These days, many businesses must be adaptable and accommodating in order to remain competitive. This is true with respect to their relationships with clients and various types of business partners. Contract management is particularly relationship dependent, and thus finding harmony with contracting partners is critical to long-term success. Many businesses have struggled to find the right contract management approach, as demands and technology cause frequent changes that may necessitate starting from scratch. In light of this, there is a recent move toward the concept of agile contract management. Here are some benefits to this style:
Being agile means being able to move about quickly. As a result, agile contract management places heavy emphasis on flexibility. This may seem counterintuitive in the world of contracting where every single detail matters and time is almost always of the essence. However, the business world is changing and thus contracting must change right along with it. By adopting a more agile approach to the whole contract management process, the contract management team will be better equipped to adapt to inevitable changes.
In order to instill this flexibility into the process, all parties to the contract have to be on the same page. This means taking steps to mitigate risks, especially in the face of uncertainty, and demonstrating a willingness to go with the flow when things do not flow quite as expected. More than anything, incorporating this style of management will decrease the likelihood and impact of any unexpected events and avoid unnecessarily contentious resolution processes.
Breaks Projects into Shorter, Easier to Handle Pieces
One of the key aspects of an agile contract management process is that it allows for long-term contracts to be broken down into shorter cycles. For example, if there is a year-long supply contract in place, the delivery schedule can be broken into a quarterly or monthly cycle. With this method, the contract management process will only focus on each cycle as it comes, and everyone must recognize and accept that the subsequent cycles may be slightly altered when change arises.
As discussed, agility requires flexibility, and this means that it is no longer necessary to constantly harp on the big picture. Granted, the big picture and end goals are always going to guide the direction of the management strategy, but it does not have to be the day to day focus. Instead, the daily efforts can be devoted to achieving each cycle successfully and making any needed adjustments for each succeeding cycle. Using this flexible approach and taking matters one cycle at a time will ease many of the burdens normally associated with long-term project management.
Encourages Frequent Collaboration
For this sort of style to really work, there must be frequent collaboration and effective communication among all key parties. As mentioned, contracting requires strong working relationships, and an agile management strategy makes this even more important. Given that change will no longer be eschewed as fervently, it will be absolutely crucial for everyone to be aware of where things stand at all times. The reality is that this sort of frequent collaboration should be the norm in contracting, irrespective of the actual contract management strategy utilized. And, because an agile approach basically demands frequent collaboration, this will no doubt strengthen the partnership.
Focuses on Mutual Benefits
One of the goals of agile contract management is to maximize the value of the deal. This means that both parties must be in it with the intention of ensuring that both sides reap the benefits of the arrangement. Agile contract management necessitates an elimination of competitive negotiations and one party seeking the better end of the bargain. Instead, the focus must be on striking an accord that will result in a positive outcome for everyone involved, which is clearly the best kind of deal to make.