Contract Management - Association of Corporate...
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Contract Management February 22, 2018 Mark Ross EVP and Global Head of Contracts, Compliance and Commercial Services
Transcript of Contract Management - Association of Corporate...
ContractManagement February22,2018
MarkRossEVPandGlobalHeadofContracts,ComplianceandCommercialServices
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Presenta:onOverview
Topic1Best-In-ClassContractNego@a@onPlaybooksandContractTriage
Topic2StandardizingTemplates
Topic3UsingManagementInforma@onandAnaly@csinContracts
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TOPIC1|Best-In-ClassContractNego:a:onPlaybooksandContractTriage
PART1Cri@calPlaybookComponents
PART2BenefitsofPlaybooks
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Cri:calPlaybookComponents
► Documen@ngprocesses/workflows(includingtriagingifrelevant)
► Iden@fykeystakeholdersandaSendantescala@on/approvalrequirements
► SeUngforthstandardtemplates
► Contractreviewcheck-lists
► Standardnego@a@onposi@ons–issuebased
► Standardnego@a@onposi@ons–clausebased
► Fallbackposi@ons
► Assigningweighttonego@a@onposi@ons(riskscores/trafficlampsystem/‘must-haves’versus‘nice-to-have’)
► Explaininginternalpoliciesunderlyingnego@a@onposi@ons
► Setexplana@onsforcounterparty
► Con@nuousImprovement
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ProcessMapping
► LeveragingSixSigmatechniques
► Ideallycross-func@onal
► Iden@fykeyvariables:
§ Ac@vi@es/Stakeholders
§ Decisions(escala@ons/approvals)/Dependencies/Hand-offs
§ Inputs/Outputs
§ ITinterac@ons
► Processmappingshouldbesupplementedbyprocessanalysis:
§ RACIchart
§ ManagementInforma@on
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Inputkeytermstotrackingdatabase Sendforcountersignatureandstorage
ReviewCommiJeeConductsreview.[Consultbusinessownersasnecessary?]
Nego@ateanychangeswithprovidersNego:a:onsComplete?
Reviewcontract,proposelanguagechanges,andthenroutetoappropriateReviewCommiSeemembersper
[email protected]@ngtable.Isrou:nginfocomplete?
SampleProcurementContractsProcessMap
Yes
Yes
Yes
Yes
Yes
No
No
NoNo
No
Escalatewhennecessary
No
Consulta
ndEditT
ermsa
ndM
onito
rTAT
TurnaroundTimeTarget(Days)
Standard Rush
2 1
3 1
4 2
1 1
*
*
*
*
*
*
†
* *
* *
*
Businessownerini@atesaprocurementac@on
Iscontract>$10k
or>1year?
Ini@atecallwithlegal/risktodiscussproposedcontract
CompleteandsubmitwitheachcontractaCRRFSubmitcontract
MonitorreviewcommiSeeTAT.ReviewcompletedwithintargetTAT?
Generatereview-statusreportandcirculateto
stakeholdersWeekly
ContractadministratorconsolidatesallchangesfromreviewCommiSee,checksforcompleteness.
Areallreviewscomplete?
Routerevisedcontractforexecu@onperauthoriza@onmatrix,thencollectsignedagreement.
Documentthresholdforini:a:ngaphonecallwithlegaltoreview
overalldeal
CRPF
Playbook/ReviewGuidelines
Authoriza:onmatrix
TerminateProcess
EndProcess
FREQUENCYBusinessOwner ContractAdministratorReviewCommiSee AssociatedDocument
LEGEND
† Selectedcontracts* Percontract
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Triaging
► ContractRiskScoringSystem§ Differinglevelsofcontractreview
► ResourceRight-Sizing(mappingresourcestorisklevels)
► Sub-ProcessDesignandMapping
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ContractReviewRequestForm
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ContractRiskClassifica:onQues:onnaire
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SampleTriageProcessMap
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BenefitsofPlaybooks
► Consistentlyapplyingyour‘goldstandard’
► Minimizingrisk► Reducingnego@a@on
cycles/redlining► Enablingdelega@onof
nego@a@onstolesscostlylegalresourcesoreventonon-legalresources(self-help)
► Transparency► Elimina@ng
wastefulprac@ces► Streamlining
ac@ons► Improving
turnaround@mes► Elimina@ng
boSlenecks
TEMPLATE&GUIDELINEIMPROVEMENT
OPTIMIZINGNEGOTIATIONPRACTICES
PROCESSEFFICIENCIES
► Upda@ngcontentbasedonmetricdrivencon@nuousimprovement
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ContractProcessandNego:a:onPlaybookStructure
Component
Description
ProcessMapping Diagramactivitiesandactivityownersforacontracttype’spre-executionlife-cycleResults:
• Identifywaste• Ensuretasksareassignedtorightresource• Streamlinehandoffs• Enableactivitytracking
Templates Setforthrelevanttemplatesandlinktonegotiationguidelinesection
StandardNegotiationPositions–IssueBased
Articulatenegotiationpositionsindependentofclauselanguage
StandardNegotiationPositions–ClauseBased
Articulatenegotiationpositionsmappedtotemplateclauses
ArticulatingFall-BackPositions
Provide actual fall-back language. Creates consistency across negotiators andcontracts;andfacilitatesaproductiveevaluationofthatnegotiationpositionovertime.Alsonotethatanimportantcontractissuemay(andinfact,oftenshould)havemultipletiersof fall-backpositions (i.e. the fall-backstoa fall-back,or fall-backs fordifferentsituationsthatimpacttheissue).
ExplainingNegotiationPositionstoCounterparty
Providesetexplanationsforassumednegotiationpositionsforcounterparty.Providingrationales for proposed changes or push-backs is powerful, yet managing thatknowledgeacrossalegaldepartmentisoftenoverlooked.Itisalsousefultotracktheeffectivenessofsuchexplanationusingasimpleanalyticsregime.
AssigningWeighttoNegotiationPositions(riskscores)
Identifynegotiationpositionsthataremust-havesversusnice-to-have.Animportantguidelinefornegotiationsistoarticulatewhentopushback,whentocompromiseandwhentosimplyacceptproposedmodifications.
ContinuousImprovement
Treatyourplaybookasalivingdocument.Conductperiodicreviewsofyourplaybookthatincludesfeedbackfromnegotiators(atleasteverysixmonths).
Import analytics intoyourplaybook. Theseanalyticswill help assesshowcompliantyourcontractsarewithyourplaybook(trackingdeviationsfromplaybookpositions),howinsyncyourplaybookiswithmarketrealities(whatyournegotiatorsareinfactdoing), and will become the basis for improving your playbook (e.g. fine tuningtemplatelanguage,fall-backpositionsetc.)
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DOCUMENT PRODUCTION REQUEST LIST FOR KNOWLEDGE TRANSFER: CONTRACT LIFE-CYCLE MANAGEMENT AND PLAYBOOK DESIGN Please indicate using the checked box function whether the requested documentation is (i) available, and (ii) provided/to be provided as part of your production of materials to Integreon. Knowledge Management Resources Please provide any existing playbooks, guides, manuals, instructions and/or check-lists that explain how [insert contract type(s)] [is/are] drafted and/or negotiated. Available: Yes ☐ No ☐ Provided: Yes ☐ No ☐ Preferred positions for specific/critical clauses Please provide us with any existing preferred lists of push-back positions (position 1, position 2, and final position 3) during negotiations that exist and are followed currently for critical/specific clauses Available: Yes ☐ No ☐ Provided: Yes ☐ No ☐ Unusual clauses/wording Please provide us with any existing guidance/language that provides for circumstances when there are escalations/approvals/flagging required to specific business authorities/department heads for any approval/confirmation before accepting any specific push-backs or unusual clauses/wording Available: Yes ☐ No ☐ Provided: Yes ☐ No ☐ Processes/Workflows Please provide any process diagrams/maps or workflow diagrams/maps that demonstrate how activities relating to the life-cycle management of [this/these] [insert contract type(s)] [is/are] organized. Available: Yes ☐ No ☐ Provided: Yes ☐ No ☐ Templates Please provide all existing templates of [insert contract type(s)] and any attendant instructions for the use thereof. Available: Yes ☐ No ☐ Provided: Yes ☐ No ☐ Prior Legal Work Product
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Next-Genera:onPlaybookMediaFormat
► WordorPDFhaveseriousconstraints.
► IntegreonhasseSledonMicrosocOneNoteasitsnewplaqormforplaybookdesign.
► Everychangemadetothedocumentistrackedandreversible.
► Mul@pleuserscanaccessandworkwithintheplaybookatthesame@me,withallchangesbeingtrackedandreflectedforallotherusersinreal-@me.
► Theplaybooksupportsnotjusttext-basedcontent,butpictures,spreadsheets,embeddedfiles,recordedvideoandaudio,andanumberofothermediatypes.
► OneNoteplaybooksarenotrestrictedtoalinearstructureandallowthecontractreviewertobounceback-and-forth,fromclause-to-clause,easily.
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OneNotePlaybookScreen-Shot
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OneNotePlaybookContractStructureScreen-Shot
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PollQues:on1
► LiSleornotatall(mostknowledgeresideswithindividuals)
► Lightlydocumented(forexample,wehavegeneralguidelinesforcertainissues)
► Heavilydocumented(wehavethoroughguidelinesonprocesses/workflow,andonnego@a@onposi@onsandtac@csacrossagreementtypes,includingfallbackposi@ons)
Towhatextenthasyourlegaldepartmentcentrallydocumentedprocessesandnego@a@onprac@cesforyourcommercialagreementsinaplaybook?
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TOPIC2|StandardizingTemplates
PART1Implemen@ngmodelclauses/goldstandard
templates
PART2Usingdynamicclauselibraries
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Implemen:ngModelClauses/Crea:ngGold-StandardTemplates
STEP4► Harmonizing/
Consolida@ngTemplateOutlines
STEP6► Crea@ngLocaliza@on
Sub-Templates
STEP5► Popula@ngSurviving
TemplateOutlineswithModelClauses(note-agreeingmodelclausesseparateexercise)
STEP1► Inventorying
TemplateRequirements
STEP3► Crea@ngIndividualized
TemplateOutlines(ClauseDirectories)
STEP2► Genera@ngTemplate
Map
OUTPUT
COLLECTIONOFGOLD-STANDARDTEMPLATESWITHUNDERLYINGMODELCLAUSE
LIBRARIES
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SampleTemplateRequirementMapping
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LeverageDynamicClauseLibraries
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PollingQues:on2
► LiSleornotatall(mosttemplatesarenotstandardized)
► Some(selecttemplatesarestandardizedusingmodelclauses)
► MostlyorEn@rely(themajorityoftemplatesinusearestandardizedandreflectmodelclauselanguage)
Towhatextenthasyourlegaldepartmentimplementedmodelclausesacrosstemplatesinuse?
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TOPIC3|ManagementInforma:onandDataAnaly:csinContracts
PART1ManagementInforma@onMetrics
PART2IntroducingAnaly@cs► PullingStructuredData
fromyourContracts► Benefi@ngfromAnaly@cs
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ManagementInforma:on
Volumes
TrackingNego:a:onPrac:ces(E.g.Fall-backu:liza:onrates)
SLACompliance
TurnaroundTimes
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SampleMonthlyPerformanceMetricRepor:ng
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SampleFallbackAnalysisReport
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Illustra:veSLAandBalanceScorecardReport
WorkflowCategor
y MeasuredAc:vity SLA Q4Performance Descrip:on
ABCCo.NDAgenera:on
TimetoComple
te
Ini@alAcknowledgement 95%≤1hour 96.7% Timefromreceipt(withinworkinghours)
HourstoComple@on 95%≤4hours 98.3% Hourstocomple@onminusescala@on
Quality AccuracyPercentage ≥98% WeightedscorecardTBD
PerformanceColorKey
Mee@ngSLA NearSLA
NotMee@ngSLA FutureTracking
Storage
TimetoComple
te Non-EnglishComple@on 99.5%≤8days Businessdaystocomple@onminusescala@on
Quality AccuracyPercentage ≥98% 98.5% 1-(NumberofErrors/TotalOpportuni@esforerror)(weightedscorecardtobeimplemented)
Nego:a:onandRedline
TimetoComple
te
Ini@alAcknowledgement 95%≤1hour 93.8% Timefromreceipt(withinworkinghours)DaystoComple@on(NDAandWO) 90%≤24hours 95.6% Hourstocomple@onminusescala@onDaystoComple@on(PSA) 90%≤48hours 93.9% Hourstocomple@onminusescala@on
Quality AccuracyPercentage ≥98% WeightedscorecardTBD
Other WarrantedEscala@ons ≥95% 1-(Numberofunwarrantedescala@ons/TotalEscala@ons)
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IntroducingAnaly:cs
UsingStructuredData DevelopingBusinessIntelligence
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BenefitsofAnaly:cs
► RiskTrendDetec@on(DeepDataDive)
► Cross-ContractTypeRiskComparisons
► Cross-BURiskComparisons
► Cross-Jurisdic@onalRiskComparisons
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PullingStructuredDataFromYourContracts
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ExampleofBusinessIntelligenceRepor:ng
Thechartisarealanalysisoflimita@onofliabilityissuesarisinginaclient’ssell-sidecontracts(thepercentagesaredrawnfromthetotalinstancesofLOLstandarddevia@onsagreedinasetofcontractsthatrequiredescala@onforapprovaltoseniormanagement)
Forthisclient,Integreonalsoprovidedalistoftheunderlyingcontractsforeachpieslice
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CLMPlaiormFunc:onalityChecklist
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PollingQues:on3
► Contractualdataisdisorganizedandnoteasilyavailable
► LackofSubjectMaSerExper@se
► Perceivedprohibi@vecost
► Idon’tknowwheretostart
Whatisthemostsignificantbarriertoyouruseofcontractanaly@cs?
©2018Integreon
No part of this publica@on may be reproduced, stored in a retrieval system, ortransmiSed in any form or by anymeans— electronic, mechanical, photocopying,recording,orotherwise—withoutthepermissionofIntegreon.
This documentprovides anoutlineof a presenta@onand is incompletewithout theaccompanyingoralcommentaryanddiscussion.
MarkRossEVPandGlobalHeadofContracts,[email protected]
+14242802410
