A Delegated Authority And Mandate For The Contract Manager

Contracts are an essential component of doing business. They lay out the expectations, terms, objectives and conditions of a business relationship between two or more parties. For organizations, contract management is a critical process. At the center of these activities is the contract manager or the commercial manager or the customer success manager.

They all are responsible (not accountable!) for ensuring that all parties involved in a contract are meeting their obligations and that the contract objectives are met. In order to do this effectively, they need to have a clear understanding of their authority and what actions they are authorized to take on behalf of their organization. This authority is usually defined in a delegated authority statement that outlines the scope of responsibilities, limitations, and thresholds for authorization.

Without a delegated authority and mandate, the contract manager may not have the necessary power to make critical decisions or take actions that are necessary to protect their organization’s interests. For instance, if the contract manager discovers that a vendor is not delivering on their commitments, they may need to take action to terminate the contract. However, without a clear delegation of authority, the contract manager may need to seek approval from higher-ups before being able to take action. This can lead to delays, disputes, and even financial losses.

Having a clear delegation of authority and mandate not only empowers the contract manager to make informed decisions but also ensures that all parties involved in the contract have a shared understanding of the roles and responsibilities. This enables the contract manager to manage the contract efficiently, identify risks, and mitigate issues before they become a problem.

In addition, a delegated authority statement can also provide clarity on the reporting structure and escalation mechanisms, which can be critical during a dispute or breach of contract scenario. It ensures that the contract manager has the necessary tools and authority to manage the contract effectively, while also providing a clear understanding of the expectations and responsibilities of all parties involved.

A delegated authority and mandate for a contract manager is a crucial aspect of effective contract management. It provides the necessary foundation for a successful and profitable outcome for all parties involved and can help mitigate issues and risks before they become a problem. Furthermore, it empowers the contract manager to make informed decisions, take actions, and manage the contract efficiently.

Now why is there always discussion on the mandate / authority? Think about that.

Arjen van Berkum

Arjen van Berkum is a columnist, keynote speaker and motivator, with an eye for business ecosystems, innovation and disruption. In addition to his work as technology and contract management evangelist, he is a visiting lecturer at Delft University of Technology (TU Delft).