The Many Facets of Contracting Part 3: Phases of Contracting
This is the third entry in a series dedicated to the many facets of contracting, as well as how each particular facet and all its relevant components relate to contract management. You can read Part 1 here and Part 2 here.
If you are reading this, then it is fairly likely that you are already somewhat familiar with the phases of contracting. However, depending on your role in the contracting process, you may be more comfortable with or play a larger role during one particular phase. Regardless, it is important for anyone involved to think about how each phase will impact contract management because that is really when proper performance is at stake. Here are the primary phases of contracting and their interplay with managing the finalized agreements:
Preparation is key to any successful contracting relationship. Companies must ensure that they adequately research any prospective partners, especially when contracting for high value goods or services. The level and depth of preparation will have an enormous influence on how the contract is managed. If companies do not take the time to research prospective contracting partners, it is far more likely for problems to arise down the road. Thus, it is imperative that each party knows exactly what to expect from the other party, and if there are any red flags on either side, no one should waste time moving forward.
Negotiations also reveal a lot about how companies and their leadership teams operate. Contract management, like most other types of management, is really about managing relationships. Thus, if the negotiation process is adversarial or imbalanced, this negativity may carry over to the management of the finalized agreement. Successful contracting relationships require trust and collegiality, and this should be evident from the initial discussions. More so, using smart contract lifecycle management software will help establish steady ground for the relationship by minimizing roadblocks.
Hopefully, a fair and genial negotiation phase will seamlessly transition to the actual drafting of the contract. It would be unfortunate to get past the negotiations only to find out that one party has completely different expectations when it comes time to put the terms to paper. The language of the contract will dictate when and how the contract management team carries out their duties, and convoluted or verbose clauses will complicate their ability to do so effectively.
More than likely, if you have gotten this far in the contracting process, things are looking good between the parties. Hopefully, there won't be any surprises at the signing table, such as unexpected addenda proposals or requests for the attachment of appendices to the primary agreement. However, if changes or additions need to be made, it is crucial for all pertinent documents that constitute the finalized agreement be turned over to the management team, so they have a full and clear picture of all mandatory terms.
Contract management is basically overseeing contract performance. For some companies, this may simply entail monitoring deliveries. For others, it may just require making installment payments. And, for other arrangements, it may involve a whole lot more over a very long period of time. Ultimately, full performance can only happen if each phase of the contracting process goes well, and there is adequate communication among the relevant members along the way.
The Buyer's Guide to Contract Management Software
Quickly identify solutions to your specific contract management challenges.
The Many Facets of Contracting Part 4: Contract Negotiations