Contract management or contract administration is the administration of contracts made with vendors, partners, customers, or employees. The personnel involved in Contract Administration required to support, negotiate, and manage effective contracts are expensive to train and maintain.
Contract management includes negotiating the terms and conditions in contracts and ensuring obedience with the terms and conditions, as well as documenting and agreeing on any changes or amendments that may rise during its application or performance. It can be summarized as the process of thoroughly and proficiently managing contract execution, creation, and analysis for the purpose of maximizing financial and operational performance and reducing risk.
Common commercial contracts include sales invoices, purchase orders, employment letters, and utility contracts. Complex contracts are often necessary for construction projects, goods or services that are highly controlled, goods or services with detailed technical provisions, intellectual property (IP) agreements, and international trade.
A study has found that for 42% of enterprises, the top driver for enhancements in the management of contracts is the pressure to better assess and alleviate risks and additionally, nearly 65% of enterprises report that contract lifecycle management (CLM) has improved exposure to financial and legal risk.
A contract is a written or oral legally-binding agreement between the parties identified in the agreement to achieve the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a contract is the condition that the parties to the contract accept the terms of the claimed contract. This was most commonly achieved through signature or performance, but in many jurisdictions the forms of acceptance have expanded to include various forms of electronic signature.
Contract Administrators/Managers are employed by attorneys and law offices, and in businesses, corporations, governmental agencies, labor organizations, and academic institutions.
Contract management professionals strive to:
• Contribute to organizational success
• Manage customer and supplier expectations and relationships
• Control risk and cost
Contract management is a role within the procurement profession. However, it spans a very extensive spectrum in terms of the responsibilities assigned to a contract manager. The job scope ranges from the administrative skills of organizing, managing, and planning, to the excitement and challenge of negotiating a major contract.
Contract Administration can be divided into five phases:
- Initial Phase
- Bid Phase
- Development Phase
- Manage Phase
- Maintenance Phase
If you have more questions about the regulations behind contract administration, contact Malyszek & Malyszek for assistance from our skilled and knowledgeable attorneys.