management; so, it explains in great detail the tasks, responsibilities and mandates that CATS CM assigns to the role of the contract manager. We have listed several examples by way of illustration:
■ The proactive management of all agreements, obligations, conditions, assumptions, expectations and objectives relating to the contract, within an established authority or mandate, from the moment the contract has been signed until its conclusion.
■ The elimination or reduction of defects, white spaces, ambiguities, and differences of interpretation in the above-mentioned aspects.
■ The management of risks that may occur during the execution.
■ The timely provision of the most accurate information to the stakeholders – according to the agreement – regarding the status, progress, finances, and realization of the contract objectives.
■ The organization, conduction and administration of meetings with other parties involved in the contract.
■ Ensuring the insightful administration of the contract file.
■ The management of non-contractually established (secondary) objectives that are still important for the contracting party.
■ 2.5 TYPES OF CONTRACTS AND THE APPLICABILITY OF CATS CM
The applicability of CATS CM is very broad. In terms of applicability, we only find some distinctions in the types of contracts when we consider the parties involved in the contract:
■ Contracts between individuals.
■ Contracts between individuals and organizations, generally referred to as B2C (Business to Consumer).
■ Contracts between organizations, also referred to as B2B (Business to Business).
Marriage contracts and, frequently, sales contracts for housing are examples of contracts between individuals. Contracts between individuals and organizations include contracts such as employment contracts, insurance, and mortgage loans. The third type of contracts, those between organizations, can include contracts for the delivery of goods, services, or for the development or production of a new company asset.
The first two types of contracts are beyond the scope of this book. They need contract management, but they will often be handled very differently than contracts between organizations. Organizations can be businesses but they can also be government institutions, foundations, associations, etc.
CATS CM does not distinguish between the different ways of structuring the WTBD and can be used for all B2B contracts. Needless to say, not all contracts require the same level of contract management. CATS CM addresses this issue by offering contract management scenarios. These contract management scenarios are described in Chapter 8.
Organizations commonly classify their activity control levels into: strategic, tactical, and operational levels. These categories can also be applied to the finalization, execution, changing and termination of contracts. This chapter describes the CATS control model, the strategic, tactical, and operational activities related to contracts, and identifies the factors that determine the success of contract management.
■ 3.1 FACTORS THAT AFFECT THE SUCCESS OF CONTRACT MANAGEMENT
The success of contract management depends on three factors. Figure 3.1 shows this schematically. First of all, the contract management policy must be sound and include a contract management process based on CATS CM that allows people to work in a process-oriented, structured, documented, repeatable and measurable manner. Subsequently, to achieve an effective contract management process, it is important to have sufficient and competent people available to carry out the work while being supported by process-aligned systems. The third success factor is the ensuring of contract management when the contract is drawn up, the contract creation. This means that, at that moment, the focus lies on having a good and measurable translation of the contract objectives into WTBD, adequate consequences for not meeting the objectives, assessment of the effects of AOCM on contract management and, where possible, having the AOCM in alignment with the expected contract management structure.
■ 3.2 The CATS control model
The organization’s management is responsible for creating a sound framework within which the activities related to contracts can be controlled and which includes all of the success factors mentioned in the previous section. The CATS control model, shown schematically in figure 3.2, is such a framework.
Figure 3.1 Factors that affect the success of contract management
Figure 3.2 The CATS control model
Later in this section, we will come back to the terms strategic, tactical, and operational, with the activities that take place on these levels. At the strategic level, the organization decides what to do. At a tactical level, it decides how to do this. Who is going to do which activities and when is decided at an operational level.
In the CATS control model at a strategic level we use the term Contract Policy. At a tactical level, we talk about Contract Control and at an operational level, we use the term Contract Management Process.
A solid control model consists of a good policy that ensures consistency with contiguous processes and agreements at the strategic level. It is structured in such a way that it offers a fluent reporting flow from the operational to the strategic level in which systems, reports and procedures are seamlessly linked.
Strategic level - Contract Policy
At a strategic level, we talk about Contract Policy. First of all, it is at this level that the organization determines how to structure contract management at the strategic, tactical and operational levels. Organizations make decisions regarding the nature and type of contracts they enter into. Naturally, the general company policy affects the contract policy. As part of their general policy, suppliers determine which policy decisions they make regarding in which market segments the organization wants to be active, which forms of collaboration they aspire to, the services they want to offer to achieve the targeted position in the market, and the clients they absolutely want to serve or not serve. Clients use their general policy to determine which goods and services they consider to be of strategic interest to ensure the continuity of their organization, and the type of market players they want to do business with. A decision to outsource services is also part of this general policy.
It is at this level that organizations determine their policy when it comes to entering into contracts. This may include:
