What are the most common reasons for contract performance issues?

2 Contract clarity

Another key factor for contract performance is to have a clear and comprehensive contract that defines the scope, deliverables, timelines, payment terms, quality standards, and performance indicators. You should also include clauses that address potential risks, such as changes, disputes, force majeure, liability, and termination. You should review the contract carefully and negotiate any terms that are unclear, ambiguous, or unfavorable. You should also ensure that both parties sign and acknowledge the contract before starting the work.

3 Communication and collaboration

A good contract is not enough to guarantee contract performance. You also need to maintain regular and effective communication and collaboration with your supplier throughout the contract lifecycle. You should establish clear roles and responsibilities, communication channels, feedback mechanisms, and escalation procedures. You should also monitor the supplier's progress, performance, and compliance, and provide timely and constructive feedback. You should also be flexible and responsive to any issues or changes that may arise, and work together to find solutions.

4 Change management

Change is inevitable in any contract, especially in complex or long-term projects. However, change can also cause contract performance issues if not managed properly. You should have a clear and formal change management process that outlines how to request, approve, document, and implement changes. You should also communicate any changes to all relevant stakeholders, and assess the impact of changes on the contract scope, budget, schedule, quality, and risk. You should also update the contract accordingly and obtain the supplier's consent.

5 Performance evaluation

To ensure contract performance and compliance, you need to measure and evaluate the supplier's performance against the contract objectives and indicators. You should use objective and reliable data sources, such as reports, audits, surveys, or inspections. You should also conduct regular performance reviews with the supplier, and discuss the results, achievements, challenges, and improvement opportunities. You should also recognize and reward the supplier's good performance, and address any performance gaps or issues.

6 Dispute resolution

Despite your best efforts, contract performance issues may still lead to disputes between you and your supplier. To avoid escalating the conflict or damaging the relationship, you should have a dispute resolution process that specifies how to handle and resolve disputes. You should also try to resolve disputes amicably and constructively, using negotiation, mediation, or arbitration. You should also document any disputes and resolutions, and learn from them to prevent future problems.