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The Difference Between Contract Management and Contract Administration

    

The terms contract administration and contract management are often used interchangeably. Although they share many similarities, at a granular level, they are technically different phases of the contract lifecycle. However, for many companies, the same team of professionals may be responsible for both facets of the contracting process, which is likely one of the reasons that people tend to conflate these terms. Deciding if these are related or distinct processes really depends on the size and resources of a company and whether the company has a specific team devoted to the contracting process. For smaller businesses, people often have multiple job functions, including the handling of all contract matters. Here are the primary differences between the two aspects of contracting:

 

Contract Administration: The Work Done Before Contract Formation

The professionals responsible for a company’s contract administration focus their work on the planning and implementation of contracts. The planning process often includes sourcing potential contracting partners, for example via sending out requests for proposal. In addition, the contract administrators help with ironing out the details of the contract arrangement, working with prospective partners to negotiate on contract matters such as price, delivery schedules, and performance expectations.

Although the word administration makes it seem as though this facet of the contracting cycle is essentially administrative in nature, it requires a great deal of strategy and business savvy. Entering into legally sound, mutually advantageous contracts is critical to the financial success of many businesses, so it is imperative to find the right partners and put into place fair agreements.

 

Contract Management: The Work Done After Contract Formation

On the other hand, contract management occurs after a contract has been completed and taken effect. Thus, this entails working to ensure that the terms and conditions contained within the contract are adhered to and that all of a party’s contractual obligations are met satisfactorily. As with the management needed for other aspects of a company’s operations, contract management requires the appropriate utilization of the company’s resources.

In addition, during the contract management phase, it is always possible that circumstances will change, necessitating modifications to the contract agreement. Of course, the contract management team tends to work closely with the other party to the agreement, so they are in a good position to know whether the relationship is working or it is necessary to pursue opportunities elsewhere. As a result, it makes sense for the contract administrators and managers to remain in close communication, in the event that they are in fact separate teams within a company.

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