The value is in the delivery: Practical guidance for contract owners

By Alex Lawrence and Hanish Thakeria

Even when a contract has been well negotiated and successfully mobilised, there is no guarantee that all the expected benefits will be realised.

As discussed in our first article on preventing contract value leakage, maintaining commercial control requires ongoing attention throughout delivery. Contract owners need to ensure that commitments are met, performance issues are addressed, changes are commercially controlled, and opportunities to improve value are not overlooked. In our experience, four practices are particularly important to protecting contract value throughout delivery.

One of the most common weaknesses in contract management is the gap between what has been agreed and what is actively managed. Contracts often contain detailed obligations relating to service delivery, reporting, approvals, and commercial commitments, yet these can receive little attention once the contract is operational.

An obligation register is a practical way of addressing this. It should capture the commitments that matter most to cost, service, risk and continuity, together with the action required, the responsible owner, relevant deadlines and the evidence needed to confirm completion. Importantly, this should cover obligations on both sides. Buyers can contribute to poor supplier performance by failing to provide timely forecasts, approvals, information, or access. Understanding these dependencies helps avoid disputes and ensures accountability is applied fairly.

The register should form part of regular contract governance, with upcoming and overdue obligations reviewed alongside supplier performance. Where a commitment has been missed, the contract owner should establish the cause, understand the consequences, and determine whether corrective action or a contractual remedy is appropriate.

Teams should not let this become another administrative document. The objective is to ensure that important commitments are understood, assigned, and followed through, rather than only being revisited when something goes wrong.

Most significant contracts contain KPIs and service levels, but having these in place does not necessarily translate into effective performance management.

A common issue is that supplier reviews become exercises in reporting historical performance. Dashboards are discussed, explanations are provided, and actions are recorded, but persistent underperformance continues without meaningful commercial consequences.

Contract owners should be clear about how each material performance measure is assessed, where the underlying data comes from, and what should happen when performance falls below the agreed standard.

Performance reviews should examine trends as well as individual failures. Deteriorating performance may warrant intervention before a formal breach occurs, while repeated failures should prompt a more structured recovery plan and, where necessary, escalation.

There is also a financial dimension that is frequently overlooked. Contracts may provide for service credits, rebates, corrective action plans, benchmarking, or other remedies, but these mechanisms have little value if they are not exercised when appropriate. For example, a service credit agreed during a performance meeting must ultimately be reflected in the supplier's invoice or otherwise recovered.

Not every performance issue calls for a contractual remedy. Isolated problems may be better resolved collaboratively, particularly where both parties have contributed to the issue. However, repeated underperformance should not become accepted simply because it has been discussed at successive governance meetings, and should instead prompt a structured recovery plan.

The contract owner needs to exercise judgement, balancing the importance of the supplier relationship with the organisation's right to receive the service and value it has paid for.

At its most damaging, scope creep develops through a series of smaller requests, additional activities, or changes to delivery assumptions that are agreed informally over time.

Individually, these changes may appear reasonable. Collectively, they can substantially alter the economics of a contract, particularly where additional costs are approved without challenging the underlying requirement or considering the impact on existing commitments.

A disciplined change control process helps prevent this. Before approving additional work, the starting point should be to establish whether it genuinely falls outside the existing contractual scope. Where a change is justified, contract owners should assess its financial and operational implications, including whether the proposed price represents value for money and whether alternative approaches are available. Decisions should be taken through the appropriate approval process and reflected in the relevant contractual and financial records. Informal agreements made through meetings or email exchanges should not become a substitute for formal commercial control.

Crucially, changes should be reviewed collectively. A contract that has accumulated numerous small variations may bear little resemblance to its original commercial baseline. Where similar requests arise repeatedly, it may be more effective to revisit the underlying scope or pricing model than to continue approving individual exceptions.

For contract owners, the challenge is to remain responsive to legitimate business needs without allowing flexibility to come at the expense of financial control.

Contract renewal is one of the clearest opportunities to reassess value, yet organisations frequently approach it too late. By the time a contract nears expiry, limited internal capacity, unresolved dependencies, or the risks associated with switching suppliers can make extension the only realistic option. This weakens the buyer's negotiating position and reduces the opportunity to challenge costs, scope, or delivery arrangements.

Avoiding this situation requires more than maintaining a record of expiry dates. Contract owners should track notice periods, extension options, price reviews, benchmarking rights, break clauses, and exit requirements, with sufficient lead time to assess the available options.

For material contracts, the renewal review should consider how the supplier has performed, whether the original business case has been delivered and how demand has changed. Actual spend, service volumes, changes in scope, and any unresolved performance issues should all inform the decision. The review should also consider whether the current delivery model remains appropriate. Market conditions, available technology, and organisational requirements may have changed since the contract was awarded, creating opportunities to renegotiate, consolidate demand, introduce competition, or adopt an alternative approach.

Where renewal is the preferred option, the organisation should enter discussions with clear commercial objectives and an understanding of its negotiating position. Where retendering or exit is a credible alternative, transition requirements, data ownership, and knowledge-transfer obligations need to be assessed early.

The most important consideration is preserving choice. An organisation that begins its review with sufficient time and reliable information is in a far stronger position than one negotiating against an imminent deadline.

The four areas above do not require an elaborate contract management framework. For most material contracts, the essential tools are relatively straightforward: an obligation register, a performance and action log, a change log, and a calendar of key commercial dates. What matters is how these tools are used.

Effective governance should provide a forum for resolving issues, making decisions, and holding both parties accountable for their commitments. It should also connect operational performance with commercial outcomes, ensuring that problems identified during delivery lead to appropriate action rather than simply appearing in the next monthly report.

The level of oversight should be proportionate to the contract's value, complexity, and risk. A strategically important, high-value contract will warrant more frequent engagement and closer commercial scrutiny than a low-risk, routine agreement. Applying the same level of governance to every contract can create unnecessary administration while diverting attention from those where the greatest value is at stake.

For procurement leaders, the challenge extends beyond individual contracts. It is worth assessing whether these disciplines are consistently applied across the most important supplier relationships, whether contract owners have the skills and authority to act, and whether the organisation has sufficient visibility of performance and commercial exposure.

Ultimately, good contract management is not simply about ensuring suppliers meet their obligations. It is about making informed commercial decisions throughout the life of an agreement. Organisations that do this consistently are better placed to prevent value leakage, manage supplier performance, and realise the benefits originally negotiated.