The hidden cost of letting contracts run themselves

Award a contract and the hard work is done. That’s the assumption baked into many procurement functions, and it’s one that’s quietly costing Scottish social landlords more than they realise.

The front end of procurement: market engagement, tender evaluation, supplier selection. It gets the time, the scrutiny and the resource. What comes after award is often handed to an already stretched service manager with the expectation that things will run themselves. When a contract is managed well, nothing visibly goes wrong, so the value goes unnoticed. When it isn’t, the damage has usually accumulated long before anyone looks closely enough to see it.

Scotland’s regulatory environment makes this harder to ignore. Housing associations and local authorities are required to report annually on any contract above £50,000. They must set out actual spend, whether objectives were met, and how far community benefit commitments were delivered. Every three years, the Scottish Government’s Procurement and Commercial Improvement Programme (PCIP) formally assesses contract management as part of a provider’s overall procurement capability. And the Scottish Housing Regulator expects landlords to demonstrate that their procurement activity is delivering real value for tenants and communities. That is a significant evidence burden, and it falls squarely on teams that are often already stretched.

That dynamic is shifting. I speak to housing associations and local authorities across Scotland every week, and the conversation has changed. Contract management is no longer just a compliance obligation. For a growing number of senior leaders, it has become a strategic priority. Sometimes a personal one, because the consequences of weak oversight are landing directly on their desks.

Why contract management has moved up the agenda

Persistent economic and geopolitical pressures have a lot to do with it. Inflation continues to squeeze budgets, and social landlords are under sustained pressure to find efficiencies just to maintain current service levels. Once departments have exhausted the more obvious cost-saving options, attention turns to post-award delivery. According to research, an average of 9% of annual contract value is lost through poor oversight.

For some procurement teams, the resource challenge compounds the problem. It is not unusual for a housing association to have one or two people responsible for dozens of contracts, each carrying multiple performance metrics, social value commitments, and renewal dates. Keeping on top of all of it manually is time-consuming, and things slip.

What poor contract management actually costs

It is rarely one big failure. More often it is a gradual erosion. Small gaps between what was contracted and what is being delivered add up to something significant over time.

Take a housing provider that appoints a contractor to replace 100 kitchens at a total cost of £650,000. Works start well, but labour shortages and supply disruption begin to slow progress. Installation quality becomes inconsistent. By the end of the programme, only 85 kitchens have been replaced for the agreed budget. The shortfall is not just financial. Fifteen households are still waiting, and the evidence trail needed to defend the spend to the board and regulator is incomplete.

But it is not only cost that suffers. Social value commitments, apprenticeships, local spend targets, and community investment are frequently agreed at contract award and then lost in the absence of post-award scrutiny. Innovation pledges go unfulfilled. The contract delivers something, but not everything that was promised, and often nobody has the data to prove it either way.

Three things that make the difference

Over the years, I have seen what separates housing organisations that manage contracts well from those that struggle. It tends to come down to three things.

Get clarity in place from the start. Many of the problems I see trace back to a handover that was never properly done. A contract manager and senior responsible owner should be named before delivery begins, not appointed after the first issue surfaces. Set up a single, accessible contract folder with the signed agreement, key terms, KPIs, pricing schedule, main contacts and known risks. Agree reporting templates with suppliers at the outset, and baseline your KPIs so you have something meaningful to measure against.

Build a governance rhythm and stick to it. Regular communication with suppliers is one of the most underestimated tools in contract management. It builds trust, surfaces problems early, and makes it far harder for either side to claim they were not aware of an issue. Schedule operational reviews, performance meetings and steering sessions for the full year and put them in diaries before delivery starts. Make sure every meeting has an agenda, produces minutes and generates a tracked action log. Invest in training for new contract managers. Confidence and capability go together, and both take time to develop.

Move beyond spreadsheets. It is still common to find contracts managed through a patchwork of hard copies, PDFs and a single shared spreadsheet. The problem is not just the administrative burden. This approach forces housing organisations to rely on data suppliers provide themselves, with no independent means of verification. A dedicated contract management platform or dashboard changes that. It brings KPI targets, expenditure tracking, expiry dates, supplier payment terms and operative-level spend into one place, and it turns social value commitments from agreed aspirations into monitored indicators. When something starts to drift, you see it early enough to act.

The point of all of it

Accountability, communication, record-keeping, and a focus on outcomes: these are the fundamentals. There are many post-award controls that support good contract management, but those four run through all of them.

Outcomes matter most. Making sure contractors deliver what they promised is not an administrative exercise. It is about ensuring that the work reaches the people it was procured for: tenants who need a warm, safe, well-maintained home. That is what makes contract management worth getting right, and it is what gives the procurement function its real purpose in a social housing organisation.

Andrew McAllister is an Account Manager at PfH Scotland

This article is based on an opinion piece by Andrew McAllister, published in Scottish Housing News.

How PfH Scotland can help

Frameworks and DPS solutions that give you compliant, quick access to vetted suppliers, including local SMEs, without lengthy procurement exercises. Our DPS can award contracts in as little as two weeks.

Quantum, our spend and contract management platform, gives members an independent view of what they’re actually spending against each contract, down to line level. You can check invoices against agreed rates, see renewals coming well before they’re due, and pull together the evidence you need for annual contract reporting without chasing suppliers for it.

Consultancy support to help you build procurement strategies that align with your organisation’s long-term investment plans, net zero and retrofit priorities, and social value ambitions.

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