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From the Choluteca to the Golden Gate – the role of commercial and contract managers

October 1, 2020

The Golden Gate Bridge in San Francisco, California, is easily one of the most famous suspension bridges in the world. Meanwhile, the Choluteca Bridge in Honduras is called the “bridge to nowhere.”

But what on earth do these two bridges have to do with contract management? More than you would realize, as it turns out. Let’s take a look at how.

What two bridges can teach us about contract management

At first glance, these two bridges may have nothing in common beyond being suspension bridges. However, both bridges survived natural disasters: the Golden Gate, the Loma Prieta earthquake in 1989, and the Choluteca Bridge, Hurricane Mitch in 1998. While both came through these catastrophes with minimal damage, the Golden Gate remained functional with minimal damage to the bridge itself and the roads surrounding it, thanks to excellent public works planning and a bit of foresight. The Choluteca, however, was left unusable after all roads to and from it were destroyed and washed away in the storm.

While the history of two bridges seems like an odd metaphor for business contracts and the value a contract manager brings, it makes sense when you look at it through the lens of building something correctly from the start. Traditionally, when two parties put together a deal, various teams are involved, from bid managers to legal to delivery, and, finally, to finance. Many of them will try to negotiate the most favorable deal for their own department or organization and ignore parts of the contract that don’t deal specifically with their department or job function. Often, this leaves vital details of the schedule such as exit plans, baselining, Governance and Key Performance Indicator (KPI) for the delivery to be hammered out later.

People often forget the primary role of a contract is to do business and not focus on what can be gained for specific departments. When people are too focused on what their particular department can deliver and not the contract as a whole, the contract is a bit like the Choluteca Bridge – it’s concrete but doesn’t lead anywhere.

The role contract managers play in negotiations

According to a report from World Commerce & Contracting (formerly IACCM), proper contract management can save up to 9.2% of the contract value. A strong contract and commercial manager (CCM) takes responsibility for the contract, obtains the required inputs from all the parties involved, sets the schedule critical key dates, discusses the obligations, dependencies, and risks, and mitigates any issues that may arise while looking at the contract as a whole. A CCM makes a real difference when making the deal useable by delivery, business, legal, finance, and even the other party. Likewise, if a detail or condition needs to change, a CCM will amend the contract to reflect these new provisions.

By introducing a CCM into the contracting process, there is less focus on what each team wants and more focus on the contract as a whole Ultimately, a CCM’s role is to bridge the negotiations done by each department and make a contract like the Golden Gate Bridge, where the contract’s infrastructure or details are robust and reliable, ensuring that it can withstand any potential problems down the line.

If you feel like you are on the Choluteca Bridge, engage a CCM and make your contract like the Golden Gate instead!

Capgemini helps Fortune 100 companies drive meaningful intelligence out of their thousands of contract documents. Learn more about how Capgemini’s Contract Compliance & Optimization (CCO) solution provides a broader and deeper solution to your compliance, cost reduction, and spend protection goals, from an often-overlooked area – the written contract.

To learn how Capgemini can provide the correct contract management platform for your organization, contact:

Mani Agarwal advises clients on commercial and contract management transformation initiatives. He helps organizations transform their contract lifecycle and contracts portfolio by implementing the right AI and ML tools. He also uses his expertise in optimizing the performance of contracts to ensure maximum value through all contractual opportunities and avoid any revenue leakage. Mani is a qualified lawyer and an elected member of the prestigious IACCM Council for IT and Outsourcing Networks.