Contract Lifecycle Manager Job Objectives
Contract management objectives (KPIs) are designed to track and measure the contract manager’s ability to successfully manage its contracts. Contract management aims to ensure that all signatories to the contract meet their respective obligations as efficiently as possible, providing value for money and delivering business and operational outputs.
- Reduce contract risk – The contract risk KPI is designed to track and measure the risk associated with each contract over time. Contract managers must ensure that the contract is structured in a way that reduces the risk of the terms been broken by one or more of the signatories.
- Increase the value of contracts under active management – The value of contracts under active management KPI measures the total financial value of the actively managed contracts. The higher this figure, the greater the chance of increased revenue streams.
- Reduce time to signature – The time to signature KPI measures the time it takes for the contract’s pre-signature processes to complete so that the contract can be signed. The aim is to reduce the overall time taken to move from contract initiation to signature.
- Reduce contract administration time – The contract administration time KPI measures the contract management resources are being deployed post-signature. If they are, it will reduce the number of new contracts signed. The lower this measurement, the more time there will be to draw up new contracts.
- Increase contract renewals – The contract renewals KPI is designed to measure the percentage of renewed contracts versus the number of new contracts drawn up and signed; the higher this number, the greater the company’s profitability. It is quicker and easier to renew a contract than to draw up a new contract.
- Contract milestones – The contract milestones KPI measures the ongoing health of contract relationships and to what extent the obligations agreed are being met. The higher this value, the more successful the contract and the lower the risk that one or more signatories will break the contract terms.
- Improve contract consistency and language – The contract consistency and language KPIs measure how a contract is changed before it is signed. The ideal scenario is where the company’s standard contracts are accepted without change by all signatories. This doesn’t happen in reality, as negotiation and legal review results sometimes in sweeping changes.
- Improve contract efficiency – The contract efficiency KPI measures how practical the contract’s application is. This measurement includes contract cycle time, customer, vendor, geographic trends, contract value assessments, and missed milestones. The more effective a contract is, the fewer support requests, and the less post-signing administration will be required.
- Improve Annual Contract Value (ACV) – The Annual Contract Value (AVC) KPI measures the average annualized income per customer contract. This value in itself is not that important. It demonstrates how many customer contracts your company must sign to reach the required income levels.
- Reduce the Terminated contract Remaining Value (TRV) – Measuring and tracking the Terminated contract Remaining Value (TRV) KPI helps prevent lost revenue due to a terminated service contract. It also highlights outstanding bills, unbilled amounts, and credit amounts.
Contract Administration Specialist Job Objectives
Contract administration specialists are under increased pressure to deliver high-value contracts, including reduced costs and increased performance. This set of KPIs measures and tracks the extent to which contract administration specialists meet and exceed their role as part of the contract management team.
- Reduce vendor fraud – The vendor fraud KPI measures and tracks the percentage of vendor fraud in relation to fulfilling a contract. This KPI is vital in increasing awareness and detection of unnecessary costs and measuring risk management effectiveness.
- Improve compliance – The compliance KPI measures and tracks the extent to which the company’s contracts are structured according to its contract creation methods and best practices. Contract compliance is key to effective contract management.
- Improve quality/complaints resolved – The quality/complaints resolved KPI measures the number of complaints received and resolved per contract. The higher the number of valid complaints resolved, the higher the contract’s quality.
- Cycle times from contract initiation to signature – The cycle times from contract initiation to signature KPI measures the cycle times from the contract initiation to the final signing. It helps to understand how quickly deals are closing, how business is growing, and how to identify new revenue opportunities quicker.
- Duration of contract bids in the queue, by type and geography – The duration of contract bids in the queue, by type and geography KPI measures how long the average contract bid or proposal remains in the queue before the final contract is drawn up and signed. Contract creation and monitoring are improved by measuring this metric per type and geography.
- Reduce delays in approvals and cycle times – The delays in approvals and cycle times KPI measures how long it takes for the contract cycle time to be completed, from conception to conclusion. The correct information must get to the right stakeholders on time. Delays in approval because of information process flow challenges will reduce the company’s revenue.
Contract Services Specialist Objectives
Contract Services Specialist objectives are designed to manage the job efficiencies and successes of any contract management strategy. These KPIs encompass qualitative and quantitative information around contract value, incidents, monitoring, and renewal. The 3 most comment elements measured include contract efficiency, contract effectiveness, and contract risk.
- Improve the contract lifecycle – The contract lifecycle is defined as the length of time it takes for a contract to be drawn up, from conception to conclusion. This KPI tracks and measures the contract services specialist’s ability to successfully manage the contract lifecycle as efficiently as possible.
- Improve on-time delivery – The on-time delivery ratio measures the number of contractual services that are delivered on time versus the total number of contractual services offered by the company. The higher this ratio, the more successful the company is. This KPI measures the contract services specialist’s ability to deliver on time.
- Improve quality and support – The quality and support KPI measures and tracks the contract services specialist’s ability to deliver quality service and support consistently: the higher this metric, the more successful the specialist, and the greater the company’s ability to grow and increase its bottom line.
- Improve partnership and innovation – Partnership and innovation with other asset management companies are designed to improve the company’s overall service delivery to the clients. This KPI tracks and measures the contract services specialist’s ability to implement innovative measures and partner with other service delivery companies.
- Improve governance and risk management – Governance and risk management are designed to manage contractual obligations effectively and reduce the risk of defaulting on the contract. This KPI measures and tracks the contract services specialist’s ability to implement governance and risk management strategies.
- Improve financial efficacy – Financial efficiency is defined as the ability to manage the cost of the contractual services effectively. This KPI measures and tracks the contract services specialist’s ability to manage all finances associated with fulfilling the contractual obligations as effectively as possible.
Contract management KPIs provide company management with an in-depth view of the contract team’s ability to successfully manage its contracts. The contract management business processes are designed to ensure that all the contract signatories meet their individual obligations effectively, delivering business and operational outputs, increasing operational efficiencies.
These KPIs aim to measure how well the contract management team meets the requirements of building customer relationships through the professional and efficient management of contracts.
Contract management Key Performance Indicators are fundamental to understanding the role that the contract management team plays within the overall goal of driving financial success through the effective management of high-value contracts, by reducing costs and increasing operational efficiencies. These elements are directly related to the company’s finances, and they are key drivers of financial success.
These KPIs support and drive optimal contract management policies, processes, and procedures, including customer engagement, reduced iterations of the contract lifecycle before signing, and sharp pricing while lowering the cost of drawing up and maintaining the contract. They also foster and strengthen relationships between the company, the product (or contract), and its target audience.
Company management is often unaware of the potential disconnect between the company, contract (or product), and the consumer. These KPIs highlight the possible pain points between these factors before they spiral out of control and cause irrevocable harm to the company’s inward- and outward-facing relationships and its income generation potential.