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Contract Management

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Contract management, also known as contract administration, covers a very broad field. It controls the new and previous contracts, manages them and evaluates them.

Nowadays, more attention is given to the administration of contracts since most of the errors are caused in this part. All parts of the contract must be respected and fulfilled because if not, a good contract loses all its value. For example, if a food provider doesn't deliver the order to a restaurant, that restaurant may not open that day.

Closing a contract

The first thing to do when closing a contract is to have good communication with the other part of the contract. That's why, although indirectly, relationship management also plays a crucial role in contract management. Relationship management can deal with either the companies they buy from or with customers " CRM, Customer Relationship Management ".

As soon as a good match is found, the contract negotiations begin. It's important for good development after contract management that all conditions are well defined and that the expectations of both parties are realistic. If any of the parties doesn't comply with the agreements " in their entirety ", a clause could be included a posteriori to solve it.

Practical examples

Contract management deals with everything related to current contracts, including in which important data such as deadlines and visiting hours. For example, the contract between a maintenance person of an aircraft construction company and the company stipulates that he must control one of his machines once a week. However, if the contract isn't managed correctly, this check could be omitted and, as a result, a part may be defective.

Another management that's responsible for the administration of contracts is the monitoring of compliance with the terms and conditions. It's possible that a client who runs a workshop won't say anything when a paint company occasionally forgets to bring a certain type of paint to their company, until, suddenly, a new director enters the company and demands compensation. Therefore, to avoid these types of errors and consequences, it's advisable to properly manage the contents of a contract.

Analysis and evaluation

Contracts must be analyzed and evaluated regularly. Although this can be done upon expiration of the contract, the ideal is that contract management is responsible for doing so with existing ones. To help determine whether the contracts should be reviewed, terminated or extended, we provide the following questions:

- How much benefit is obtained from the contract? " financial "
- How does the contract improve business processes, the product or the service?
- Has a problem arisen as a result of the contract?
- How optimal is the agreed method?
- How efficient is the collaboration?
- Does the contract relate to a continuous activity or does its duration depend on a project?
- Why or why don't we cooperate with this provider or customer?

Automate contract management

Contract management is a serious thing for many companies, and therefore there are many people involved. Frequently, specialized software is used to maintain an overview. A logical solution for this is a Document Management System " DMS " specialized in contract management, since contracts are, of course, documents. This type of DMS software regulates teamwork in contracts and generally includes a specific system for Contract Lifecycle Management " CLM ". The CLM is a feature that thoroughly tracks all contract details.

Contract management is also often mentioned in the context of enterprise resource planning " ERP, Enterprise Resource Planning " because contracts are usually based on the core processes of a company. Contracts are normally linked to project management, a task that's usually linked to the ERP. Therefore, it should be considered if it's worth integrating software for content management into the ERP system.


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