Contract management is a method of effectively monitoring supplier performance to get the best value for money from a contract. Contract management is a key responsibility of procurement who must design and implement contract review procedures to manage risk within their supply chains.
Top 5 Contract Review Tips
Here are my top 5 contract review tips!
Survival Strategy #1
Learn The Language
If your contract review meeting is with the procurement manager or the contracts manager you are going to need to keep up. The strategy is to understand the ask and avoid the risk of looking like an idiot or worse, failing to deliver what's expected of you.
As a procurement expert, I can easily switch to excessive procurement acronym speak without even realising it. It's only when I see the glazed expression starring back at me that I stop and ask, "which part of what I just said don't you understand?" The response is often - "all of it!"
It may therefore be useful to memorise and regurgitate some of the more relevant procurement acronyms and their meanings below:
ABI - Activity Based Income
PO - Purchase Order
PID - Project Initiation Document
KPI - Key Performance Indicator
SLA - Service Level Agreement
SME - Small and Medium Enterprises
FOI - Freedom of Information
RFP - Request for Proposal
RFI - Request for Information
RFQ - Request for Quote
PQQ - Pre Qualification Questionnaire
SQ - Selection Questionnaire
ITT - Invitation to Tender
D-U-N-S - Data Universal Numbering System
TUPE - Transfer and undertaking of employees
PIN - Prior Information Notice
DPS - Dynamic Purchasing System
CPV - Common Procurement Vocabulary
SOR - Statement of Requirements
EOI - Expression of Interest
PCR - Public Contract Regulations
OJEU - Official Journal of the European Union
TED - Tenders Electronic Daily
MEAT - Most Economically Advantageous Tender
GDPR - General Data Protection Regulations
Survival Strategy #2
Track Your Performance
A Key Performance Indicator uses a quantitative indicator. For example, a quantity, a number, a ratio or a percentage. Indicators provide a way of measuring and comparing numerical data. The acronym for Key Performance Indicator is KPI.
In a contract they can be called Contractual KPI's or Procurement KPI.
There is often a requirement to report your performance against a KPI in the contract. The expectation of procurement is often that suppliers will bring a report to a contract review meeting. This will form the basis of the discussion. Most procurement managers will request a copy of the KPI performance report prior to the meeting.
It is therefore a good idea to know in advance how you are performing against each contractual KPI.
This information will help you to prepare for the contract review meeting with procurement.
If you are failing to meet a KPI, it may be a requirement of the contract that you prepare a performance report. This will include the reasons why you have failed to meet the KPI. You may also be required to provide a plan of how you intend to bring your performance back to the required level to meet the KPI.
On the other hand, if you are meeting or exceeding all of the contractual KPI's you could use the contract review meeting as an opportunity to ask for additional business or an extension to your contract.
Survival Strategy #3
Request The Agenda
If you're provided with a contract review agenda in advance, prepare for each and every agenda item. Procurement professionals are thorough, you need to be through too.
If you're not provided with an agenda, you could be walking into an ambush. My approach - always ask for an agenda, prior to the contract review meeting. Even if the response is, we are just having a chat. Your understanding of a chat and procurements understanding of a chat, could be worlds apart. Forearmed is forewarned.
Other information you need includes:
What questions will procurement ask you at the contract review meeting?
Who will I be attending the meeting?
Who am I expected to bring with me to the meeting?
This information will help you to prepare for the contract review meeting and avoid any awkward questions or surprises.
I appreciate that not everybody is as super organised as me when it comes to contract review meeting preparation. The procurement person you are meeting with may genuinely not have thought about any of this in advance and may genuinely just be intending to have a nice chat. In this case, you will be viewed as super professional and on the ball, so you really have nothing to lose here.
Below is an example list of questions asked at a contract review meeting:
- How do you think you have performed under the contract?
- Where do you think you can improve?
- What is new and innovative in your industry?
- What are you doing to ensure you meet all your KPI's?
- What value will you deliver under this contract in the next 12 months?
- What are your investment and growth plans over the next 3 years?
This is only a small sample of question a buyer could ask a supplier at a contract review meeting. You could be asked just about anything by procurement. The point is, none of these questions are easy to answer, so be prepared. Asking for a copy of the contract review meeting agenda and practicing your answers to difficult contract review questions can only help in this difficult situation.
Survival Strategy #4
Never Go Alone
Why go to a contract review meeting with a colleague?
- Your colleague can make notes whilst you talk.
- This will help you to focus on your performance.
- Provides feedback on how you can improve before the next meeting.
- Any misconduct or inappropriate behaviour is witnessed and can be reported.
Survival Strategy #5
Be Prepared To Sell
Make a list of topics you want to talk about and questions you want to ask. It is fine to write these down, procurement will view you as prepared and professional. Ask intelligent questions to make the right impression. Show an interest in the organisation and the contractual relationship.
You could ask questions about future developments. This may provide you with information about future opportunities for your company or threats to your current contract.
However, if the invite comes your way, you may be a little more prepared for reading this blog post.
If this is case, please remember to leave me a comment and let us know if the survival strategies and tips helped you in any way.
Copyright Naomi Clews Consultancy ®
About the Author
Naomi Clews Consultancy
Procurement, Tendering, Business Skills
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