Contract management:Team leader

The role of the contract manager described in last month's article clearly requires a wide range of skills and understanding. The contract manager will be involved closely with the requirements of not only users and suppliers, but also all other departments of his/her organisation and the market generally. One can summarise the skills needed under three broad headings.

Team skills
No one person can effectively manage the contract process without the help of colleagues. The contract manager must be capable of building the team, developing and maintaining its confidence, interdependence and trust. The team must include the contractor.

Procurement skills
A contract manager must understand good procurement practice which includes:

• contract terms and conditions
• contract and specification writing
• tendering processes as well as good negotiating skills and market knowledge.

Business skills
These take procurement skills a stage further and cover:

• skills in judging business needs
• knowledge of service providers, products, services and skills
• knowledge of market place and trends
• knowledge of commercial techniques, eg risk assessment, financial appraisal
• knowledge of how and why service providers can achieve what they claim
• assessing service provider competence Uniting all three of these skill areas is the need for excellent communications skills.

  Contract communications
  The model communications set-up is simple, clean and effective. This envisages all communication between client and contractor being routed through the respective contract managers. The reality of contract life is that the model is seldom adhered to. Therefore, the contract manager must be on top of what is happening.

  The contract manager must be the focal point of all communication, even if it does not all go through him or her. It is this focal role that enables the contract manager to maximise his/her added value to the contract process.

  There will be few, if any, people in any organisation who possess sufficient breadth and depth across all these skills areas. Any deficiency can be countered by identifying those who have recognisable ability in one or more of the areas and provide the training to graft on the missing elements and/or supplement those skills with professional and expert support.

  The manager must possess, or be able to direct in others, the skills of analysis, communication, negotiation, motivation and leadership and innovation. Finally, the contract manager must be able to pull together and command that range of skills and knowledge with determination and mental toughness.

  The key is to achieve effective rather than efficient contracting; there is nothing inherently wrong with being efficient, but it is not enough. Doing the right things is much more important than doing things in the right way; outcomes are generally more important than process; users must be fully involved. Risk must be managed and eliminated wherever possible, but this is often more easily achieved by seeking to maximise opportunity.

  Contract relationships
  Recent years have seen a marked and increasing trend towards closer, longer lasting relationships between buyers and suppliers. This has come about as a result of the recognition that everyday services can have a major impact on the effectiveness of an organisation, in terms of both its image and its performance. Earlier emphasis on the cost and nothing but the cost has begun to diminish while that on the quality of the service has grown. Attention has shifted from 'win-lose' contracting to 'win-win'.

  Compare and contrast the traditional and the new approaches; the move from the adversarial relationship to co-operative venture; from lowest price to best value for money; from complexity to simplicity; from short-term sealed bid competition to longer term renegotiable contracts. Take note of the new emphasis on winning all round, in which it is recognised that the best contracts reflect the mutual and genuine desire that both parties should continue to benefit and that the experience of the contract throughout its term should lead positively towards its renewal.

  This new emphasis on partnership does not, however, mean that contracts are any less toughly fought and managed. Neither does it in any way reduce the task and the role of the contract manager. Indeed, the emphasis on good, clear, decisive contract management increases in order that the 'new relationship' does not cloud the minds of the parties into forgetting that it is still a business relationship.

  Partnership must be made to work
  The easiest trap into which contracting parties can fall is that of thinking that partnership makes life easier and, because the relationship is one of warmth and closeness, it will look after itself. Partnership makes no difference at all to the fundamental contractual relationship of buyer and seller; it merely shifts emphasis and partnership must be made to work.

  There must be a new openness between the parties; trust and commitment must come to the fore with shared assumptions and goals, non-confrontational attitudes, negotiated agreements and incentives to achievement. Both parties must look to increase profitability, share risks, innovate and enhance security. They must share information and knowledge; understand each other's business needs, objectives and culture; set up joint teams and arrange common processes in order to maximise the benefit to be derived from the distinctive competencies they have in terms of physical assets, specialised knowledge and skills.

  Partnership will not be effective without a clearly defined contract with practical performance monitoring, measurement as well ass administration. Everyone involved in the contract process and the provision and receipt of the service must have role clarity and understand their responsibilities, their authority and the limitations on each.

  The value of effective contract management
  The contract manager is the point at which the relationship between buyer and seller is maintained and developed; at which end user requirements are managed and co-ordinated; at which monitoring and measurement results come together; where problems are anticipated, identified and where solutions are prepared, worked out and implemented; where advantageous change is sought, analysed and implemented and where variations to the contract requirements are managed and controlled.

  The measure of effectiveness of the contract management is the presence of the main indicators of either success or failure; whether mutual dependency is acknowledged or denied; whether there are joint teams or opposite sides; whether there is trust or suspicion; whether the relationship is co-operative or at arm's length; whether solutions are sought or blame attributed as the first reaction to a problem; whether the contracts are flexible and innovative or rigid and unyielding.