The Relational Contracting Bandwagon by Jon Hansen

Posted on December 17, 2013


They say that originality is the ability to conceal your source, and this statement has never been truer than it is regarding the emergence of the Relational Contracting model.  I say emergence in that while the concept is certainly not new   ̶   as detailed in his book, Andy Akrouche developed and began successfully implementing his model in both the public and private sectors more than 20 years ago   ̶   it is only now gaining the mainstream recognition it deserves.

The simple question this raises is whether or not said recognition is a good thing, especially with various entities including consulting firms scrambling to establish their branded version of the relational model.

On the one hand, the increasing awareness of the importance of moving away from a transactional or deal oriented engagement with supply partners is long overdue and necessary.  This is because it is the only way to address the challenges associated with the high percentage of complex contracts that run off the rails.

However, and this is key, are the relational models that are being heralded as the path to finally realizing the promised benefits associated with large contracts really viable?  Or as IACCM’s Tim Cummins put it, can they address what he referred to as being value erosion, in which 27% of all contracts or $3 billion per year are under-performing as a result of poor contract management.

Interesting enough, I will have an opportunity to review the viability of one such model in an upcoming IACCM webinar on the 19th of December.

I will keep you posted.

In the meantime, I would encourage you to check out Akrouche’s book Relationships First: The New Relationship Paradigm in Contracting.  After all, it is always a good idea to use the original and most successful model as the standard by which to judge all others.



Posted in: Commentary