terms. You know about risk management and how to handle legal risks.You know how to draft and manage penalty clauses and which types of breach trigger compensation and the right to cancel the contract. 

You ensure that understanding and actions are corrected so that the contract is successful to the greatest extent possible - preferably before the legal rules on liabilties and conflicts becomes relevant!

You ensure that illegalities are avoided and risks are minimized while pursuing the opportunities that arise - e.g. in the context of change management. In other words, you don´t think law or business separately - you are thinking law and business combined!

 

The project manager

Lastly, the contract manager job also has a management function - as a contract manager it is also your job to manage all the relationships, practices and processes that surround the  draft and operation of a contract. You have the overview of the process and know who to involve and when. You are able to allocate the different roles accordingly, and also able to discuss the balance between pre-award, award and postaward activities of the contract manager - and this may vary depending of the organizational diagrammes and roles. You are also the one who handles conflicts along the way – within the organization as well as in the relationship between customer and supplier. Non-biased and neutral, based on facts. In these respects, your job function is very similar to that of a project manager - but with your focus on handling the contract and the legal and commercial issues.

What does a contract manager do?

A contract manager can be described as a "legal-commercial project manager" who aids the organization in involving all relevant business, project, technical and legal matters before the organization purchases or sells goods and services. When the contract is signed and is implemented and goes into operational mode on a daily basis in the organization, it is the contract manager's job to make sure that all this is followed up in the most optimal way.

Along the way, both strategic and tactical issues must be taken into account. This may be how contracts should support procurement strategies or how to tactically and operationally plan to implement the contract. 

In this way the contract manager helps the organization rowing like a team.

 

 

 

Main Contract management tasks:

There are a number of tasks that characterize the work with contract management - and in the role as contract manager:

1. The ability to understand the different phases of the contract, from demand clarification to bid phase, preparation and negotiation, to implementation and operation, and completion and acquisition of experience

2. Knowledge of the activities involved in the various phases and which stakeholders are involved 

3. Act as a link and focal point between the different parts of the organization and in the relationship with customers or suppliers 

4. Ability to understand and reconcile business, technical and economic thinking with legal thinking and project management 

5. Ability to act as both commercial and legal project manager for major procurement, supply and sales operations

6. Plan and negotiate – both internally and externally 

7. Implement the contract optimally in the organization, e.g. by arranging contract start-up meetings, ongoing status meetings, etc.

8. Continually facilitate and document relevant communication and update the contract

9. Plan and manage change management and conflict resolution

10. Explain which goals are pursued in contract management and report on status, crises and progress to management and business

11. Ensure that everything is done legally and according to internal rules and policies

12. Continuously inform and educate the organization in how it should manage contracts optimally

13. Work for open, trusting, non-biased and constructive cooperation between all parties

14. Implement the necessary software/IT systems that can support effective contract management and improve collaboration

15. Continually optimize processes, activities, contracts and communication internally as well as externally in relation to customers and suppliers

16. Ensure that the business has eventually acquired the necessary knowledge, competence and stability to manage contracts, so that good contract management becomes a regular routine.

17. Get better and better at determining and documenting the values ​​that are created by good contract management

You can read more about the various roles and activities in a number of guides from state authorities at home and abroad. These instructions are reviewed, among other things, on our CCM Practitioner training.

If you think it sounds like an extensive role to be a contract manager, we can reassure you: you do not need to be an expert in all areas, but you need to be able to gain the overview and assess when it is necessary to include other business areas and professions to reach the goals.

With a certification in Contract & Commercial Management, you will obtain the necessary knowledge for assessing a large amount of topics yourself but also learn when it is necessary to involve other areas of business or experts – e.g. concerning demand specifications, procurement rules, specialist legal knowledge and so on.  With this, you can contribute to minimizing the loss of value in contracts. 

 

What is the loss in value without best practice contract management?

Studies show that organizations can reduce the loss of value considerably if they introduce best practice contract management.

In the organizations where the maturity is lowest, up to 20% in value is lost. These are typically organizations where contract management takes place randomly and ad hoc, without any fixed approach to processes and activities, and with unclear goals, roles and responsibilities.

In the best organizations, this loss of value is reduced to 3%. It is not possible to completely avoid loss of value - e.g. due to unforeseen circumstances, changing business needs, etc. - but you can reduce it considerably if you introduce WorldCC's methods and tools. As an official WorldCC training partner, NSCCM has access to all the knowledge, methods and tools needed to optimize your contracts.

 

Being a contract manager isn’t always defined by your job title 

Today, there is a great diversity in the relationship between job title and function, and therefore you can easily exercise contract management on a daily basis without contract manager being your job title. You may be a strategic purchaser, tender consultant, tender lawyer, bid manager, procurement manager, IT contract manager, category manager, commercial manage, project manager, or office manager?

Sometimes it is also seen that different titles depend on the company's focus in the pre-award or post-award phase, or the practitioner’s educational background – for instance "Tender and Contract Manager, "Legal contract manager" or "Commercial manager". 

For example, at our most popular certification, CCM Practitioner, less than 50% of participants have a contract manager job title, while the other participants work with the discipline of contract management as an integral part of their job function. Many of our participants take the Certification in order to get ideas on how the clarify processes, roles and activities better and bring this knowledge back to management and the organization.

 

Expand and document your competencies with a CCM-certification 

At NSCCM, we offer certification programs and courses in contract management at several levels in Danish as well as in English: from the operational level with a focus on knowledge of processes, activities and tools, to the tactical and strategic level with focus on management, personal development and organizational development. However, on all levels of certifications, you learn how to integrate the strategic, tactical and operational level.

NSCCM is a training partner for World Commerce and Contracting (former IACCM) with more than 80.000 members in over 180 countries, and we have offered their certified courses from 2014 as modular classroom teaching. From 2018, NSCCM has also offered the CCM Practitioner in English, as the only provider of this in the Nordic region. You are welcome to contact us for further reference.

 

CCM Practitioner – English edition

CCM Practitioner English edition spans over one month with 4 intensive teaching days, ending with a multiple choice exam. 

CCM Practitioner is the first step in IACCM / World Commerce & Contracting’s flagship of certifications. This is the certification program is for candidates who already work with contract processes on a daily basis. You are typically in an active, responsible role, in cooperation with management. Read more about CCM Practitioner English edition.

The program will provide you with knowledge, skills and tools that will enable you to understand and apply the most important principles, tools and techniques of contract management from day one. 

Both you and your organization are better served if the people handling the contracts are properly dressed for the task. A certification documents your competences and guarantees that you know what you are doing. 

NSCCM has assembled an expert team of educators who have the latest knowledge in all three perspectives on CCM. Read more about our teaching team.

Teaching takes place: May 13.-14. and June 13.-14. 2024

Read more about the education here

 

Short courses i English                                              

Negotiate, Draft and Manage Contract in English

Learn to connect and integrate commercial, technical, and legal issues, e.g., how to optimally negotiate, draft and manage liquidated damages, limitations of liability and indemnification clauses. An interactive course designed for contract managers, bid manager etc. working e.g. in the energy sector, IT, pharmaceutical or construction industries.

April 29.-30. 2024

Read more about the course here  

 

Basic Contract Management - English edition

Contract Management is a complex puzzle in most organizations. During the course we will get into all the elements needed to perform contract lifecycle management, and how you create an overview of your own contract processes and activities.

You gain knowledge and methods and get to work interactively with specific tools to manage and improve contracts.

September 18.-19. 2024

Read more about the education here

 

Internal courses

We are happy to create internal courses that are tailored to your organization or department. This will help your organization implement contract management faster, better and more cost-effective.

If you are interested in an internal course, contact us at nsccm@nsccm.dk or call 70 20 01 31.

 

Do you know…

Companies that introduce contract management often get higher value on Stock exchanges? They are sold at a higher price, as the value and risks of the contracts are known exactly - buyers and investors therefore dare to pay more.

 

Do you want to know more? 

Maybe you are still considering questions like: What are the effects of contract management and how does it benefit my organization? Below you can see the answers to the most frequently asked questions.