False Economy: The Problem of Underinvestment in Contract Management Skills

Wednesday, 12 August 2026

Introduction: The Capability Gap That No One Owns

Contract management is the discipline through which commercial intent becomes commercial outcome. Procurement identifies the value an organisation is seeking. Contract management determines whether that value is actually delivered. By any reasonable measure, the two functions should be resourced and developed with comparable seriousness. In practice, they are not. Across twenty years of developing capabilities of procurement and contract management professionals in Australia, the Middle East, and Asia, and teaching at universities and for leading professional associations including the Institute of Public Works Engineering Australasia (IPWEA) and the Institute of Public Administration Australia (IPAA), the most striking and consistent observation is the gap between the importance of contract management and the investment that organisations make in developing the people who perform it.

This paper examines that gap. It considers why contract management has been chronically underinvested, what the cost of that “false economy”, what capability frameworks require, and what organisations need to do to close the gap. The argument is that the underinvestment is structural, that its cost is documented and significant, and that the path to remediation is well established. What is missing is not the capability framework, the knowledge and skills pathways, or the evidence. What is missing is resourcing and organisational leadership.

1. The Vital Capability That Goes Under the Radar

The Chair of the Joint Committee of Public Accounts and Audit (JCPAA) captured the position of contract management in Australian public sector practice with unusual clarity when announcing the Committee’s 2024 inquiry into Commonwealth contract management frameworks. Successful outcomes cannot be achieved from government procurement activities without effective contract management. Contract management is therefore a vital capability for public sector agencies, but one that commonly goes under the radar and is often lacking for a number of reasons. The phrasing is significant. Contract management is not a peripheral function or a back-office concern. It is a vital capability, but, too often, it goes under the radar, despite its importance, because organisational attention and investment are directed elsewhere.

The same observation has emerged in the private sector. Procurement teams routinely command dedicated training budgets, formal career pathways, professional certification programs, and senior leadership sponsorship. Contract management teams, where they exist as distinct functions, frequently rely on informal, on-the-job learning, with limited structured development and unclear career progression. The signal this sends to practitioners is unambiguous. Procurement is a profession. Contract management is something procurement professionals graduate beyond, or that operational staff pick up as part of their broader role.

The consequence of this signalling is predictable. The most consequential decisions in the commercial lifecycle, the decisions about how to manage variations, how to enforce performance standards, how to handle disputes, and how to extract value from the supplier relationship over time, are made by practitioners who have not developed the skills for them. The supplier, by contrast, has typically invested heavily in financial acumen and negotiation skill development. The asymmetry favours the supplier.

2. The Evidence of Systemic Underinvestment

The Australian National Audit Office (ANAO) has produced a body of performance audit evidence that documents the cost of underinvestment in contract management capability. Of 36 performance audit reports conducted on procurement and contract management activities over the five years to 2024, just over half were assessed as either partly effective or not effective. The ANAO identified the consistent themes across that body of work as the use of appropriate expertise, transparency in decision making, demonstration of value for money, ethical conduct, and good record keeping. Each of these themes maps directly to capability gaps that structured contract management training is designed to address.

The JCPAA’s March 2025 contract management inquiry report reinforced these findings. The report exposed deficiencies in Commonwealth contract management practice, including insufficient record keeping and poor documentation of value for money in contract variations. The report also highlighted the need for entities to maintain an appropriate arm’s length relationship with suppliers and to establish and monitor effective and measurable key performance indicators. The Committee’s central recommendation was that the Department of Finance has a pivotal role to play in addressing shortfalls in contract management across the Commonwealth, and that the Department needs to be more than just a policy steward providing advice and resources. The recommendation, in plain terms, is that ongoing underinvestment requires a systemic response, and that policy guidance alone is insufficient.

Underinvestment also shows up at the local government and state agency level. Successive ICAC investigations in New South Wales, including Operation Hector at Transport for New South Wales and the Inner West Council, highlighted this systematic breakdown. Inquiries have identified poor enforcement of procurement and contract rules, deficiencies in managing building projects and personnel, and contract managers who lacked sufficient understanding of the contract model they were operating within. Each of these is a capability finding. Rarely is this the product of malicious actors alone. Typically, they are the product of capability gaps that allow misconduct to occur and to escape detection at the time only to be discovered subsequently through investigations.

3. Why Contract Management Has Been Relegated to as a Junior Function

The reasons contract management has been chronically underinvested are organisational and historical. Several factors recur across jurisdictions and sectors.

The first is visibility. Procurement produces visible artefacts: signed contracts, savings figures, completed tenders. Contract management produces avoided losses, sustained relationships, and outcomes delivered against commitments. Avoided losses are inherently invisible. The contract that runs smoothly, the supplier that delivers as promised, the variation that is negotiated quickly and quietly, do not generate the visible achievements that drive organisational recognition and investment.

The second is professional identity. Procurement has, over the last twenty years, established itself as a profession with global certification, recognised qualifications, and a clear career pathway. Contract management has been slower to professionalise. Many practitioners performing contract management functions hold technical qualifications in their original discipline, engineering, project management, finance, law, but have no formal contract management qualification. They are doing the work, but they are not recognised as members of a profession that is doing the work.

The third is governance. Procurement governance is well established, with clear authority delegations, probity requirements, and audit oversight. Contract management governance is less developed. In many organisations, the question of who is responsible for monitoring supplier performance, approving variations, or initiating disputes is mixed or unclear, with responsibility distributed across the originating procurement team, the operational owner, the legal team, and the finance function. Where responsibility is unclear, capability investment is rarely prioritised. It is not uncommon for a contract owner to be identified, especially when contracts are failing. 

4. The Real Cost: What the Audits Show

The cost of underinvestment in contract management capability is not theoretical. Successive ANAO audits, the JCPAA’s contract management inquiry, and the Department of Finance’s own analysis have documented a consistent pattern of failures that map directly to capability gaps:

• Supplier performance against contractual commitments is not systematically monitored. Where it is monitored, the data is not consistently used to inform decisions about variations, renewal, or future procurement.
• Contract variations are approved without rigorous documentation of value for money. The cumulative effect across an organisation’s contract portfolio is significant value loss without commensurate accountability.
• Key performance indicators are inconsistently linked to evaluation criteria. Suppliers are selected on one basis and managed on another, and the gap between the two is rarely closed.
• Record keeping is consistently identified as inadequate. Without records, neither performance can be assessed retrospectively nor lessons learned for future procurement.
• Probity and ethics breaches occur during contract delivery as well as during procurement. ICAC investigations have repeatedly identified weaknesses in contract management oversight that allowed corrupt conduct to persist.

Each of these failure modes is a capability gap. None of them is intractable. They are the predictable consequence of asking practitioners to perform sophisticated commercial work without the structured development, recognition, and support that the work requires.

5. Capability Frameworks: APCC, CIPS, and the Path Forward

The capability frameworks needed to address contract management underinvestment already exist. The Australasian Procurement and Construction Council (APCC) launched its Public Sector Procurement Capability Framework in 2021, defining the core procurement and related business skills necessary to deliver compliant value for money procurement outcomes. The Framework identifies proficiency levels aligned to the Australian Qualifications Framework, providing a structured pathway for capability development across the lifecycle. The APCC has subsequently certified specific qualifications, including the University of Queensland (UQ Skills and AcademyGlobal) Diploma and Advanced Diploma of Procurement and Contracting, as aligned to the Framework.

The Chartered Institute of Procurement and Supply (CIPS), the global professional body, provides the equivalent international framework, with structured qualifications from CIPS Level 4 Diploma through to the CIPS Level 6 Professional Diploma, and a Global Standard for Procurement and Supply that defines the competencies required at each career stage. CIPS qualifications are recognised across more than 150 countries and provide a globally consistent measure of professional capability.

At the Australian Commonwealth level, the JCPAA’s March 2025 recommendations explicitly endorsed the development of a procurement and contract management profession within the Australian Public Service, building on the launch of the APS Procurement and Contract Management Profession by the Australian Public Service Commission. The architecture is in place. What remains is the organisational leadership commitment to use it consistently.

The implication for organisations is clear. The argument that there is no available framework for contract management capability development is no longer credible. The frameworks exist, the certifications are accessible, and the qualifications are recognised. The question for any organisation is whether it is prepared to invest in applying them.

6. Building Contract Management Capability

Reversing the underinvestment in contract management capability is a multi-year effort that requires coordinated change across several dimensions:

• Recognise contract management as a profession in its own right, with a defined career pathway, structured qualifications, and senior leadership sponsorship.
• Align the capability frameworks for procurement and contract management so that practitioners can move between the two disciplines and build integrated commercial expertise.
• Invest in structured education that addresses the full commercial lifecycle, not just the procurement phase, including the legal, commercial, financial, and relationship management dimensions of contract management.
• Establish governance structures that make contract management responsibilities explicit, with clear authority delegations, monitoring obligations, and accountability for outcomes.
• Build the feedback loop between contract management experience and future procurement strategy, so that the capability investment in contract managers translates into better procurement design over time.

Each of these elements is supported by the existing capability frameworks, the audit and inquiry recommendations, and the body of practitioner experience available to organisations that choose to access it. None of them requires the invention of new policy. Instead, the consistent application of policy that is already in place is needed.

Conclusion

Contract management is not a peripheral discipline, it is the mechanism by which commercial intent becomes commercial outcome. Organisations that underinvest in it consistently fail to capture the value their procurement processes were designed to identify. The Australian evidence base, drawn from the ANAO’s performance audit program, the JCPAA’s contract management inquiry, ICAC’s procurement-related investigations, and the APCC’s capability framework, makes the cost of underinvestment unambiguous. Supplier performance is unmonitored. Variations are undocumented. Key performance indicators are unenforced. Value for money cannot be demonstrated. Each of these failures is a direct consequence of underinvestment in the people performing the work.

Twenty years of educating contract management and procurement professionals across multiple jurisdictions has reinforced a single conviction. Organisations that invest in structured contract management capability development, that recognise contract management as a profession, and that align capability frameworks across the full commercial lifecycle, consistently outperform those that treat contract management as a downstream administrative task. The investment is not large in the context of the contract values being managed. The return on the investment is the difference between value identified at procurement and value delivered at contract close-out.

AcademyGlobal was established in 2004 to build this kind of integrated capability. Through globally informed procurement and contract management training, university partnerships including the University of Queensland, Monash University and University of Technology Sydney with public sector, private sector, and not-for-profit organisations across more than twenty countries, AcademyGlobal helps organisations resolve the structural conflict between procurement and contract management at the level of measures, capability, and governance.

To learn more about the author’s background and practice, view Paul Vorbach‘s profile on the AcademyGlobal website or connect with Paul on LinkedIn.

About the Author

Paul Vorbach MCom, LLM, MBA, FCG, F.ISRM, FAICD, FGIA is the Managing Director of AcademyGlobal, a Sydney-based capability development firm established in 2004 that has delivered training in more than twenty countries across five continents. With over 20 years of global experience, Paul has trained contract management, procurement and supply chain professionals across Australia, the Middle East, and Asia, and has taught at post-graduate university level and for leading professional associations. He is Vice President of the Institute of Strategic Risk Management (ISRM) for ANZ, Treasurer of the Society of Risk Analysis (SRA) for ANZ, and Adjunct Faculty at the Australian Graduate School of Management (AGSM) at the University of New South Wales.

AcademyGlobal partners with public sector, private sector, and not-for-profit organisations to build the capability that underpins sustainable delivery performance. AcademyGlobal is the Chartered Institute of Procurement and Supply (CIPS) Centre of Excellence for Australia, New Zealand and Asia, regional partner of the Chartered Institute of Public Finance and Accountancy (CIPFA), and the first Australasian Procurement and Construction Council (APCC)-certified provider of the Diploma and Advanced Diploma of Procurement and Contracting through its partnership with the University of Queensland (UQ Skills).

Paul’s full profile is available at academyglobal.com/paul-vorbach and on LinkedIn.