What is contract management?

Contract Management is an interdisciplinary field that requires both professional, social and communicative skills. 

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

However, organizations often lack knowledge about the processes and activities that need to be carried out in order to get the best benefit 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 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 have to master procurement, project management and financial management.  

Being able to introduce contract management into an organization depends on two things. Partly on the individual'sknowledge, competences and commitment and partly on whether management and organization can handle this as a team.

In order to solve this task, more and more organizations are choosing people with particular knowledge of contract management, often called contract managers. We also see that the contract manager role is fully or partially integrated into other job functions with contract-related activities, e.g. in the role of strategic purchasing, project manager, procurement 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?

 

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´s also required that you have analytical sense, good communicative skills, and the will and ability to familiarize 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 steering 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? 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 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 inspection of the contract clauses, so they are suited to the market, capabilities and needs? How should evaluation criteria be developed and applied? What key indicators show that we are on the right track? 

 

The legal perspective

Your legal perspective is always present – whether or not you have a formal legal education background. 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 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 are combining law and business.  

 

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 genesis and operation of a contract. You have an overview of the process and know who to involve when. The often fragmented processes surrounding contracts must be reconciled. You are also the one who handles conflicts along the way – within the organization as well as in the relationship between customer and supplier. In these respects, your job function is very similar to that of a project manager.

 

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 handled on a daily basis in the organization, it is the contract manager's job to make sure that all this is followed up.

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. 

 

Contract management tasks:

There are a number of tasks that characterize the work with contract management: 

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 

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. Plan and manage change management and conflict resolution

 8. Optimize processes, activities, contracts and communication internally as well as externally in relation to customers and suppliers

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.  

 

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 it being included in 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 or the practitioner’s educational background – for instance "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. 

 

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.

NSCCM is a training partner with World Commerce and Contracting/IACCM with ore than 70.000 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, the only provider of this in the Nordic region. 

 

CCM Practitioner – English fast track

CCM Practitioner English Fast Track 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 English CCM English Fast Track Practitioner.

The certification program will provide you with knowledge, skills and tools that will enable you to understand and apply the most important principles 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.

 

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. 

 

Did you know that…

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 - therefore buyers and investors dare to pay more.