A summary of the premiere contract management method
CATS CM is a practical approach to managing contracts according to a detailed roadmap. This contract management method is easy to implement and gives each contract manager the ideal instrument to achieve success. The structured, practical method offered by CATS CM makes the contract management process and managing contracts more easily controllable from the moment of signature.
CATS CM offers you structure, tools and practical insights which simplify the realisation of your contract objectives and provide your organisation with a uniform work method.
Why CATS CM
The contract management method facilitates every contract manager, both on the client and the supplier side. The primary goal of the method is to give the contract manager grip on contract management so he can carry this out to the best of his abilities. CATS CM increases effectiveness and efficiency. This hugely increases the chance of realising all contract objectives, and with it, the intended added value. An organisation can even achieve greater added value than planned through regularly attuning the contract to the organisational goals. Another advantage is the cost management of a contract, resulting in cost savings and reductions. Additionally, it gives a contract manager optimal control over the contracts, also giving one a better grip on any potential risks.
CATS CM, this is how it works
CATS CM helps organisations by offering a structured contract management process which is set up on the basis of the phases of the contract lifecycle.
The method mainly gives practical structure to two phases within this contract lifecycle: contract execution and termination and evaluation. In the phases before signing (specification of needs and contracting), the method is very effective as a checklist for the contractual agreements.
Principles of the contract management method
The CATS CM method is based on four principles, namely the demarcation of responsibilities, the recognition of the roles, a roadmap for a controllable contract management process and the focus areas of the contract manager (CM Essentials). We’ll go over these pillars in more detail below.
Pillar 1: Demarcation: WTBD & AOCM
Each contract consists of a description of ‘Work To Be Done’ (WTBD) on the one hand and ‘All Other Contract Matter’ (AOCM) on the other. This important demarcation of the responsibilities within the CATS CM contract management method clearly indicates who does what.
Pillar 2: Roles: who is responsible for what
A clear division of tasks, responsibilities and powers also structures contract management. A contract therefore requires at least three roles for optimal implementation: contract owner, contract manager and service manager.
- The contract owner determines the need and the budget.
- The service manager – sometimes referred to as the project manager or subject matter expert – takes care of the tasks under ‘Work To Be Done’: For a service manager with the supplier, this means installation, execution, maintenance and transfer. On the client side, this means that the service manager mainly has to facilitate the delivery of services or products and additionally determine the quality of the deliveries.
- The contract manager takes care of ‘All Other Contract Matter’. He monitors aspects such as price/rate, important dates during execution, duration, progress reporting and inspections, solving issues and managing risks.
Pillar 3: The contract management process in six steps
The contract management process takes place in the execution and termination phases of the contract lifecycle. This process consists of six steps. This method indicates what needs to be done for each step. The middle four – Plan, Do, Check, Act – are based on the Deming quality cycle. We added two steps to this within the CATS CM method for the benefit of proper contract management: Initiate and Closure. The contract management begins with the Initiate step, which includes the activities of ‘studying and analysing the contract file’, ‘drafting a risk profile’ and ‘planning and carrying out the intake with the contract owner’.
Pillar 4: The focus areas of the contract manager (CM Essentials)
Each role has its own focus areas. The focus areas of the contract manager are in the CATS CM method brought together in the ten ‘CM Essentials’:
- The contract environment
- The contract file
- The contract risk profile
- The invoicing process
- The status, implementation and progress
- The contract calender
- The contract assessments
- The subjects for meetings
- The meetings
- The (dis)satisfaction of the other party
Not every contract requires the same amount of attention
Of course, not every contract requires the same amount of attention. The idea is not to manage a simple contract for purchasing simple products such as pencils and pens as intensively as a large IT contract with a high risk for being able to continue with the primary process. It is therefore important to categorise contracts and then determine a ‘contract management regime’ per contract type. CATS CM also helps with categorising the contracts using the contract differentiation matrix.
Is that which is contracted and needed being delivered?
At the beginning of a contract, that which is needed, delivered and contracted will entirely be in line. However, in our practical experience, this quickly begins to deviate. It is therefore important to calibrate this regularly. To this end, CATS CM has the ‘contract assessment’ (the seventh ‘Essential’). The contract assessment identifies deviations and the contract manager can then in consultation with the contract owner determine the course of action. For example: certain service are necessary but not contracted. Do we want to include these in the contract? Or: certain products are contracted and are being delivered, but we actually don’t need them any more. Then these are to be quickly removed from the contract.
High adoption rate of CATS CM in the Netherlands
The CATS CM© contract management method is due to its high adoption rate in many organisations in a range of industries the standard method for managing contracts in the Netherlands. Discover what our customers say about the method at www.cats-cm.com