Recent WorldCC research has once again revealed the extent to which organizations are losing value from their contracts – and for those in procurement, the situation is getting worse.

Volatile market conditions are not new. We have been talking about the speed of change for decades. That also applies to the way goods and services are bought and sold. Yet for most buyers, their thinking about contracts has not significantly evolved. They view them as transactional; they operate with rigid templates; they focus on negotiated savings; and hope for the best when it comes to delivery. The big problem: the process of contracting is disconnected from outcomes.

Two recent pieces of work illustrate this. First, WorldCC’s 'Closing the procurement value gap' report identifying 11% value erosion in procurement contracts. Second, a webinar and associated survey examining the working relationship between Legal and Procurement, which revealed deep structural and operational weaknesses. Together, they provide a compelling picture of a system that lacks clarity of authority, accountability for outcomes, and the data flows needed to adapt and perform.

Value erosion is in large part a compliance problem. On the one hand, there is too much of it, creating rigidity and inflexibility. On the other, people are often blinded to the need for change and they are complying with the wrong things. When applied badly, compliance undermines any sense of responsibility – and these surveys confirm that is the case in many procurement contracts.

An 11% erosion of contract value is not a minor inefficiency. It represents lost margin, missed performance incentives, unmanaged change, avoidable disputes, and opportunities that never materialize. Yet for most organizations this remains invisible.

What the data shows is that value erosion is rarely caused by a single failure. Instead, it emerges from a fragmented operating model in which contracting activities are split across functions, systems, and stages of the lifecycle, with no single owner accountable for the quality and integrity of the process or its economic outcomes.

Procurement may focus on award and savings. Legal may focus on risk allocation and enforceability. Operations inherit the consequences and often operate ‘in spite of the contract’. Finance rarely sees the results in any actionable form and long after the opportunity to intervene has passed – for example, through audit. Contracts exist, but contracting as a discipline does not.

The Legal–Procurement disconnect

The Legal–Procurement survey reinforces this diagnosis and is indicative of the problems we are describing. Respondents consistently highlighted misaligned objectives, unclear roles, and limited collaboration. In about 70% of the organizations responding, it is clear that communication between the two functions is inconsistent and poorly executed. Unclear responsibilities, inadequate data, late engagement, risk-averse templates – poor operational performance results from a lack of senior engagement in defining how the functions should work together and in setting clear goals for what value they should jointly aim to deliver to the business. One data point is particularly illustrative: only 15% of organizations operate with shared contracting technology between Legal and Procurement. This lack of shared data is not a technical inconvenience, it’s a structural failure. When functions do not access the same information, they cannot form a common view of risk, performance, or value.

Right now, this means that many organizations operate with an approach that is optimized for control at the front end, but is weak in execution, adaptation, and recovery. There are simply too many disconnects and each point of weakness is where value drips away.

Contracts are treated as static artefacts

These findings align closely with WorldCC’s broader work on adaptability and resilience. Traditional contracting models and terms are designed for stability: predictable demand, known risks, and linear execution. Negotiation mostly focuses on the consequences of things going wrong, rather than ways to reduce risks and maximize opportunities. Today’s volatile markets and today’s static contracts are badly misaligned and disconnected from the relationship they are meant to govern and the value they are meant to enable.

This is why organizations can invest heavily in systems, templates, playbooks, and approval workflows, yet still experience significant value leakage. The problem is not transactional efficiency, it’s the absence of an integrated contracting system that links intent, authority, data, and action across the lifecycle.

Accountability without authority and authority without accountability

A recurring theme across both data sets is confused authority. Many individuals are expected to manage suppliers, resolve issues, or protect value, but lack the authority, data, or tools to do so. Conversely, those with formal authority – the policy setters, template owners, approvers - are often too far removed from execution to be accountable for outcomes. This mismatch creates risk aversion, delay, and escalation. It results in many viewing contracts as either irrelevant, or too difficult to influence. So they give up. In such an environment, adaptability is situational and risky and resilience has little chance of emerging.

The implications of these findings are clear. Incremental improvements are not enough: organizations need to rethink contracting as an operating model, not a document flow. Three actions stand out:

1. Establish accountability for outcomes: Someone must be accountable for whether contracts deliver value in practice, not just whether they are compliant at signature. This requires explicit ownership for the quality of the process and insight to outcomes. The recently released Contract Management Standard provides the framework for this improvement.
2. Integrate authority, data, and execution: Legal, Procurement, Finance, and Operations must work from shared data, supported by common technology and governance. Authority to act must be aligned with responsibility for results.
3. Design for adaptability, not just control: Contracts and contracting processes must anticipate change, support timely decision-making, and enable adjustment without excessive friction. This is essential for resilience in volatile markets.

The 11% value erosion figure should not be seen as a statistic to debate, but as a signal to act. The tools, insights, and technologies to do better already exist. What is missing is the will to move beyond functional silos and treat contracting as a core business capability, a process that connects strategy to execution and intent to outcomes.

Download the 'Closing the procurment value gap' report

Catch-up on the 'Legal and Procurement: Can they ever collaborate' webinar