Contract Management Tips
Biz & Co

Contract Management Tips

It's very important that you enter into contract negotiations the right way. Most people fail to exercise their due diligence before appending their signatures. After the document is signed, the document will be stored away and its original intent is often forgotten. The only time when people make reference to it is when things go south. This is the wrong way to approach contracts.

The execution of the contract is as important as its drafting. Any enterprise should treat their contract management lifecycle as a living thing. Its use should be more often to remind people of their roles, responsibilities, deliverables and any obligations they have to each other.

As a living thing, the contract should be able to adapt to the changes in their operating environment. However, you'll need to be careful when managing and making changes to a contract. It should be done in accordance with the laid down steps and procedures.

So, how do you manage your contracts and what are the areas to consider when negotiating a huge and living contract? Here are a few tips and hints that'll help you manage a large contract.

Prioritize Your Contract Management

The biggest mistake you can make is treating contract management as the last activity, an add-on to the process. Design the exercise as part of your business strategy right from the start.

Here, you'll need to employ measures that support the contract management exercise. Such measures may include the provision of funds, and educating your employees on how to undertake the exercise.

Proper budgeting and planning needs to be done prior to its implementation. You might want to consider several factors, such as what happens when a crucial member of the organization leaves and how will you manage the execution of the contract long after the drafters have left?

Develop a Robust Storage and Sharing Facility

Once you draft a contract, you'll need to put concrete measures in place to store and share the documents. Here, pay close attention to the identification and versioning procedures.

Once you sign the contract, it becomes binding engagement. to both parties You'll, therefore, need to store all the documents that appertain to this engagement safely. Well, you may decide to create a master documents library where you store all these files.

Say for instance you've opened a tender for supplies to your firm. Some crucial document to store alongside the supply agreement would be the winning bidder’s tender. The supporting documents to this bid should also be stored. Others may include minutes, plans and any other material communication that pertains to this engagement.

But why do you need a paper trail? You need one because these documents are quite important in resolving any conflicts that may arise in the future. You'll only need to go to the master library and check who said what, when and why.

Your business should put measures in place to easily share documents without contravening their privacy or confidentiality status.

Design Post Contract Information Flow

Once you sign the contract, proceed to its execution stage. Here, develop obligations between the parties on how to share, verify and authenticate information. Such measures are important in the managing of a contract.

For instance, using open book accounting is an obligation for the huge contracts. However, when you want to peruse through the data, it's mostly opaque. It's difficult to get the accurate costs and margins on the other party.

How then do you go past this opacity? By setting out the specific cost heads and any hidden charges. These records should be provided to you within specific intervals.

Use Appropriate Management Provisions

It's crucial that the management provisions you employ are embedded throughout the duration of the contracts. Ensure your contract management procedures are proportionate to the complexity of its deliverables and scope.

For instance, outsourcing a service from an ICT company warrants a deeper and wider attention as compared to a commodity supply contract. The provisions on this contract may range from service or delivery management meetings to special arrangements to solving disputes and dealing with underperformance.

Conclusion

You shouldn't view a contract as a document that is simply necessary to start a project or make references in times of trouble. You should make efforts to maintain the document and update it where needed. Ensure it is able to react to the changes in the environment and working relationship between the two parties.