The mission statement for claims & contract management in companies
Insert a framework for action and ensure that all employees act in a concerted and uniform manner.
2016-01-31. If there was a such a person as the best claims & contract manager in the world, or better still if you could find him/her and employee him/her in your own company, what would his/her expertise be worth? Would he/she be able to single-handedly improve the commercial results of project implementation? This is rather unlikely, after all both project implementation and project initiation are team-based tasks, of which claims & contract management should be integral components. This specialist article elucidates some basic aspects of the permanent anchoring of claims & contract management in companies in the industrial project business.
Why systematise claims & contract management at all?
Claims & contract management in the industrial project business serves, among other things, to enable the company to efficiently and clearly handle the consequences of deviations, disruptions and changes. Contract management during project initiation (“preventive claims management”) serves to bring into focus the performances that the parties are required to render to each other. It also serves to create a contractual apparatus which makes it possible to appropriately handle those deviations, disruptions and changes and assess and establish compensation claims. Claims management rests on this basis. It is virtually the executive power in this context.
Why does a company need a mission statement for its claim and contract management?
Since claim and contract management are a team-based task they need organisation, which is necessary to ensure that each individual employee in the company participating in project initiation and project implementation knows and confidently applies his/her duties, competencies and responsibilities (“DCR”) within the framework of the company’s claim and contract management for his/her area of work. To be able to establish these duties, competencies and responsibilities correctly and without redundancy, in such a way as to support the company’s business performance, an overarching framework for action is required for the employees in claims & contract management involved in the company’s project initiation / project implementation. Besides defining the duties, competencies and responsibilities involved in the role of an employee in claims & contract management, the purpose of this framework for action is on the one hand to prevent and unify individual action by particular employees marked by their personality, and on the other to ensure reliability with respect to contract partners in project initiation and implementation. Such a framework for action is known as a “mission statement for claims & contract management”.
How is the mission statement for claims & contract management in a company created?
Prescribing this mission statement is the task of the company’s management. It is defined by the management team answering three questions and communicating the answers to the employees involved in project initiation and implementation:
- What do we want our contract partners to think of the claims & contract management in our company?
- What demands does our company have vis-à-vis its own claims & contratc management?
- What results does our company want to achieve in its projects with corporate-wide claims & contract management?
The answers to these three questions are decisive as to how the future mission statement for claims & contract management can be summed up in a single statement. In an earlier organisational consulting job performed by 11:55 PM consultants GmbH, our client chose the mission statement “success through dialogue”. This is a clear indication that a sense of partnership with customers, suppliers and contractors is highly valued, but also shows that our client does not want to miss out on optimised project results. This mission statement chosen by our client is of course only one of many possible mission statements for claim and contract management in the industrial project sector. However, it seems to be good choice in view of the fact that claims management in particular often has a negative reputation, as it appears to serve the purpose of aggressively protecting the company’s own interests. Such a “balanced” mission statement helps to remove acrimony and aggression from a claim (“the conflict”) and foster relationships based on partnership.
It should be the primary objective of companies in the industrial project business to exhibit reliability in project work with respect to their contract partners. The objective goes hand in hand with that of achieving optimum project results in a commercial sense. In order to achieve both of these objectives, it is essential to ensure uniformity in the work of all the employees involved in project initiation, whatever type of activity they are engaged in. Equally, it is essential to select a mission statement for claims & contract management that fits in with the business model of one’s own company and its market position. Last but not least, this mission statement must be put into practice top-down by all levels of the corporate hierarchy.
(Author: Jürgen Hahn)