The 3 Maturity Levels of Commercial Contract Management

15 octobre 2016
Contract Management - Construction
start of a race
Maturity Levels of Commercial Contract Management

Did you ever consider how to measure a company’s Commercial Contract Management efficiency?

We consider that 3 maturity levels apply, and those are measurable.

Commercial Contract Management Maturity – The 3 Levels

Level I – “Implemented, … without escort

Typical Description

Commercial Contract Management is handled with either a strong administrative or a legal orientation, or also by Project Managers, but without the transversal Commercial Contract Management competencies.

Consequences

Commercial Contract Manager is often perceived as a ‘business killer’ or ‘inappropriate’ in the subject matters, and consequently avoided by most internal stake holders.

Level II – “Implemented, enforced, … and imposing

Typical Description

Contract changes, procurement and sales contracts are under control, and lead to average financial success.

Consequences

Commercial Contract Management is well accepted by most internal stake holders, but Clients, partners, subcontractors and providers find it difficult, or are reluctant, working with the company.

Level III – “Implemented, enforced and collaborative

Typical Description

Commercial Contract Management is improving collaboration and efficiency internally, through its solution oriented and transversal value add approach.

Consequences

Less conflicts, faster deal closing, more successful delivery of contracts, improved efficiency, and Commercial Contract Management are valued by most internal and external stake holders.

“Which is the maturity level of your company?”

How to shift from one level to the other?

Implementing Commercial Contract Management correctly the first time is certainly the better way, for, unfortunately, improving immature Commercial Contract Management is by no means easy. Experience shows that:

  • a single ‘mature’ Commercial Contract Manager cannot change the maturity level of the company
  • Hiring a ‘mature’ CCM will not impact the company maturity level either
  • Even a ‘mature’ CCM team cannot change it
  • And education sessions, will not do the job either

So, what then?

It is still feasible, but you need to set time and effort.

By doing so your company will greatly benefit from it. And your competition will be left behind (unless they already improved their maturity level!).

Key factors

Organisation wise

You need to:

  1. Convince the CEO and the Executive Board Members
  2. Set up a business leader (not a support function) as a sponsor and monitor
  3. Probably change the reporting line
  4. Improve the process and delegations
  5. Secure adequate communication

Practice wise

In the practical implementation part, you will need other key factors. But seeking advice from a qualified external support is probably the best start.

Do you wish to uplift your company maturity level?

 

Albert Schot
Founder
albert[at]schot.ch