According to the National Contract Management Association, Virginia, “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.”
The contract management process, therefore, goes beyond the awarding of contracts. It defines the responsibilities of the parties in every stage of the contract’s lifecycle. An effective contract management process ensures that the terms and conditions of the contract are met. It also guarantees customer satisfaction in the long run. It involves a meticulous process of contract initiation, drafting, review, approval, execution, implementation, monitoring, and closure.
Organizations in every sector consider contract management to be the key to managing their internal and external stakeholders. It helps them to minimize risks, optimize performance, and nurture positive relationships with stakeholders. It may be noted that the contract lifecycle management process is both ongoing and dynamic.
Stages of the contract management process
Contract management processes involve several stages — each stage contributes to the effective creation, execution, and management of the contracts. The following are the stages involved in any effective contract management process:
Stage I – Initiation:
This involves identifying the need for a contract and the definition of its scope and objectives. At this stage, the contract management process identifies and names key parties and stakeholders.
Stage II – Planning:
This stage involves developing the plan for the contract management process and establishing the roles and responsibilities of the individuals involved. This stage also outlines the overall strategy for contract execution.
Stage III – Contract creation:
In this stage, the contract’s terms and conditions are drafted. It also defines the rights, responsibilities, and obligations of each party.
Stage IV – Review and approval:
In this stage, relevant stakeholders, legal teams, and other parties conduct a comprehensive review of the contract. They obtain necessary approvals and make revisions as agreed by all involved parties.
Stage V – Execution:
This stage involves the signing of the contract. Signing makes a contract legally binding. Every entity with an interest in the contract should ensure all approvals are obtained and sign the contract.
Stage VI – Implementation:
This is one of the most important stages of the contract management process. It is in this stage that every term of the contract is accurately communicated to relevant teams and stakeholders. It is also in this stage that processes are defined to ensure compliance with the contract. Teams have to monitor and manage all issues that may arise during its implementation.
Stage VII — Performance monitoring:
After executing and implementing the contract, the next stage involves regularly monitoring performance and promptly addressing any deviation or non-compliance. Additionally, meticulously maintaining records of performance and compliance is crucial.
Stage VIII – Amendments and changes:
It is normal to come across requests for changes or amendments to the contract. All relevant parties must formalize the amendments with explicit agreement and record and sign off on them properly.
Stage IX – Renewal or termination:
Towards the expiry of the contract, related teams should evaluate the need for renewal, renegotiation, or termination. They have to accordingly follow established procedures for renewal or termination.
Stage X — Dispute resolution:
Dispute resolution should have its charter. It should follow a process that has been previously agreed upon by the parties.
Stage XI – Closure:
Upon the expiry of a contract, all relevant parties must properly archive the documents. They should also conduct a final review and analysis of the contract management process to identify the scope for improvement.
What are the objectives of contract management?
Contract management involves several objectives. Some of the key objectives are listed hereunder:
- The fulfillment of every obligation as outlined in the contract
- Compliance enforcement with agreed-upon terms and conditions
- Identification and assessment of potential risks associated with the contract
- Defining strategies to mitigate risks
- Monitoring and control of costs associated with the contract
- Identification of opportunities for cost savings and efficiencies
- Monitoring and assessment of the performance of all parties involved in the contract
- Implementation of measures to optimize performance and achieve desired outcomes
- Maintaining positive relationships with contractors, vendors, clients, and other stakeholders
- Avoidance of legal disputes by adhering to legal requirements in contract creation and execution
- Prompt address of issues to maintain a positive relationship with clients and other parties
- Implementation of changes and enhancements to increase efficiency and effectiveness
- Modification of contracts on a need-basis
- Establishment of effective mechanisms for dispute resolution
- Ensure financial accountability and transparency in all financial aspects of the contract
Make your life easier with contract management services
There are several service providers who specialize in offering comprehensive contract management services to all sizes of organizations across the industry. Their end-to-end services are known to streamline operating models and enhance organizational efficiency. They bring immediate benefits of making the entire contract process hassle-free and less time-consuming. Most of these service providers today deploy advanced technologies and platforms that automate routine tasks, from document creation to deadline tracking. They also centralize contract repositories and utilize standardized templates to bring consistency and ease to the processes. Access to critical information becomes easy with these process enhancements. Contract management service providers also mitigate risks when assessed through a broader spectrum. They do this by providing tools for thorough reviews, compliance monitoring, and performance assessments.
In the long run, leveraging contract management service providers increases the accuracy and transparency of contract-related activities. They also enable organizations to focus on core business functions.
Legal Support World to aid your contract management
LSW, a leading global legal process outsourcing service provider, has been providing end-to-end contract management processes to clients for the last sixteen years. We have been operating across a diverse range of clientele and, therefore, understand the nuances of every industry.
We offer a suite of tailored solutions that have a proven track record of optimizing our client organizations’ contract management functions. Our team of skilled professionals leverages new-age tools and technologies to build robust contract management processes that have made their contract lifecycle management easy, error-free, and hassle-free. We partner with clients to build their processes, offering centralized repositories, standardized templates, and automated tasks. The added advantage of deploying the latest technologies has enabled client organizations to stay updated on market changes.
At Legal Support World, delivery excellence is a prime focus. We offer a wide range of value propositions, including in-depth reviews, comprehensive risk assessments, and performance monitoring. Our teams offer contract management services across the spectrum, including property law, corporate and securities law, trusts and estates, employment law, family law, etc.
In choosing Legal Support World, your organization stands to gain a strategic partner that is dedicated to not just meeting but exceeding your contract management needs. Our deep domain expertise will empower your team to work on bigger and more strategic areas. We promise an optimized and streamlined contract management process that will reduce your risks, ensure 100% compliance at all times, and keep the process agile for future changes.