Conveyor belt contracting
The prime objective of business relationships is to maximise value and this requires an appropriate contract that provides the flexibility to collaborate effectively. World Commerce and Contracting recently declared that “smarter contracting can prevent 11% value leakage because of enterprise-wide failure to structure and manage contracts as living commercial relationships rather than static documents” (Closing the Procurement Value Gap, 2026). Our take on this is the need for commercial organisations to adopt practices and procedures that support joint operations.
“Of course we have a collaborative contract; it’s the standard one with additional terms and conditions.” Director, Commercial
“They are always naturally cynical about our intentions and our standard terms do not include the concept of increasing joint rewards.” IT Services Manager
“The complexity of the contract over time has created a negative dynamic to the relationship, and how issues are resolved. This often breaks the trust between both parties as costs escalate.” Aviation Engineering
“We are investing heavily in this relationship even though it is a fixed price contract and we don't get credit for it. They are always asking us to do more.” IT Services Provider
“Our contract people agreed to the price change without reference to us. Even the customer can't sign anything without the ok of the commercial man. They still have their own chain of command.” Defence Services Supplier
“The customer has introduced their commercial department into the normal day running of the Post Design Services contract. They argue over pennies and halfpennies and it takes us 9 months to agree prices. This has slowed down the whole process considerably and introduced an element of conflict between us.” Engineering Project Manager
“For economy reasons we have centralised contract management. This is a big mistake. They are focussed on the company not on the business outputs and don't appear to be accountable for their actions.” Construction Project Manager
“As a commercial officer with responsibility for over 30 companies we rarely get the opportunity to review individual relationships.” Contract Manager
“I feel trapped within their contract terms and conditions which prevent us from improving the quality of the relationship. There is still a bit of the old 'cost-plus, bowler-hatted' attitude to overcome.” Procurement Manager
The contracting function thus has a major role to play in meeting business objectives and ensuring effective collaborative operations. Formulaic processes and proforma contracts can result in costly, bureaucratic overheads that undermine the trust between partners. Many organisations are currently exploring the use of AI to draw up and manage contracts but they must recognise that although this will enable greater efficiency it will not convert a transactional arrangement into relational contracting.