For many years I have advised non-specialists and non-lawyers, for example project managers and even CEOs, on what contract management is all about. With my background in sales, sales management and general and senior management I have always started with the contradiction – or at least paradox – at the heart of contract management which is that if you ever have to refer to the contract with a client or with a supplier, you know that the relationship is broken. If the relationship between supplier and client is in tatters, whoever has been managing the contract has failed.
I therefore see the aim of contract management as preserving that crucial relationship between supplier and customer, and while this strikes many people as missing the point, I always go back to the fact that acquiring a new customer or, from the other point of view, changing an important supplier, is extremely costly and will never reward anyone, and that it is in everyone’s interest that the contract is fulfilled in the best way possible. Once I have made this point and seen that it is understood, the next steps are usually straightforward.
Yes, the contract is there to determine what is going to be supplied, in what time frames, to what quality standards and to what budget, but contract management as distinct from the contract, has that over-arching aim of never allowing contract management to dictate what those outcomes are. For both sides, a failed contract is usually a disaster.
Obviously I meet a good deal of resistance to this rather stark view of what the aim of contract management is, but usually even those who disagree with me do come to recognise that there is at least some value in this perspective. It is not for nothing that I also point out that the response to issues arising in delivering a contract will determine how successful a contract manager is. If the outcome of a real issue arising is that the person responsible calls an internal meeting, that is a negative response – and generally one that project managers rely on. If the outcome of a real issue arising is that the person responsible calls for a meeting with the other party, that is a positive response – and generally one that people with a sales background rely on. Between those two perspectives is a major insight into how to deal with contract management.
Obviously I do focus on the mechanics of contract management, including how to read a contract, what the technical terms are, how to interpret the relationship between clauses, the use of specific language and which words are important. I point people to look at the termination clause or clauses first. It is important to understand concepts like severability or to understand why indemnities are always attractive to lawyers but are the devil’s own work in real life. I advise people to know the contract inside out but to wear their knowledge and learning lightly. It is important to do the basics, but always think of the outcome you want to achieve. There is plenty of good advice available free on the web, but some twenty years of wrestling with these issues is condensed in my book, Contract Management for Non-Specialists, and you might find a glance at this short book helpful.