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3 Critical Steps That Need to Be in Your Contract Administration Process


Though the terms ‘contract management’ and ‘contract administration’ are often used interchangeably, they are not exactly the same thing. Contract management refers to the full spectrum of contract-related activities that occur within your organization, encompassing everything from the earliest stages of planning your approach to contracts in general, to drafting and negotiating agreements, to finally winding down and evaluating the performance of individual contracts after they have concluded. Contract administration, meanwhile, refers to a very specific phase within a contract’s lifecycle, kicking in during the post-award phase of your contract. More specifically, contract administration refers to the processes and procedures that must occur in order for business units to implement and manage a specific agreement after it has been finalized.

Diligent contract administration is important to receiving the full benefit of your contracts as expected. This is because if you don’t take steps to ensure that contracts have been implemented and are performing as agreed upon, then despite all of the effort that goes into negotiating a strong contract that maximizes your benefits and decreases your risks, you are essentially leaving its successful fulfillment up to chance.

There are lots of things, both mundane and extraordinary, that can derail contract performance. A clearly defined contract administration process can reduce fundamental pain points and internal silos and grow accountability, thereby improving the odds that your contracts deliver the results they were intended to reap. 

To ensure that your contract administration process best positions you for success, make sure you don't forget to include these three critical steps.

1. Onboard New Contracts to Your Electronic Storage Repository

As the old adage "out of sight, out of mind" cautions, filing away contracts after they’ve been signed often means forgetting about them altogether. But taking the time to onboard them to your contract repository has the opposite purpose, helping to make sure everyone has the information they need and keeping your contracts (and administration-related work) top of mind. 

In order to properly administer an agreement, various stakeholders will need to be able to reference the document from time to time – whether as part of the course of ongoing contract monitoring, or in the case of any irregularities or problems that may arise during the contract term. Filing your contract away in a physical location can make this difficult. Instead, it’s important to take the time to properly onboard each new contract by uploading it to a secure repository and then setting up appropriate tags and reminders for action items within each new agreement. 

Keeping contracts in a searchable electronic repository means that anyone who is involved in administering contracts will be able to access it as needed (Pro tip: if you are concerned about unauthorized access, look for contract management software with robust security features such as granular user permissions and multi-factor authentication). Leveraging features such as tagging and auto-reminders can also save time and reduce risks later because these can improve discoverability and help to ensure that you don’t forget any contract-related task down the road. Advances in artificial intelligence can speed up this formerly-cumbersome task instead of requiring you to carefully read each document to tag it, and some software is capable of scanning the text and suggesting appropriate tags.

2. Conduct a Handover Meeting

One common reason problems can arise during the administration period of a contract is that those responsible for administering the agreement may not be the same as those who negotiated it in the first place. This can cause gaps in knowledge and expectations, ultimately resulting in a contract that does not deliver as intended. But this can be avoided if those who are involved in the pre- and post-award stages conduct a thorough handover, reviewing the contract and expectations, milestones, and other relevant information. Only once those who will be administering the contract have been brought fully up to speed can they develop an informed administration plan to meet the contract’s objectives.

3. Determine What It Will Look Like When Things are Going Right – and Wrong

If a chief objective of contract administration is ensuring that deals are fulfilled as expected and agreed upon, then having a plan that objectively allows you to assess ongoing performance is key. The best monitoring plans are highly specific. Not only should yours include the specific criteria you’ll need to monitor (these may change over the lifetime of your contract – for example, as a customer project evolves from sourcing materials to building to delivery), it should also detail target metrics or a range of metrics that will let you know that things are, or are not, on track. Defining the frequency of monitoring-related tasks, as well as reporting and escalation mechanisms and structures, can also help keep the work of administering contracts systematic and organized, and provide quick clarity should questions or problems arise.

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