When managing contracts, performance monitoring is one of the most important ways to measure success. With a large variety of contracts, all with different terms, it can be difficult to know how you should assess contract performance. Luckily, you can boil down the success of each contract, no matter the complexity, to four key contract performance metrics. Read on to discover how contract management software can help you optimise four key contract performance metrics.
Contract performance metrics
Contract performance metrics are the data points to help measure the efficacy and efficiency of contract lifecycle management processes that can directly influence the bottom line of an organisation. Four key contract performance metrics include cost, punctuality, reliability and consistent quality. Measuring and optimising contract performance metrics usually involves the use of industry-leading CLM software.
1. Cost
The most obvious metric you will want to look at is cost. When it comes to business operations, the success of any contract can be simply determined by whether or not the contract is resulting in profit or savings. If you find that a contract causes unforeseen expenditures by not providing enough ROI to compensate, you may need to reassess your contract.
Fortunately, tracking contract financials within leading CLM software allows you to track many budgetary variables within a centralised contract financial data report for enhanced oversight, where you can easily track the following quantities:
- contract transactions
- contract expenses
- total contract budget
- remaining contract budget
- percentage of used contract budget
- percentage of remaining contract budget.
2. Punctuality
Timeliness is important when it comes to contracts. Each party needs to fulfil their contractual obligations on time or it can cause major issues. If the other party is consistently slow to fulfil their obligations, you could end up with an underperforming contract. It’s important to monitor the punctuality of the other party to ensure the success of the contract.
Thankfully, you can remain abreast of timely obligations with the help of automated CLM software contract obligations – such as crucial task alerts, date awareness, virtually real-time obligation status reports, milestone tracking and dynamic graphical dashboards for optimised contract obligation oversight. Rather than trapping contract obligations in static documents, you can automate contract obligation tracking in a centralised location – freeing you up to focus on CLM strategy.
3. Reliability
Finding the right contracting partners and vendors can prove difficult. A reliable working relationship is necessary to ensure the success of your organisation’s operations. Assessing your counterparty’s inevitable contract changes in the pre-signature stage of the contract lifecycle and tracking post-signature contract performance contribute to the reliability of your contract counterparty and your contract management system.
Fortunately, leading contract management software can provide you with reliable contract management tracking tools and robust reporting features to help you measure pre-award and post-award contract management processes. Such oversight and trackable data can help you assess counterparty reliability that can inform contract renewal or contract termination decision-making.
4. Consistent quality
Concentrating on high contract output can often lead to poor quality. It’s important to ensure that the completed contracts retain consistent high quality to virtually ensure that contractual obligations are successfully fulfilled.
Fortunately, industry-leading CLM software can empower you to create consistent, high-quality contracts with the help of pre-approved contract templates and clauses from a secure language library. You can leverage version tracking and rules-based authoring permissions within a centralised location. Without automated contract authoring tools, your internal stakeholders can find themselves disorganised and frustrated – especially when undesignated personnel inadvertently involve themselves in the contract writing processes outside of their expertise or permissions.
Optimise contract performance with Contract Insight®
Robust contract performance management with detailed CLM data analytics oversight begins and ends with Contract Insight and is enhanced by use of the right metrics. Book a free demo of Contract Insight® contract management and eProcurement software today!
Contact John O’Brien, CEO at Four Business Solutions – global business consultants and software integrators specialising in business process improvement.
