8/5/2015

WhatisContractManagement?

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WhatisContractManagement?

WhatisContractManagement?
ByRyanGoodrich,BusinessNewsDailyContributor July24,201304:53pmEST

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Credit:Lichtmeister|Shutterstock

Contractmanagementistheprocessofmanagingcontractcreation,execution
andanalysistomaximizeoperationalandfinancialperformanceatan
organization,allwhilereducingfinancialrisk.Organizationsencounteran
everincreasingamountofpressuretoreducecostsandimprovecompany
performance.Contractmanagementprovestobeaverytimeconsuming
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elementofbusiness,whichfacilitatestheneedforeffectiveandautomated
contractmanagementsystem.
Thefundamentalsofcontractmanagement
Whentwocompanieswishtodobusinesswitheachother,acontractspecifies
theactivitiesenteredintobybothorganizationsandthetermsthroughwhich
theywilleachfulfilltheirpartsoftheagreement.Contractsaffectbusiness
profitabilityinaverylargewayduetotheemphasisonrevenueandexpenses.
Whenacontractisphrasedpoorly,oneorganizationmightlosecountless
thousandsofdollarsoverasimpletechnicalitytheylackedtheresourcesto
identify.Effectivecontractmanagementcanultimatelycreateapowerful
businessrelationshipandpavetheroadtogreaterprofitabilityoverthelong
term,butonlywhenmanagedcorrectly.

Elementsofsuccessfulcontractmanagement
Itisntenoughthatanorganizationhasprofessionalsinplacetohandle
contractmanagement.Employeesmustbeaugmentedwiththepresenceof
processesandsoftwarecompanionstosatisfyincreasingcomplianceand
analyticalneeds.Whenacontractmanagementstrategyissuccessfully
implemented,organizationscanexpecttosee:

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Theexpectedbusinessbenefitsandfinancialreturnsarebeingrealized
Thesupplieriscooperativeandresponsivetotheorganizationsneeds
Theorganizationencountersnocontractdisputesorsurprises
Thedeliveryofservicesissatisfactorytobothparties

Activitiesthatmakeupgoodcontractmanagement
Thefoundationforcontractmanagementreliesontheimplementationof
successfulpostawardandupstreamactivities.Duringthepreawardstage,
employeesshouldfocusonthereasonforestablishingthecontractandifthe
suppliercanfulfillthetermsoftheagreement.Additionalconsiderationis
neededtounderstandhowthecontractwillworkonceawarded.Avoiding
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unwantedsurprisesrequirecarefulresearchandclarityofpurposeinthe
actualcontract.
Contractmanagementrequiresalevelofflexibilityforbothpartiesinvolved
andawillingnesstoadaptcontracttermstoreflectanychanging
circumstances.Problemsareinevitable,whichmeansorganizationsmustbe
preparedfortheunexpectedandbeabletoadjustcontracttermswhen
needed.
Stagesofcontractmanagement
Contractsplayasignificantroleintheendofquartercrunchandarebroken
upintostagestoorganizeeffortsandstructurethetypicalcontractprocess.
Whendonemanually,creatingacontractcanprovequitetimeconsuming.
Theprocessincludesthefollowingsteps:
1.Initialrequests.Thecontractmanagementprocessbeginsbyidentifyingcontractsand
pertinentdocumentstosupportthecontractspurpose.
2.Authoringcontracts.Writingacontractbyhandisatimeconsumingactivity,butthroughthe
useofautomatedcontractmanagementsystemstheprocesscanbecomequitestreamlined.
3.Negotiatingthecontract.Uponcompletionofdraftingthecontract,employeesshouldbe
abletocompareversionsofthecontractandnoteanydiscrepanciestoreducenegotiation
time.
4.Approvingthecontract.Theinstanceinwhichmostbottlenecksoccurisgetting
managementapproval.Userscanpreemptivelycombatthisbycreatingtailoredapproval
workflows,includingparallelandserialapprovalstokeepdecisionsmovingatarapidpace.
5.Executionofthecontract.Executingthecontractallowsuserstocontrolandshortenthe
signatureprocessthroughtheuseofeSignatureandfaxsupport.
6.Obligationmanagement.Thisrequiresagreatdealofprojectmanagementtoensure
deliverablesarebeingmetbykeystakeholdersandthevalueofthecontractisntdeteriorating
throughoutitsearlyphasesofgrowth.
7.Revisionsandamendments.Gatheringalldocumentspertinenttothecontractsinitial
draftingisadifficulttask.Whenoverlookeditemsarefound,systemsmustbeinplaceto
amendtheoriginalcontract.
8.Auditingandreporting.Contractmanagementdoesnotsimplyentaildraftingacontractand
thenpushingitintothefilingcabinetwithoutanotherthought.Contractauditsareimportantin
determiningbothorganizationscompliancetothetermsoftheagreementandanypossible
problemsthatmightarise.
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9.Renewal.Usingmanualcontractmanagementmethodscanoftenresultinmissedrenewal
opportunitiesandbusinessrevenuelost.Automatingtheprocessallowsanorganizationto
identifyrenewalopportunitiesandcreatenewcontracts.

Contractmanagementsoftware
Whilethetraditionisnormallytomanagecontractsmanuallythroughfolder
andfilecabinetstorage,thepracticeisriddledwithinefficienciesthatcanonly
detractfromanorganizationsoverallefficiency.Integratingwithanautomated
contractmanagementservicewillhelpfreeupcountlessmanhoursand
automatecountlessprocessesassociatedwithmanagingacontract,thus
creatingmorevalueforacompany.

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