Contract Management Principles

Principles focus attention and guide you. Effective principles are self-evident, relevant, sticky (memorable) and actionable. They must guide and help us achieve better results. To give them a chance they must be mandatory, otherwise what’s the point?

The Crown Commercial Service uses these eleven principles to underpin their approach to contract management. Each also has an accompanying paragraph of verbiage the CCS thought necessary to explain and embellish.

  1. Ensure that contracts are known and understood by all those who will be involved in their management
  2. Be clear about accountability, roles and responsibilities
  3. Establish and use strong governance arrangements to manage risk and enable strategic oversight
  4. Adopt a differentiated approach based on risk
  5. Manage contracts for business/public service outcomes
  6. Accept that change will happen and plan for it
  7. Measure and report on performance and use KPIs and data efficiently to incentivise good performance
  8. Drive continuous improvement, value for money and capture innovation
  9. Accept that successful delivery of major projects is best achieved through a single fully integrated team
  10. Ensure that links are made with organisation and/or government wide SRM programmes
  11. Adopt and encourage mature commercial behaviours

The CCS says that Government departments should also use these principles to complement their own guidance. More to read and understand! But on a take it or leave it basis rather than as something fundamental to success.

What about the qualities each principle exhibits? Are they the qualities principles need to be effective? Do these principles guide us to do things differently, better than before, consistently better than before?

For me the CCS’s principles struggle on all fronts, they’re not particularly self-evident, relevant, sticky (memorable) and actionable. For example, is it self-evident what “adopt and encourage mature commercial behaviours” means? What is a ‘differentiated approach’ in the “adopt a differentiated approach based on risk” principle? Differentiated from what?

Those you need to adopt your principles will switch off if they don’t grasp them easily and quickly. This is exacerbated if we factor in the mammoth amount of verbiage the CCS has to support contract management; indigestion kicked in after only 10 minutes.

I’m keen on ‘less is more’. It helps attract and retain attention because each principle is easier and quicker to digest, understand and deploy.

The eleven principles I use are:

  1. Satisfy beneficiaries needs
  2. Make one person responsible
  3. Responsibility is the ‘day job’; not an ad-hoc addendum
  4. Establish a common understanding, especially for decision making
  5. Relationship and resources relative to worth/complexity/context
  6. Establish multiple and diverse feedback loops
  7. Buy and pay no more than necessary
  8. Receive, at least, what you agreed to buy
  9. Eliminate waste
  10. Keep an exacting audit trail
  11. Vary the contract to improve the above

The first three principles are vital. You award a contract in the expectation that those you intend to benefit will do so in a way that satisfies their needs. Therefore, the first principle is the fundamental purpose of a contract. The second and third principles make it significantly more likely you’ll achieve this fundamental purpose.

Did you notice there’s no explicit mention of risk? Avoiding or mitigating risk doesn’t, on its own, result in success. Concentrate on satisfying beneficiaries needs!

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