Contract management is the effective management of contracts created with external clients, vendors, suppliers, employees, or contractors. Contract management entails negotiating the existing terms and conditions of a contract, as well as ensuring compliance with those terms and conditions and documenting and finalizing any amendments or changes which may occur during its execution or implementation. Contract management also involves managing any disputes which may come up during the contract period and negotiating any adjustments that might be required due to the expiry of a contract. Furthermore, contract management also involves assessing whether a contract should be continued or terminated.
The importance of contract management is often underestimated. It is a complex process that involves many steps and techniques. This article briefly describes these steps and techniques for your consideration. This article also briefly describes the benefits of contract management and why it is beneficial.
Benefits of Contract Management
The primary benefit of contract management is the reduction in costs associated with procuring and implementing contracts. With contract management, the primary responsibility and authority are switched from the project manager (i.e., the project leader) to a contract management specialist. This means that the manager is relieved from the direct involvement and supervision of the contract activities, including the negotiation of the contract and the modification of the contract to incorporate changing circumstances and industry requirements.
Another primary benefit of contract management is its ability to provide management services that are often time-consuming and difficult to perform. For example, contract management can monitor contract compliance activities undertaken by project teams. By monitoring these activities, contract management helps ensure that all contractual agreements are being successfully implemented. This can make the process much more efficient and effective. Also, contract management can ensure that all required contract documents are being properly submitted and that all applicable laws and regulations are being strictly followed.
By assigning contract management responsibilities to a contract compliance specialist, you are relieved of the time-consuming aspects of reviewing and negotiating contracts. This means that contract management specialists can devote their time to more important matters. A contract compliance specialist can help identify and correct contract deficiencies and errors while simultaneously ensuring that these errors are not being passed on to other parties. While the majority of contract compliance specialists are contract managers, there are a small but growing number of contract management specialists who are contracted, compliance researchers or consultants. They conduct in-depth research into contract compliance issues and provide advice and guidance to project managers and other professionals involved in contract management activities.
Pros and Cons
There are a few drawbacks to contract management. For example, because contract management specialists have a large number of tasks to complete and have a high degree of responsibility, contract management professionals can become highly frustrated and oftentimes leave projects early. A contract compliance researcher is unlikely to do this, so you may want to consider a contract management consultant as a temporary solution until you find a more suitable candidate. The other drawback is that contract management professionals tend to cost a great deal of money, so if you’re experiencing budget shortfalls you may be unable to afford full-time contract management professional.
If you are experiencing budget shortfalls due to a lack of productivity in your business, it may be more practical to focus your attention on contract management rather than contract compliance research. Contract compliance research requires a lot of time and attention, and if you are experiencing a lack of efficiency in managing your contract files you may prefer to use contract management to address the problem. However, if you have a large number of non-compliant contracts (also known as “non-standard contracts”), it may be necessary to contract with a contract management specialist to implement a process to bring all of your contracts into line with your existing contract documents.
To begin the contract management process, you will need to determine which sections of your contract meet the requirements for the contract management process. Once these sections have been established, you can move forward with implementing the contract management process by creating an Action Plan. This plan should outline which steps to take to address any issues or concerns you have and how long the project will take to complete. You should also identify the tasks that are most critical to completing the contract management process, such as contract reviews or contract analysis. In addition to the actions to be taken in your contract management process, you should also develop a plan to address any issues that arise after the contract management process has been completed, such as contract closeout. You may wish to contract with a contract management professional to help you oversee the contract lifecycle, and the steps you take to address contract compliance problems.