A detailed contract administration plan, or CAP, can help to maximize the chances of a successful contract and reduce friction and disagreements between parties. The CAP is a document that outlines each party’s responsibilities and describes how each party plans to fulfill its obligations as a signatory of the contract.
Preparing the CAP, especially when the contract is a long-term or complex project, is a crucial task. The steps outlined below will help you determine exactly what items to include in your contract administration plan.
Define Your Project Description Plan
This section should set the stage for the remainder of the document. It should contain a detailed overview of the contract, including:
The history of the contract’s development
The goals and objectives of the signing parties
Create A Communication Plan
In this section, you should describe how frequently, and via what channels, the parties plan to communicate. To do this, think about key stakeholders involved and determine the answers to these questions ahead of time:
How often will you hold sit-down meetings with one another?
Who will be the important points of contact on both sides of the contract for reporting or raising issues?
Whenever possible, make sure you document any communication in the event of a contract dispute.
Establish Your Deliverables
Your CAP should clearly outline the deliverables that the vendor plans to provide. This section will define the start date and end date (if relevant) for the project, as well as the deadlines (if any) for each product or service to be rendered.
Outline An Acceptance Plan
This section will determine the conditions that must be met in order to accept the deliverables and to consider the contract complete. The terms of acceptance will likely depend on the type of deliverables agreed to. For example:
Are you willing to accept partially finished work from the vendor?
What quality standards do you have for the vendor’s work?
Develop A Monitoring Plan
Your CAP should also include a monitoring plan that discusses how the parties will assess the deliverables, measure performance, and exchange feedback. Dedicated contract management software can help you monitor milestones by keeping track of key dates, deliverables, and performance measures and metrics.
If you encounter serious issues during the life of the contract, or if one party is not satisfied with the work it receives, what are your options for resolution? Depending on the contract and the severity of the breach, you have several options available to you:
Cancellation of the contract
These latter options are often invoked in the event that one party was deceived to enter into the contract due to fraud or misrepresentation.
Establish Amendment Guidelines
Even the best-laid plans can change or go astray, so you need to include provisions for flexibility within your contract administration plan. Prepare for this by establishing solutions to questions like these, ahead of time:
What will happen if the client would like to request more work from the vendor, or if the deadlines need to be changed?
Will the contract be amended, or will you draft a new one?
Set Allowable Payment Rules
This section will discuss the particulars of how the vendor will receive payment for its work. It’s critical to identify the following when creating your CAP:
What payment method(s) will be used?
Will payments be delivered in one lump sum or in installments?
Who is in charge of receiving them?
Plan for the Contract Close-Out
When the terms of the contract have been fulfilled, the close-out process will begin. This section should contain a checklist for closing the contract, including matters such as:
Finalizing payments and resolving any refunds or disputes
Settling any subcontracts
Handling issues surrounding patents, warranties, trademarks, inventions, or royalties
Finishing any audits and filing the reports
Winning the bid and signing the contract are important first steps, but drafting a contract administration plan ensures that you have a strategy for the success of the contract. For more on contract administration best practices, including things to consider before and after your contract kick-off meeting, download A Guide for Preparing a Contract Administration Plan.