What is contract leakage?

Contract leakage refers to the difference between the benefits forecasted before awarding a contract

and the actual benefits realised during its execution. For example, savings predicted during tendering

may not materialise due to supplier underperformance, scope creep, or poor contract management.

This phenomenon highlights the importance of post-contract management and continuous

monitoring of supplier performance. Category managers must ensure that expectations set during

procurement are followed through by tracking delivery, compliance with terms, and value creation.

Tools such as KPIs, SLAs, and audits help minimise leakage by ensuring accountability. Ultimately,

failure to address leakage can lead to financial loss, reduced trust, and missed opportunities for

improvement. By focusing on contract outcomes as well as initial savings, procurement ensures that

strategic objectives are consistently met.

Reference: CIPS L5M6 Study Guide, p.145