Although contract management and contract administration are commonly used indiscriminately, they refer to distinct stages of the contracting procedure. Contract administration refers to the steps taken before a contract’s signature. In contrast, contract management refers to the steps taken after a contract has been signed to guarantee that the terms of the agreement are met.
Learn more about the distinctions between contract administration and contract management, as well as some useful hints for succeeding in either area, in the next section.
Contract Management Explained
After a contract has been signed and put into effect, it must be managed. This is making an effort to guarantee that the contract is followed to the letter and that all of the duties of each party are met to everyone’s satisfaction.
The contract will likely need to be revised throughout the contract management phase due to unforeseen changes in conditions. Naturally, the contract management staff typically works closely with the other party to the agreement, so they are in a prime position to recognize if the connection is successful or if it is time to pursue prospects elsewhere. Therefore, the contract administrators and managers need to have open lines of communication.
When it comes to managing contracts, you may take your pick among a wide variety of strategies, tools, and approaches to help you achieve your objectives. Contractsafe.com is your solution if you are ready to store and manage your contracts from one station.
Regardless of the size or complexity of your contract portfolio, the following seven best practices can help you manage your contracts more effectively.
- Keep all of your contracts in one place
Finding your contracts is a crucial step in efficient contract management. A central repository for your company’s contracts will make it easy to locate a certain document and quickly retrieve information about its duration, terms, and other pertinent characteristics.
- Set and measure contract management KPIs
Establishing key performance indicators (KPIs) for contract management allows you to track progress and report results to internal stakeholders. You may use these key performance indicators to pinpoint problem areas in your contract management process, allowing you to take corrective action to lessen risks, cut costs, and uncover untapped opportunities.
- Balance storage security and access
Contract administrators and legal counsel need to balance confidentiality and ease of access. Users of contract management software can store their confidential contracts in a safe online location and restrict access to them based on various criteria, such as the user’s or group’s role in the organization. This means that legal departments can assist with contract management without you having to give up complete control of your repository.
- Track contract approval time
If a contract can be approved and put into effect promptly, it will be possible to reap the benefits of that agreement sooner. You need a monitoring system before you can improve the efficiency of that procedure. Time spent on contract approval can shed light on your current contract cycle and point you toward areas where you might make changes for the better.
Contract Administration Explained
Professionals in charge of a company’s contract administration devote their time to developing and carrying out the organization’s contractual commitments. Requests for proposals are one method planners use to find prospective contracting partners. Contract administrators negotiate with potential business partners to iron out the contract’s specifics, including pricing, delivery dates, and expected performance.
The term “administration” may imply that this phase of the contractual cycle is merely administrative, but in reality, it necessitates a great lot of forethought and business acumen. Many organizations’ bottom lines depend on their ability to enter into contracts that are both legal and beneficial to all parties involved, making it crucial to locate reliable partners and draft equitable agreements.
Making and sticking to a solid contract administration plan aids your team in managing each new contract for its entire duration. To reduce the likelihood of contract violations or other scenarios leading to one party not completing their promises, the parties should detail their respective responsibilities in this legal instrument.
Keep these guiding principles in mind as you develop the strategy you will use to manage contracts.
- Outline the goals and outcomes.
Establishing mutually agreeable terms for the project’s scope and deliverables is the first step toward a smooth contracting procedure. Any agreement is vulnerable to the destabilizing effects of “scope creep,” so it’s important to define the boundaries of the contract in writing clearly.
- Make sure you provide a thorough timeline.
It may seem obvious, but a contract’s administration plan should include a comprehensive timeline that marks out the beginning and finish of the project, as well as any major deliverable due dates and status reports along the way.
- Arrange the tasks ahead of time