In its most basic form, contract management refers to the process by which legal or contractual relationships are administered and managed between two parties.

It mainly applies to written contracts created for the exchange of goods and services paid for once completed.

A crucial part of contract management is monitoring the actual process involved in it.

This is typically completed by a senior member of an organization and allows the individual in question to make sure the relationship with external stakeholders is being maintained correctly.

1. Critical Aspects of Contract Management You Need to Know About

a) They are developing a Contract Management Team.

The first stage of the contract management process is to work out who in the organization will manage the Contract in question. In the case of a small business, this is typically the responsibility of the business owner. However, an additional member of staff may also be involved.

A senior manager or someone with the appropriate level of knowledge usually manages the Contract in larger organizations. Many teams get involved in contract management, including legal, finance, and human resource teams. Before the contract moves to the next stage, critical things must be established, such as a realistic timeline, appropriate team structure, and resources required to complete the project expertly.

b) Managing Relationships.

One of the essential areas of contract management is the management of relationships amongst stakeholders. These can be people within the organization or outside it. They are otherwise known as vendors. For tasks and obligations outlined in the Contract to be carried out effectively, a good relationship must exist between everyone working on the Contract.

This is important because if issues do occur, it is better to deal with them internally. However, it may be necessary to take legal action if it is the only option remaining.

c) Contract Performance Management.

This part of contract management works between both parties to ensure they are living up to their obligations outlined initially. This could be things such as making sure deadlines are being met, payment is being received, and standards of work meet original specifications.

d) They are administering the Contract Effectively.

An important aspect of contract administration is how to deal with conflict if something isn’t going as initially intended.

If either party is found not to be effectively meeting their original obligations or communicating as effectively as possible, it could be necessary to seek legal action. Ultimately, this is so that either party can be compensated due to the other parties’ negligence.

This approach is only recommended once all other options have been attempted, such as frequent communication or appropriate relationship management. Resorting to legal aid is only considered a last resort.