BBA 4326 Unit VII Assignment
Columbia Southern University
Contract Management Maturity Model
In relation to contract management, businesses require a great deal of maturity within the contract management processes in order to prevent problems and achieve success. Mature contract management processes describe “organizational capabilities that can consistently produce successful business results for buyers of products, services, and integrated solutions” (Garrett, 2015, p. 183). The tool used to benchmark the contract management process maturity of an organization and to establish a road map for implementing initiatives for improvement is the Contract Management Maturity Model (CMMM) (Rendon, 2014). Garrett (2015) describes how the CMMM is a helpful tool to organizations as it creates a vision of excellence to aid buying and selling entities in focusing on the key areas of process improvement, and it provides users with the proper framework required to improve their respective levels of performance. Additionally, the CMMM offers organizations a visual tool to aid in assessing its level of capability within the six major steps; known as the key process areas, accomplished when buying or selling products, services, and integrated solutions. Buyers and sellers each account for six contract management key process areas with buyer’s activities consisting of procurement planning, solicitations planning, solicitation, source selection, contract administration, and contract closeout. Sellers activities reflected within the maturity model include pre-sales activity, bid/no bid decision making, bid or proposal preparation, contract negotiation and formation, contract administration, and contract closeout (Garrett, 2015).
Contract Administration and Contract Closeout
While buyers and sellers each account for six key process areas within contract management, it can be seen that both buyers and sellers accomplish the key process areas of contract administration and contract closeout (Garrett & Rendon, 2015). According to Garrett (2015, p. 192), these two key processes are “identical for both the buyer and the seller” and additionally, both parties “perform identical contract administration and contract closeout functions during the management of a contractual relationship.” Each of these key process areas further encompasses specific key practice activities that should be accomplished in order to accurately measure an organizations contract management process capability.
Contract administration describes the process of managing relationships with contractors and ensuring that the performance of each party involved meets the requirements set forth in contractual agreements (Garrett & Rendon, 2015). There are several contract management key practice activities in relation to contract administration, some of which are ensuring that the organization has an established method for assigning contracts to either teams or individuals in order to manage the post-award phase of the contract, conducting a pre-performance meeting to deliberate buyer and seller contract administration responsibilities, and to discuss procedures for communication, performance management, or changes within a particular contract. Additional key practice activities for both buyers and sellers include establishing protocols for managing contractor invoices and payments, establishing and managing the process of administering contract incentive fees and award fees when applicable, and finally encouraging disputes within a contract to be resolved utilizing alternative dispute resolution methods (Garrett, 2015).
According to Garrett and Rendon (2015, n.p.), contract closeout is the “process of verifying that all administrative matters are concluded on a contract that is otherwise physically complete. This involves completing and settling the contract, including resolving and open items.” Key practice activities that must be accomplished by buyers and sellers in relation to contract closeout include having an established process within the organization for closing out contracts which encompasses ensuring that all work has been completed, appropriate documentation has been accomplished, and all financial matters are resolved. Other key practice activities within contract closeout involve the contract termination process, which requires written or oral notification in order to terminate a contract due either to cause or default, and maintaining a database for lessons-learned and best practices information, which can be utilized in future projects and contracts (Garrett, 2015).
In order for organizations to effectively create and manage contracts, they must first have mature contract management processes in place. Having these mature processes in place will aid in preventing problems and achieving success within contract management. The Contract Management Maturity Model (CMMM) is a valuable tool that can be utilized by an organization to assess maturity within the contract management process and to develop a road map for continuous and future improvement within organizational contract management process maturity.
Garrett, G. A. (2015). World class contracting (6th ed.). Riverwoods, IL: CCH.
Garrett, G., & Rendon, R. (2015, June). Improving the U.S. Federal Acquisition Workforce, Part 2 of 3. Retrieved from http://read.nxtbook.com/ncma/contractmanagement/june2015/improvingtheusfederal_feat.html
Rendon, R. (2014, July 29). Benchmarking Contract Management Process Maturity. Retrieved from https://www.pmi.org/learning/library/benchmarking-contract-management-process-maturity-1914