4 Key Contract Performance Metrics

It is often difficult to discern the success of a contract when the subject matter of the agreement is more complex than the delivery of a single item in exchange for a payment. A lot of business contracts can last for several years and may involve a series of actions, deliveries, and/or payments from one or both sides. Nonetheless, contract performance is critical to managing a company’s contract portfolio, and it obviously has significant influence on the bottom line. As a result, the contract management team must have clear metrics by which to measure performance. Here are four key metrics that can be used to evaluate contract performance:

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5 Contract Drafting Nightmares And How to Avoid Them

Every phase of the contracting cycle presents its own set of challenges. Contract drafting can be particularly brutal with lawyers for each side going round and round over virtually every detail. Unfortunately, sometimes even those lengthy and detailed drafting sessions result in a mediocre contract. There are certain prevalent problems that crop up time and again irrespective of the contract's core content. Here are 5 potential contract drafting nightmares and some tips on avoiding them:

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Do You Know How Efficient Your Company's Contracts Are?

Maximizing efficiency is the cornerstone to a successful business. Unfortunately, when it comes to the company contract portfolio, businesses often overlook the importance of efficiency. There is usually so much focus on the general operations and staying within the budget, and sometimes it's hard to see how contracts that span several years really affect day to day affairs. As a result, too many companies probably don't even know how their contract portfolio is faring, which can end up causing a lot of problems if things begin to go awry. Here are some things to evaluate to know how efficient your company's contracts are:

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How to Stress Test Your Contracts Before Signing

Contracting is fairly standard practice for most companies these days, although some industries are more contract heavy than others. Even though individuals and companies have been entering into contracts for centuries now, these agreements still manage to cause problems, with contract disputes clogging up countless court dockets. Although some disputes may be unavoidable given that many things are beyond one party’s control, companies should take the appropriate precautions to determine whether they can withstand certain issues. Understanding where a contract could go wrong before actually signing it is a bit tricky given that contract performance will not commence until all terms and conditions are agreed upon and the final version is executed. However, here are some of the questions that the contract negotiation and drafting teams should be asking throughout their respective processes to stress test the agreement before either company signs on the dotted line:

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How to Measure Manufacturing Contract Productivity with Custom Reports

In manufacturing, monitoring contract performance is critical to monitoring overall productivity. Regardless of whether a company is manufacturing products comprising a million tiny pieces or heavy duty machinery with several large components, there are likely various contracts with at least a handful of suppliers, if not many more, as well as contracts pertaining to distribution.

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6 KPI's to Measure the Performance of Your Contracts

Key Performance Indicators, or KPIs, help contract managers measure progress and achieve goals against contracts. When designed and used optimally, KPIs play a role in driving actions and can have significant effects on results and projects.

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How to Use Contract Insights to Monitor Contract Portfolio Performance

Most people understand that when they enter into a contract with another party that one or both parties will be expected to perform some action. In some cases, one party’s performance may be fairly substantial and ongoing, such as providing a service on a continuous basis, whereas the other party may simply have to remit payments in exchange for receiving that service. This is obviously the simplest version of a contractual relationship, and these days, many business transactions are anything but simple.

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What to Do When a Contract Severely Underperforms

Hopefully, dealing with underperforming contracts is not something that your company encounters very often, if ever. In the unfortunate event that it does occur, the contract management team must be well equipped to address the situation swiftly and effectively. Ideally, when there is even a mere indication of performance problems, it must be tackled before it becomes a much larger issue with costly repercussions. Here is what to do about an underperforming contract:

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The Most Important KPI's for Contract Management

The only way to ensure that your company is operating efficiently is to establish clear goals, along with key performance indicators (KPIs) to determine whether those goals are being met. This is true regardless of which facet of the business you are seeking to manage. With respect to contract management, it may be difficult to identify which KPIs make the most sense to monitor because contracts vary so much from one situation to the next. 

 

Broadly speaking, however, the best KPIs for contract management are ones that are "SMART," meaning they are specific, measurable, achievable, results-oriented, and time-constrained. Thus, irrespective of the type of contracts your company is managing, here are some of the most important KPIs: 

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The Many Facets of Contracting Part 1: Contract Basics

This is the first 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.

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