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If you want your projects to succeed, you need to create a good contracts and risk management culture within your organization. When good corporate governance is missing, you’re likely to spend a lot of time banging your head against the wall.

Over the past 33 years, every organization I have ever worked for faced project failures due to inadequately defined contract or commercial management policies and procedures. Fortunately, organizations like the International Association For Contracts and Commercial Management (IACCM), National Contracts Management Association (NCMA) the Chartered Institute of Procurement and Supply (CIPS) and the International Organization for Standardization (ISO) have been helping organizations develop a better understanding that good corporate governance means defining the “who does what and when” regarding enterprise contract management and enterprise risk management.

And that is precisely the piece missing from too many contracting and commercial management processes. To fix it, you might start by consulting well known standards and working with the best organizations to clarify your sense of “corporate governance” – a term that defines your contract and commercial management operations. The task is not as difficult as you might think, as long as the top executives in your organization put the right muscle behind it.

“Corporate Governance” are two words that, when joined together, immediately bring to mind headlines from the news over the past decade of a spate of scandals that engulfed companies and caused several large corporations to collapse due to mismanagement and irresponsible corporate behavior.

Regulators all over the world have thus had to implement various acts and rules to rein in irresponsible corporate behavior that would mar the prospects of the corporations and harm their shareholders and stakeholders.

As defined by the Management Study Guide1 “Good corporate governance means that the processes of disclosure and transparency are followed so as to provide regulators and shareholders as well as the general public with precise and accurate information about the financial, operational and other aspects of the company.”

That sounds all warm and fuzzy, but how is good corporate governance achieved? It’s easy, really. Many organizations have enjoyed much success by simply drafting and implementing ISO 9001:20152 compliant policies and work flow procedures covering the entire Enterprise Contract Management Lifecycle3 with a focus on risk-based thinking. Figure 1 below is a Contract Management Lifecycle dashboard I created for my current employer:

2-1

Figure 1 - Contract Management Lifecycle dashboard

Outlining the key steps for your processes would be the first step. I have found it

helpful to actually create a guide such as The Contract Management Plan3 as a narrative that includes a section heading for each of the process step boxes from the Contract Management Lifecycle dashboard (Figure 1). And under each section heading, of course, you would outline explanatory narrative and sub-process work flow procedures that assign specific responsibility for who does what and when. From my experience, I have found that creating such a guide document helps grease the wheels when trying to implement a project delivery framework inside an organization.

But do not get discouraged if this takes longer to accomplish than you had initially imagined. For some organizations, this exercise took me 6 months to complete because of internal challenges with decision making, well entrenched bad behaviors and not so good corporate governance.

Is it worth the effort?

For me? Absolutely! I remember working for a global company in Abu Dhabi in 2006 to 2009 as a Senior Contracts Manager. My other ‘unofficial’ job duties included assisting the corporate quality assurance manager with developing and implementing a complete Integrated Management System (IMS) for the company so that they could qualify for ISO certification.

It took us approximately one year to complete – painful! But as we were putting the finishing touches to the documentation and computer systems, the company’s CEO put his executive muscle behind that IMS implementation by renting a large banquet hall at a nice hotel to present it and he instructed all employees (about 500 or so) to attend.

During his opening remarks, he referred to the new IMS as being the “ship” that would carry his organization to new levels of success. He then paused and pointed to the rear doors of the hall, and said, “Now, if anybody in this room is not willing to give an ‘all hands on deck’ effort to implementing this new IMS, and following it, then you can exit through those doors at the back and go find yourself another ship to get onto. Hopefully that other ship will not sink with you on it.”  

Have you ever heard a pin drop? I will never forget that as long as I live.

And I’ll also never forget this -- good corporate governance with clearly defined, good contract and risk management policies and procedures starts at the top. Senior executives must drive it down within their organizations and they should appreciate the value of having strong contracts and risk management professionals within their organizations. By doing so, the shareholders and stakeholders of those companies are the ones who will enjoy the fruitage of successful projects.

END NOTES:

 

  1. Management Study Guide (MSG), Article titled What is Good Corporate Governance? – a publication of MSG Presentations 2019
  2. ISO 9001:2015, Quality management systems - Requirements
  3. The IACCM Operational Guide provides a lifecycle body of knowledge. IACCM has also worked with a wide group of member companies to produce a shared ‘standard’ for describing the contract management lifecycle.

 


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Jeff Barnes, Head of Contracts and Risk Management for Rider Levett & Bucknall (Philippines)


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