By Emma James, chief commercial officer, Digital Modus
In NHS procurement, the moment a contract is signed is often treated as the finish line. In reality, it should be the starting point to understand what needs to be achieved and how we measure the delivery and ultimately the success of the contract.
The NHS proposed 2026/27 payment reforms signals a continued shift in elective care funding, with greater reliance on activity-based payments and targeted incentives such as best practice tariffs to drive efficiency, delivery and waiting list recovery.
By linking more funding to how care is delivered – and not just how much – these changes aim to reshape provider behaviour and improve value, placing greater emphasis on measurable outcomes and making robust, proactive contract management essential to ensure these incentives translate into real improvements in performance.
Over the past few years, contract management has become something of a buzzword. Many recognise its importance, yet many still struggle to undertake contract management consistently and embed it effectively.
Capacity and resource constraints, unclear ownership, capability and inconsistent processes mean contract management is frequently reactive rather than proactive. This can lead to higher risks, poor performance and cost impact.
When issues finally surface, they tend to appear at the end of a contract lifecycle – often when it is already too late to address them properly.
At its core, effective contract management is about ensuring value for money, risk mitigation, accountability and service continuity. But it is also about ensuring the supplier and the organisation deliver on what was promised.
When it works well, contract management protects public funds, strengthens supplier relationships, increases visibility and ultimately improves outcomes for patients and end users.
The challenge is that the contract management itself is often misunderstood and misinterpreted, leading to reactive behaviors, incorrect assumptions, improper application and unnecessary frustration.
The gap between procurement and delivery
In many NHS organisations, procurement teams focus on designing contracts, while operational teams inherit the responsibility for managing them. This handover can create a disconnect.
The people who tendered the requirements may no longer be closely involved once the agreement begins, and the teams responsible for day-to-day delivery may not have fully understood the critical importance of defining key performance indicators (KPIs) or contractual obligations in the first place.
Often not wholly understanding that these should be used throughout the life of the contract to define the requirement, manage performance, identify risks and opportunities, support continuous improvement and provide data insights against the requirement.
The result is a familiar pattern in many trusts.
A contract runs for several years without contract oversight. Performance issues are tolerated or overlooked because they are not systematically measured with relationships often taking priority.
Then, when the contract approaches renewal, organisations suddenly realise the service has not delivered the expected outcomes.
Often at this point, the opportunity to manage the situation and mitigate the risks has passed and has resulted in under performance, higher risks and value for money not being achieved.
This highlights an important truth: contract management is not simply an administrative task that begins after the procurement process is completed.
It is a continuous process that should start before a tender is issued.
Defining success from the start
Emma James
One of the most common pitfalls in contract management lies in how contracts are designed up front.
If the requirement or the success measures are vague or poorly defined, monitoring performance against them becomes extremely difficult.
Organisations frequently discover, after the fact, that a supplier has not delivered something they expected. Yet when they review the contract documentation, the requirement was never explicitly specified.
Without clear metrics and performance indicators, it becomes challenging to hold suppliers accountable or enforce improvements.
This is why contract management must begin at the earliest stages of procurement planning. Before a contract is even tendered, trusts should be asking critical questions:
- What outcomes are we trying to achieve?
- How will we measure whether those outcomes are being delivered, are they SMART (specific, measurable, achievable, realistic, timely)?
- What data will we need to monitor performance effectively?
- Who will be responsible for oversight throughout the contract lifecycle?
By defining these elements upfront, organisations create a framework that supports consistent monitoring and early intervention; SMART service levels agreements and meaningful KPIs to ensure the appropriate oversight is undertaken and is clear for all parties.
These can then be monitored throughout the entire lifecycle of the agreement.
Shared responsibility, not siloed ownership
Another persistent issue is uncertainty around who actually “owns” a contract.
Technically, procurement teams facilitate the process of letting the contract, but they are not usually responsible for delivering the services.
Those responsibilities typically sit with operational teams or budget holders. Without clear governance structures, accountability and contract/supplier relationship management can become blurred.
Effective contract management requires collaboration between procurement, contract managers and service owners.
Each group brings a different perspective: procurement provides commercial and tendering expertise, contract managers ensure ongoing oversight, and operational teams understand the service delivery context.
When these perspectives work together, organisations can identify risks earlier, resolve issues more quickly and maintain stronger supplier relationships.
From reactive to proactive oversight
Many contract management challenges stem from a lack of proactive monitoring. Instead of reviewing performance regularly, organisations often rely on informal feedback through relationships or sporadic reviews.
A structured approach changes that dynamic.
Regular performance reviews, clear escalation processes, and transparent reporting allow both parties to address problems before they escalate and put in place any risk mitigations.
Importantly, contract management should not be framed solely as a compliance exercise.
While monitoring KPIs and enforcing contractual obligations are essential, the broader objective is to ensure services deliver the intended outcomes and the organisation receives value for money from that contract.
This requires ongoing dialogue with suppliers in an open and transparent manner, continuous improvement, and, in some cases, adjusting contractual arrangements to reflect evolving needs using the performance and data collection undertaken through the contract management activity.
Building capability for the long term
Contract management is often not recognised as a critical function and is often under-resourced or added to the job description of other roles.
Skilled professionals who understand commercial frameworks and service delivery are in short supply, and organisations frequently rely on teams, often in procurement or the service owners to manage the contracts alongside the ‘day job’’, creating competing priorities.
Building capability in this area is essential.
That means investing in training, establishing clear processes, and creating roles specifically focused on contract oversight. It also means recognising contract management as a strategic function rather than an administrative afterthought.
Digital tools, AI and data platforms play a key role.
By providing greater visibility of contract performance, milestones and financial commitments, technology can help organisations move away from manual tracking and fragmented reporting.
Using automation and AI can remove burdensome administrative tasks, collating all the data in one place and undertaking basic monitoring, alerting organisations of any issues.
This allows contract managers to focus on under-performing and high-risk contracts. However, technology alone is not the solution; it must be supported by the right governance structures, people and skills.
Unlocking the full value of contracts
NHS contracts represent significant investment in taxpayer money.
Ensuring those investments deliver the intended outcomes requires more than well-written procurement documents. It requires active, informed and consistent management throughout the life of the contract.
Done well, contract management strengthens accountability, improves supplier performance and safeguards the public purse by delivering value.
Done without care, it allows problems to accumulate quietly until they become costly to the end user or disruptive to the patient.
The shift that many organisations are now recognising is simple but important: procurement does not end when a contract is signed. It is one step in the procurement lifecycle.
One is which has been underrated and unrecognised but with the right investment can deliver the largest returns.
