What would you do with 9.15% of the value of your project?Adrian Furner, March 2nd, 2017

©2016 IACCM

About the IACCM

IACCM is a non-profit, cross-industry association and is the global forum for innovation in trading relationships and practices.

Dedicated to raising the quality and integrity of trading relationships worldwide

With over 40,000 members from more than 13,000 organizations in 164 countries

Providing standards, assuring capabilities, leading research, certifying performance

Our mission is to identify and promote the international standards and practices for defining and managing trading relationships. We develop and

communicate leading practices that support economic growth and organizational success by ensuring commitments are ethical, achievable

and sustainable.

3

©2017 IACCM

Why is it important?

• A high percentage of projects fail to deliver expected benefits

60 - 70%

• Commercial issues lie at the heart of most ‘troubled projects’

70 – 75%

© IACCM 2013 All Rights Reserved

4

©2017 IACCM

The opportunity

9.15%is the average impact to bottom-

line performance that results from weaknesses in contract

management

Source: IACCM Value of Contract Management Survey 2013

©2017 IACCM

Lack of clarityon scope and goals

1

Result: Cause of claims/disputes

3Failure to engage stakeholders

Result: Misaligned interests and future opposition

Negotiations focus on the wrong terms and risks

Result: Performance management dominated by blame/fault

7Contracts difficult to use or understand

Result: Users see contract as irrelevant to business needs

9Limited use of contract technology

Result: Inefficiency and loss of quality in performance and analysis

Average valueerosion 9.15%

Legal/contract team not involved early enough

2

Result: Wrong form of contract & extended lead time

4Protracted negotiations

Result: Competitive exposure & delayed revenues

6Contracts lack flexibility. Insufficient focus on governance

8Poor handover from deal team to implementation team

Result: commitment & obligations missed & misunderstood

10Poor post award processes and governance

Result: Repetitive issues and errors causing value loss

Result: Loss of economic benefit; contract a weapon

5

The Top 10 Contracting Pitfalls

©2017 IACCM

So what can we do about it?

In a global world the pressure on 9.15% is upwards

©2017 IACCM

1) The Power of the Relationship

Relational Contracting is a method to achieve mutually successful outcomes through an alignment of interests and

procedures that tackle the most frequent sources of

failure.

IACCM

©2017 IACCM

2) Communications is a key competence not a team

IACCM Future of Contracting Research – “We have presided over an era of massive growth in

the length and complexity of contracts, to a point where 88% of business users can’t understand

them and 83% find the process by which they are formed unhelpful.”

©2016 IACCM

Contract Design – are you easy to do business with?

Forward thinking organizations are focusing their attention on user-based contract models and tools, ensuring fast, accurate dissemination to those responsible for implementationand reducing performance risks.

Difficult to understand contracts result in business risks; they are more likely to be‘consigned to the drawer’, ignored or misinterpreted.

©2016 IACCM

Contract Design

©2016 IACCM

The Comic Contract

Robert de Rooy, Lawyer, South Africa

©2017 IACCM

3) Thinking upwards and outwards …

Gaining knowledge – demands asking questions!

• New contract and commercial models

• Focus on enabling

• A focus on ‘outsights’ and performance data

• Collaborative networks

• Leadership and influencing skills

• Technology and adaptive standards

Innovation & emerging trends

Which terms are most risky? Are they the ones we spend most time negotiating?

Are we playing the portfolio well enough?

©2017 IACCM

Stemming the Value Leakage

We help you work out where you are and what to do to get to the next level:

Capability• Workshop Improvements to prioritize

capability building, to close gaps• Contract Design• Relational Contracting Workshops

People Skill Development• Workshops to prioritize skills development• CCM Certifications• SRM• Organizational Design

“Our right path to commercial excellence became easier to see when we insisted that capability and competence move hand-in-hand and side-by-side. As the journey continues, our increasingly competent people demanded increasingly smart contract management processes. This was not an unrealistic expectation, it is a non-negotiable journey to excellence.” IACCM Member

©2017 IACCM

The future state?

This presentation was delivered

at an APM event

To find out more about

upcoming events please visit our

website www.apm.org.uk/events