At last... the missing contracts
A common theme seems to be the disconnect between procurement experts who negotiate the contract, and the technical people who manage its performance. Contracts are signed, put in the bottom drawer, and never looked at again. The article cites one example where a London based financial services company was overcharged £15 million over 12 months because it failed to reconcile invoices against the negotiated terms of the contract.
With quotes and examples from o2, British Airways, Novell, Eli Lilly, Adecco, HM Prison Service and University College London, there's an interesting mix of ideas for improving contract management.
1 comment:
Just found your site. Very interesting article. I wonder if corporations have really quantified the cost of a lapse in contract management. Not being able to find the contract is symptomatic of a loss of due diligence and lack of a disciplined process development. Of the 5 major organizations that I have worked for during my career,only one, the US Government could retrieve up to 90% of the contracts. Other organizations were either lax in their administration, did not have an authority policy, and there was maverick contracting actions outside the policy guidelines. The latter organizations are real, "shootimup'cultures with nondelegated employees making deals on the side and are a nightmare for attorneys, procurement personnel, and contract managers. The proliferation of multiple contracts with the same vendor in an organization is rampant and leads to inconsistent contract management of the vendor across the enterprise.
SOX only intensifies the necessity of good contract management. How many money is flushed down the corporate sewer for lack of not being able maintain the contract.
The next big organizational mantra of continuous improvement...Contract Management. This is a job for the CEO on down.
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