Most Admired Global Companies in Contract Management Announced

IACCM survey identifies contract leaders that excel in ethics and risk management; quality of contract management has become a key indicator of company performance and integrity

Ridgefield, CT — October 3, 2008 — Contracts are one of the primary vehicles through which opportunities are realized and risks are negotiated and managed. In a complex, networked world, the quality of contract management has become a key indicator of a company's performance and integrity. In the words of one oil industry executive, "World-class companies must have world-class contracting performance."

The ability to define and manage successful trading relationships represents a "core competence" in today's networked world. Corporate reputation and performance depend on a complex web of relationships that span multiple jurisdictions and regulatory environments. Many believe that it was this complexity that first enabled — and then defeated — the leaders in the financial services industry.

While politicians argue over the need for new regulations and controls on bonuses and pay, top global corporations continue to steer their own path in ensuring good governance. They understand the need to balance risk and opportunity, to ensure the trust of key stakeholders. Making and managing responsible commitments is fundamental to that issue of trust.

Most Admired Identified

In the first-ever study of its kind, the International Association for Contract & Commercial Management (IACCM) asked almost 10,000 contracts, procurement and legal professionals worldwide to nominate the companies they most admire for the quality of their contract management performance. These professionals identified more than 400 organizations, and this week the results of that study were announced, highlighting the top 25 most admired contract management performers in the world.

Occupying three of the top four positions are groups from the outsourcing industry. This might be expected, given the long-term nature of their contracts and the criticality of contract management to profitability, customer value and relationship retention. Indeed, it is notable that IBM heads the list, and that contract management was an area for global reengineering focus more than 10 years ago, when Lou Gerstner stated his belief that "contracting is directly linked to brand image."

Today's contract management techniques stretch far beyond the largely administrative tasks of the past. Leaders in this area have understood its critical role in both relationship and corporate governance. The contracting process provides a framework for regulatory compliance, reputational risk management and effective change control, as well as offering a source for added value and innovation.

Top companies understand that added value goes much further than simple price cuts or cost reduction. They use superior contract management skills to drive measures such as improving the safety and reliability performance of contractors or ensuring continuous upgrading of speed and quality. Growing partnership and interdependency means more and more acceptance of open-book policies and information flows, managed by individuals who demonstrate integrity and procedures that earn trust.

Contract Policies "A Key Line of Defense"

"As governments worldwide consider regulatory responses, they should consider the extent to which contracting policies and practices represent a key line of defense for corporate behavior and ethics ," said Tim Cummins, IACCM's CEO. "They would do well to study the companies and business sectors that have adopted robust self-regulation through high quality management of their trading commitments."

Therefore this first study of excellence in contract management is both timely and significant. With the voting now complete, IACCM said that the next step would be to conduct in-depth interviews with many of the winners to understand the approaches they have taken to develop "good practice" in the way they handle their key trading partners.

A more detailed report on the steps to achieve contract management excellence will be issued later this year, the IACCM said. Meanwhile, below are the "top 25" most admired global companies in contract management.

The Global 25

1. IBM
2. Accenture
3. Hewlett Packard
4. BT
5. Boeing
6. Cardinal Health
7. EDS
8. Intel
9. Qualcomm
10. Bechtel
11. Centrica
12. Procter & Gamble
13. Chevron
14. BAE Systems
15. CH2 M Hill
16. J & J
17. Lockheed Martin
18. ABN Amro
19. Coca-Cola Enterprises
20. Fluor Corp.
21. Saudi Aramco Oil Company
22. Bank of America
23. EXL Holdings
24. Capgemini
25. General Motors

IACCM undertook the study in June/July 2008. Participants were asked to nominate companies with which they had dealings as a professional and which exhibited excellence in their post-award contract management performance. In many cases, those experiences were with specific groups or divisions of a company — for example, in some instances the nomination was for sales contracting, in others it was for procurement. Given the focus of the study and the make-up of the respondents, nominated organizations tend to be those dealing with relatively complex, high value and long-term contracts; there is also potential bias towards North American and Western European companies, IACCM said.

IACCM added that the study is based on the opinions and experiences of IACCM members and does not necessarily reflect the views of IACCM officers or members of the board. It is planned to be the first in an on-going series of studies related to contracting and relationship management excellence.