Contract Management Goals - Best Practices
Contract Management Goals
Large organizations having high volume of transactions with several trading partners, face an eternal challenge of tracking contractual compliances. They invest their time, money and resources in a wide range of activities which culminate in the so called "Contract Management exercise". Traditionally teams looking after contract management, whether it be the legal department or the sourcing & procurement dept, would rely on tracking mechanisms built out of Microsoft excel sheets and access databases; but with time this evolved and organizations adopted and implemented popular contract management software tools which were easily available in the market. By adopting the CMS, the organization tried to ease out the pains of contract management.
The entire aim of the contract management exercise is to ensure that each party performs according to their intended agreement. This can be achieved by adopting some basic practices listed below -
a) Convey important information about the critical contractual terms and requirements to the project team members. This can be done through a training session which highlights the scope / deliverables/ milestones/ penalties/ change control processes/ IP and confidentiality clauses amongst others.
b) Track changes to the signed document as the relationship grows and evolves during the contract period ( or its extension) - to capture any changes to the agreement by means of change orders/ processes outlined in the contract and ensure that this information is passed on to the project team.
c) Create visibility of the executed contracts by providing a centralized repository (provided through digitized contracts present in the CMS).
d) Ensure compliance of the various terms in a contract which will eventually help mitigate risks
Adopting the above listed practises will enable the contract manager to reduce the risks and enable efficiency in the long run.
