Best Practices in Contract Management

Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • #292456

    This SIG member from the buy-side is currently looking into ways to better structure their organization to improve compliance, consistency, and overall quality of the contract management practices. They currently operate in a purely decentralized way, in which contracts are executed by a procurement individual and the management and administration of that contract is given to the business unit to assign as they see fit. The storage, retention, and even sharing of contract information between procurement and the business is often different or non-existent. Compliance is difficult to assess, and there are wild variations in how a contract is managed and to what level of diligence that is conducted – none of it based on any sort of logical segmentation. So needless to say, there is a process problem. 

    They are in a position where they may be able to make significant changes to their business structure and processes to improve our contract management in the organization. This member would like to hear from SIG members who are successful (or not!) to understand what is the current standard and to help set them up on the right path. 

    Will you please take a moment to respond?

    1. In your organization, where does contract management live?

    2. Are there dedicated/professional contract managers? And are they the procurement officer/staff who completed the procurement, negotiations etc. If not, is there any feedback loop to these individuals? 

    3. If there is a handoff to another individual or unit after contract execution, what does that handoff look like

    4. How does this set-up work for your organization (e.g. are there compliance issues?)

    5. Who is responsible for ensuring contract compliance, who is responsible for verifying deliverables?

    a. How is the contract administrator involved in the day-to-day of the project/purchase/etc.

    6. What were the challenges faced with this set-up?

    #294965
    Anonymous
    Guest

    1.In your organization, where does contract management live?  For Indirect Procurement it lives in the Procurement Department in collaboration with Legal.  Category Managers can manage their own contracts or engage with Legal to manage the contract.  For Direct Procurement it lives in the business units and with Legal. 

    2.Are there dedicated/professional contract managers? And are they the procurement officer/staff who completed the procurement, negotiations etc. If not, is there any feedback loop to these individuals?  There are contract managers in both Legal and Procurement and they do collaborate on contract negotiations.  Legal mainly focused on the legal terms and the Procurement category managers focused on the business terms.

    3.If there is a handoff to another individual or unit after contract execution, what does that handoff look like  In our case there is no handoff after execution.

    4.How does this set-up work for your organization (e.g. are there compliance issues?)  There are few compliance issues on the Indirect Procurement side.  Compliance issues are likely to occur on the Direct Procurement side. 

    5.Who is responsible for ensuring contract compliance, who is responsible for verifying deliverables?  Procurement Category Managers are responsible for compliance and verifying deliverables.

    1.How is the contract administrator involved in the day-to-day of the project/purchase/etc.  Currently we do not have a formal Contracts Admin.  That work is done by the Category Managers or Legal Contracts Managers.

    6.What were the challenges faced with this set-up?  Getting Category Managers trained up on the Contract Management tool, so they can manage their own contracts.  

     

    #294966
    Anonymous
    Guest

    1.In your organization, where does contract management live? 

    oThird party contracts were managed by the Procurement group. We had the contract management software and maintained the database.

    2.Are there dedicated/professional contract managers? And are they the procurement officer/staff who completed the procurement, negotiations etc. If not, is there any feedback loop to these individuals?

    oWe had contract reviewers within Procurement that were lawyers or paralegals. These reviewers worked closely with Legal to put a legal review process together. Certain things could be signed off at the reviewer level, while some had to go through official Legal review. The assigned Procurement resource owned the whole process end to end (RFx, negotiations, contracting, etc.) and they were expected to work with the contract reviewers during the contracting process.

    3.If there is a handoff to another individual or unit after contract execution, what does that handoff look like

    oDepending on the relationship, the contract would go to Procurement’s vendor management program or to the business. Larger relationships that  spanned multiple departments often resided with Procurement, whereas strategic single-department vendors went back to the business.

    4.How does this set-up work for your organization (e.g. are there compliance issues?)

    oThis set up worked well. There was no mandate to go through Procurement, but whenever the Legal team got any contract requests they directed them to Procurement so we had good visibility. Contract signers would often require Procurement review prior to signing, so that was another way we got visibility.

    5.Who is responsible for ensuring contract compliance, who is responsible for verifying deliverables?

    1.How is the contract administrator involved in the day-to-day of the project/purchase/etc.

    Each Procurement resource is responsible for compliance, but there is an approval process prior to execution to ensure the whole process was followed as a control mechanism. 

    6.What were the challenges faced with this set-up?

    oThe only real challenges were related to implementing the changes across the organization. 

     

    #294967

    We currently operate under a hybird model for Vendor Management. A central department exists for procurement with an enterprise view. Each business segment has it’s own Vendor Management Office, that understands the unique needs of their business. The two teams work together to procure new services/products as well as renew/terminate existing services/products. This model allows the centralized department to provide intelligence on the enterprise wide Vendor relationships without having to have an understanding on the uniqueness of each of our diversified businesses. 

    1. Contract management “lives” in the central department including accountability for negotiations. The business segment Vendor Management Office provides information on the specific business segment terms and conditions.

    2. Yes. Our Contract Manager report directly into the centralize department and for the most part are paralegals. The are authorized by our Legal Department to negotiation contracts on behalf of Legal for medium and low risk rated engagements.

    3. No really a hand-off. Both the Vendor Manager and the Contract Manager have access to the final versions of the contracts. They are stored in a centralized repository.

    4. This aligns with our regulatory responsibilities, therefore there is no issues.

    5. All day 2 activities (after the contract is signed) are the responsibility of the Vendor Manager in the Business Segment Vendor Management Office. This includes contract compliance, non-performance, and ongoing monitoring overall.

    a. They are not really involved. This is the responsibility of the Project Manager, and if an issue arises the Vendor Manager will become involved.

    6. I think it is a good model. The only caution is to make sure the 2 individuals are talking regularly while an engagement is in flight. You can not expect that you can just “throw it over the wall, and get a response.” Collaboration is the key to success. 

     

    #294968

    Thank you Michele!

Viewing 5 posts - 1 through 5 (of 5 total)
  • You must be logged in to reply to this topic.