What is Contract Lifecycle Management?
You must understand Contract Lifecycle Management (CLM) because you put yourself at risk without it. It is the process of handling a contract from beginning to end.
Remember from last time contract is broadly divided into government and commercial? Well two areas are also divided further categories for buyers and sellers. Here are four examples.
- Government buyer: The US government buys a new aircraft carrier to expand its fleet.
- Government seller: Your county government sells off excess land to raise revenue.
- Commercial buyer: Google buys YouTube.
- Commercial seller: FedEx sells Kinko’s and rebrands its office stores from FedEx Kinko’s Office to FedEx Office.
That’s the beginning, so onto…
Finding Common Threads
Google Images and Bing Images can really help when you look for charts. (Here, here, here, here and here).
However, some language in these charts is confusing.
I eventually came across one chart I liked. (The three charts are buried deep into the document). Provided by the Federal Acquisition Institute, these charts break down CLM into three distinct areas – Acquisition Planning, Contract Formation, and Contract Administration. This breakdown is from a government buyer perspective, but I think it applies equally well to government selling, commercial buying, and commercial selling points of views).
- Acquisition Planning (“We need lots of special pencils. Who can get us special pencils just the way we like? Invite or ask them to respond in the way we like”).
- Determination of Need
- Analysis of Requirement
- Extent of Competition
- Source Selection Planning
- Solicitation Terms and Conditions
- Contract Formation (“We now have a list of pencil sellers. Let’s pick the best one, draw up the contract, and get all the right signatures”).
- Solicitation of Offers
- Bid Evaluation
- Proposal Evaluation and Negotiation
- Contract Award
- Contract Administration (Pencils made and checked. Problems are resolved. Seller is paid and numbers are done. Renew or terminate the contract).
- Initiation of Work
- Quality Assurance
- Payment and Accounting
- Modification and Special Terms
- Contract Closeout or Termination
Each of these subparts has more sub-subparts. (There are a total of 71 parts). Yes, it’s a lot of information. Fortunately you can always use this chart.
So put into a cyclical process, CLM looks like this chart. Note that this visual is no available in the FAI document.
If the contract is renewed, then the cycle starts over again at the first step. If the contract is terminated, then the process ends.
What about Relationships?
Something still isn’t right. These charts fail to mention building relationships with the buyers or sellers.
Am I really supposed to believe that CLM is conducted entirely in a void? No, no, no. That isn’t right.
People and their relationships are involved at all levels in all parts of life. Without good relationships, contracts – like marriages – can fall apart. CLM is no different.
Perhaps these charts imply good relationships between buyer and seller, but I don’t see evidence of that. The human factor is missing from these charts, so I’ve added a relationships level.
Add Evaluation
While evaluation is present in several steps throughout the chart, I don’t feel that it’s given the priority it deserves. Evaluation is necessary in all steps, even if all you do is think about it for 10 seconds. If you only evaluate when chart tells you, then you may be wasting valuable time. It takes little time and the possible time saved is rewarding.
However, I think you should also review your relationships as well. This lets you spot areas to strengthen or (if necessary) terminate relationships. This lets you figure out if Suzy is taking advantage of you, or if you are taking advantage of John.
Put It All Together…
You get this.
I like both charts, but they can always be tweaked.
How would you improve these ideas and charts?
