Contract management: The talent it takes
What skills should a contract manager ideally possess? RODNEY TIMM of Property Beyond delves into the debate.
Facilities and property management services contracts have matured and evolved significantly over the past decade. In most situations, the outsourcing of facilities and property related services as non-core support functions underpinning primary business objectives is now the norm.
The outsourcing rationale is generally undisputed. But commentary is still variable about the success or otherwise of these multidisciplinary service contract arrangements. In analysing the issues that impact success in these types of contracts, it appears that the skill sets of the managers responsible for the contract delivery – both within the service provider organisation as well as the client business – are key to the success of the contract’s performance.
However, the debate about the ideal contract manager skill set continues. Should contract managers have a strong technical or transaction background to drive portfolio operational outcomes? Should the focus be on management and relationship skills? Or should there be a combination of these various skills? Based on analysis of various existing contracts, the core generic competencies of contract managers tend to fall into one of the categories discussed below.
TECHNICAL AND OPERATIONAL SKILLS
Traditionally, facilities and property management teams have been populated with operational skills. These teams may include building engineers, who understand the engine rooms of buildings, know how to respond to building heartbeat changes and have had oversight on the internal workings of the building for most of their careers. Or these teams may include property transaction junkies, who have made their name in the industry though great lease negotiations.
As often occurs in business, however, excellent building engineers or lease negotiators – who are very good at their operational jobs – promoted out of their comfort zone into areas requiring very different skills of team leadership and managing client expectations may not prove to be the best contract managers.
LEGAL AND CONTRACTING SKILLS
Some facilities and property services contracts continue to be managed through the lenses of the contract and procurement team. The main focus is on ensuring that all services are being delivered strictly in terms of the contract documentation – ever-alert antennae seek out contract extras for works outside of the tight contract parameters.
Although it is bad business for service providers to consistently provide services that extend beyond the brief, continual scrutiny for extras is not a good approach to creating enduring contract relationships. Similarly, client organisations that manage contractor relationships with a focus on enforcing the delivery of contracted service strictly as specified in the contract before making payments are also likely to ‘burn out’ their service providers.
These may be strict interpretation of critical minimum standards and key performance indicators in a stick approach; however, this focus should not belong to the contract manager. These performance monitoring duties best belong to the procurement department or independent auditors.
LEADERSHIP AND MANAGEMENT SKILLS
Managing integrated property and facilities services contracts across large and geographically diverse portfolios within a complex stakeholder environment requires specialised management skills. Knowing how to communicate – how often, with whom and why – with increased flexibility, as may be required in ever-changing business environments, is core to managing client needs and expectations.
Having the confidence to trust, delegate and rely on team managers without having to know all the details – but knowing where to access the expertise – is a skill that technical experts may have a problem developing. The leadership skills required by contract managers responsible for a team of diverse operational delivery personnel include being prepared to listen to and consider multiple points of view. The most important trait for contract managers is emotional maturity, encompassing self-awareness, self-management and social awareness. In addition, social skills are often key to successful client and team communications, whether in the context of business as usual, crisis management or conflict resolution.
INNOVATION AND VALUE-FOR-MONEY SKILLS
As the outsourcing industry matures, the focus is moving to value-for-money outcomes based on innovative solutions. As enabling technologies and workplace practices underpin new distributed workplace platforms, business units are increasingly being pressured into delivering tangible corporate value from changes in their property portfolios.
Contract managers need to be able to identify creative opportunities that support client business needs. In addition, contract managers need to have the courage and conviction to convince the client to change the workplace or service model to achieve the desired outcomes. Business leadership discussions now focus on cost of occupancy benchmarks, commercial property models and capitalising on contract partners’ core business. Contract managers need to be able to deliver on these expectations.
The overarching skill contract managers should be proficient in is probably the understanding of general business. Property and facilities contracts can be seen as the management, logistical and administrative equivalent of a business with a variety of operating units, often with conflicting demands, needing a range of services all within a tightly priced budget.
Besides normal technical and transactional functions in facilities and property management, other more generic business skills such as finance, personnel, procurement, reporting, management information systems and other generic business processes are essential. Contract managers need to have the ability to understand the business environment in which their clients operate and their competitive market positioning to be able to respond appropriately in co-creating tactical and strategic responses.
As the pace of business increases, the ability to make rapid, astute commercial decisions in managing clients’ risks is becoming core to contract managers’ capabilities. However, clients are also seeking credibility and to have the confidence to be able to take the contract manager into senior decision-making forums, knowing that they are able to clearly articulate the benefits of a new plan for achieving more cost-effective and aligned property outcomes.
THE MOOD FOR CHANGE IS HERE
The needs of the industry are changing. Companies in their second and third generation of outsourcing have realised that they are able to buy more than merely technical or transaction skills. The leaders in the service provider industry have noted that the mood for change has arrived. Business management skills are now considered by these industry leaders as key to managing the transition of the industry, and to ensure the sustainability and rollover of outsourced contracts.
But, these skills need to be backed up with access to technical, operational and management process skills. Many clients now also understand the need to make this change as well. Successful contract managers representing clients are being trained to take the same approach. Having a dogmatic master/servant contract management approach does not support sustainable commercial contract outcome for either party.
Rodney Timm is the director of Property Beyond.