Contract Management is the process of managing contracts, deliverables, deadlines, contract terms and conditions while ensuring customer satisfaction. Public and private organizations know that purchasing does not end when the contract is awarded. Effective post-award Contract Management is essential.
Stages of Contract Management Process
While there are many components of contract management, we can summarize the process by breaking it into five clear stages: creation, collaboration, signing, tracking and renewal. We can further identify individual steps within the stages. In all, we can break the process down into nine steps, each of which contributes to one of the five overarching stages. This makes it easier to manage the end-of-quarter crunch that tends to happen when it's time for a new round of contracts. Here are the steps of each stage:
- Initial requests. The contract management process begins by identifying contracts and pertinent documents to support the contract's purpose.
- Authoring contracts. Writing a contract by hand is a time-consuming activity, but through the use of automated contract management systems, the process can become quite streamlined.
- Negotiating the contract. After drafting the contract, employees should be able to compare versions of the contract and note any discrepancies to reduce negotiation time.
- Approving the contract. Getting management approval is the step where most bottlenecks occur. Users can preemptively combat this by creating tailored approval workflows, including parallel and serial approvals to keep decisions moving at a rapid pace.
- Execution of the contract. Executing the contract allows users to control and shorten the signature process through the use of electronic signature and fax support.
- Obligation management. This requires a great deal of project management to ensure deliverables are being met by key stakeholders and the value of the contract isn't deteriorating throughout its early phases of growth.
- Revisions and amendments. Gathering all documents pertinent to the contract's initial drafting is a difficult task. When overlooked items are found, systems must be in place to amend the original contract.
- Auditing and reporting. Contract management does not mean drafting a contract and then pushing it into the filing cabinet without another thought. Contract audits are important in determining both organizations' compliance with the terms of the agreement and any possible problems that might arise.
- Renewing. Manual contract management methods can often result in missed renewal opportunities and lost business revenue. Automating the process allows an organization to identify renewal opportunities and create new contracts.
Much of contract management comes down to handling these nine steps. Contract lifecycle management is critical. As different contract types go through their various stages, contract managers need to monitor any potential changes or breaches of contract. If an employee or business is unhappy with their contract, it might be worth making alterations to the contract. It's important to follow contractual obligations while also making sure both sides of the contract are happy.
There are many times during the contract management process when lifecycle management becomes important. Vendor performance and risk management are important considerations during the management of contracts. For example, if a vendor fails to meet their contractual obligations, you may need to rework the contract or enforce some disciplinary measure.
- Supplier Relationship Management
- Contract Lifecycle Management (CLM)
- Negotiation Strategies
- Vendor Management
- Risk Management
- Contract Compliance
- Contract Drafting
- Legal Contract Review
- Service Level Agreement (SLA)
- Contract Renewal
- Contract Termination
- Contract Auditing
- Contract Repository