No matter how different organizations may be, they have one thing in common. They were all established to give substance to a mission and a vision. Contract management plays a major role in realizing these goals, which is why it is important that everyone involved in contract management is aware of its effect and how it can be safeguarded.
Every organization translates its mission and vision into a strategy. When it comes to the overall operations, of course they have to take the rules of the game, stipulated by laws and regulations, into account. Based on this strategy, in addition to the preconditions established in the laws and regulations, the organization describes its goals for the short, medium and long term.
As soon as contracts give substance to (some of) these goals, a second translation follows. The organizational goals are translated into contract objectives. Practice shows that most contract objectives are not, or not concretely, defined when contracts are drawn up. This is because, on the one hand, objectives are trickier to measure and, on the other hand, organizations don’t always want to share all their objectives with the other party. As a supplier, for instance, you wouldn’t want to shout about your desire to achieve a generous margin. Or, as a client, your goal of reorganizing is something you might prefer to keep to yourself.
In the contract, the contract objectives are to be translated into performance. The performance of a contract can be services as well as the delivery of products.
The relationship between organizational goals, contract objectives, and contract performance can be diagrammed as follows:
Figure: The relationship between organizational goals, contract objectives and contract performance
Contract management as a success factor for realizing your strategy
The CATS CM® methodology defines contract management as ensuring the realization of contract objectives for both demand and supply. The methodology has been structured in such a way that contract managers are constantly focused on safeguarding the contract objectives to ensure their optimal realization. The contract manager also sees to it that any changes to the contract objectives are guaranteed and implemented in the contract execution and contractual agreements in the best possible way.
This is the second blog of the series ‘Contract Management with CATS CM® in a nutshell’, in which we guide you through an overview of our vision and methodology. Do you have any questions for Linda Tonkes and Gert-Jan Vlasveld, the authors of the book Contract Management with CATS CM® version 4? Then please send an email to email@example.com!