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Contract performance

Get to grips with how to measure contract performance 

What is performance of contract?

Contract performance is meeting the obligations laid out in the contract. The quality and timing of the performance must be agreed by all parties and written in the contract. When the party meets the obligations laid out and ‘performs the contract’ the contract is terminated or can be renewed.

There are three common types of contract performance:

There are three common types of contract performance:

Performance requirements

There can be several different performance requirements amongst organisations. However, they should cover all aspects of a contract and all parties must be fully aware of the measures and measurement before the contract is awarded. It’s important that whatever performance measures you select, they can easily be identified and will; provide clear evidence of success. Look below at some requirements and how they could be measured.

  • Compliance with contract obligations: This ensures the smooth running of contracts whilst maintaining good relationships with suppliers. You could measure this by setting a target compliance level and regularly check that suppliers are meeting their obligations.
  • Compliance with regulations: This will help limit any reputational damage through not adhering to regulations and reduces fines and attention of regulators. Regularly check for updated compliance just in case there are any updates that may affect your organisation.
  • Suppliers deliver targets are met: This is extremely important as it will help to avoid any disruption to operations. Checking up on your suppliers allows you to detect if your supplier is facing any challenges that may present a risk to your business. Produce a monthly performance report and identify the targets and performance that are being met. If a supplier is underperforming in one area, you can proactively take action to help mitigate risks.
  • Key contract dates: Contracts contain critical dates that need to be met. Ensure that there is enough time for your supplier to perform efficiently and at a high standard, which helps to reduce non-performance. Measure how many key dates are laid out in the contract, ones that have not been met or at risk of not being met. 
  • Contract performance requirements: At a higher level could be managing change, customer support, infrastructure issues and internal and external relationships, however, these are much more difficult to measure.

CIPS Contract Management Cycle

Our Contract Management Cycle is used to create a smooth end-to-end process, ensuring optimum scoping, planning, managing, and reviewing are taken place at the right time. Find out more about the Contract Management Cycle

Contract management key themes

Procurement KPIs Contract Terms Contract management Strategy
Benefits Breach of contract End of contract

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