There are many moving pieces leading to the execution of a contract between two parties. More often than not, the negotiating parties don’t really think about what will happen subsequent to finalizing the agreement. Unfortunately, this can make a contract manager’s job more stressful than necessary, and in some cases, will have negative consequences. During the negotiation and drafting of a contract, the parties involved need to think about the reality of executing and overseeing a contract and ensure a smooth transition to the contract management team. In addition, here are four things contract managers must take into consideration at the commencement of and throughout the manage phase of a contract lifecycle:
Complete, Accurate, and Applicable Contracts
This seems like a no brainer and yet it is all too common for contract managers to end up with an incomplete contract package. Addenda and appendices may be missing or documents that were crucial to the ultimate agreement may not be included.
In addition to needing a complete contract package, the information furnished and conveyed must be detailed and accurate. And, this isn’t a one time check. Throughout the contract management process, the contracts must be reviewed for completeness and accuracy, as things change and issues arise.
Also, there must be an assessment as to the appropriateness or applicability of a contract. For example, if a contract manager notices that the company has similar contracts with different vendors for essentially the same good or service, this is something that must be flagged and reported to avoid duplicative expenditures.
Priorities and Obligations Delegated and Communicated Effectively
As a contract is handed over to the management team, it is important for key aspects of the contract to be communicated. There are usually certain items that take priority over others, as well as obligations that may impose more significant consequences if they are not handled properly.
Once a smooth transition has occurred, the contract management team must further assess each contract to determine how action items should be managed and delegated. Effective communication is probably the most important facet of any management process, yet so many companies endure unnecessary hassles due to internal communication lapses. This is particularly problematic when it pertains to a contractual issue because of the potential financial and legal implications. Thus, the contract management team must periodically review and reprioritize, and continuously communicate to ensure that everyone is on the same page.
Clearly Delineated Roles and Responsibilities
Ownership and accountability are also key components to a successful contract management process. For most companies, it would be unrealistic to expect one person to oversee every detail of every contract. There has to be an independent yet interdependent team capable of assuming responsibility for different parts of the process. This may entail division by contract or by subject matter. It really depends on the type and volume of contracts a company has, as well as the expertise of its team.
Ultimately, the contract management team must ensure that the division is clear, roles are delineated, ownership is taken, and accountability is expected. And, this should be a collaborative and dynamic process to ensure maximal efficiency, productivity, and results.
Appropriate Utilization and Allocation of Resources
The idea of managing a business without the benefit of technology seems unfathomable these days. Even for those of us who remember life pre-cellphone and email, it is hard to comprehend how we survived without it. Fortunately, we no longer have to imagine a disconnected world or deal with managing our business affairs with the good old pen, paper, and calculator. It seems fair to say that there is some sort of technology solution out there that can help with just about any facet of running a business, contract management included of course.
It is imperative for the contract management team to utilize all available resources and to incorporate suitable technology to streamline the management process. A solid contract management solution will eliminate some of the more tedious aspects of overseeing contracts, such as keeping track of important dates and trying to figure out an appropriate filing system, allowing the team to focus their attention on the more pressing matters associated with contract management.