Best Practice Contract Management

Best Practice Contract Management
The Client: Commonwealth Government Agency

Are you on track to improve outcomes and reduce risk?

Earlier this year we released 10 Questions to Assess Contract Management Capability – an introductory tool to help organisations understand their existing capabilities in contract management.

Confident in their procurement practices, our client wanted to understand whether or not solid procurement practices led to longer term, value for money outcomes after the award of the contract. Our client wanted to know more about their organisation’s contract management practices and capabilities compared with better practice.

Better practice organisations are recognising the value of tracking outcomes of procurement decisions over the longer term

What was considered best value for money or the right decision at the conclusion of a procurement process might not remain true two, three or five years on. As we know, organisations are changing more rapidly than ever. If the needs of the organisation aren’t proactively and continuously reviewed, risks arise in relation to whether or not the supplier relationships created remain appropriate for the changing organisation in the years to come.

Existing practices versus best practice

To assess our client’s existing contract management practices, Grosvenor tailored a better practice comparator tool. We worked with our client to identify a suitable sample of contracts for assessment, collected relevant documentation and interviewed stakeholders. Following this data collection phase, we populated the tool. This involves answering subsets of questions under five key elements of contract management, and allocating a score against each question.

A sample output from the tool, along with the scoring scale, is illustrated below:

For the comparative task, we not only conducted an aggregate assessment of the results across the individual contracts within the sample, but using our own IP and previous experience conducting reviews for similar clients, we identified the Best Practice score and an industry better practice score (Better Practice PS).

Improving outcomes and reducing risk

This assessment enabled Grosvenor to identify clear strengths within the organisation’s contract management practices, as well as highly-targeted opportunities for improvement. The result for our client was a clear pathway for improvement, armed with practical recommendations to improve longer term contracting outcomes across the organisation.