Contracts are essential for businesses from both sides of the fence. Whether your business is procuring services or goods or providing services to your clients, contracts cement the relationship, enable your business to function, and can provide regular long-term income. As such, it is vital that any contract you are involved in is managed effectively.
The key to ensuring successful contract management is maintaining a consistent and informed approach. The slightest inefficiency can result in a significant loss of capital, which can increase exponentially by means of associated costs or penalties. The following three steps aim to provide simple and clear guidance on how to succeed in contract management.
Step one
Standardise your method. This relates to the entire process, from procurement to delivery. Create a detailed process incorporating setup, communication, key performance indicators (KPIs), monitoring and non-compliance that can be utilised for any contract by your organisation, thus promoting efficiency amongst your contracts and staff.
Step two
Ensure your contract manager is conversant with the focus of the contract. By utilising staff familiar with the subject matter, you will aid productivity. Many managers are tasked with overseeing or delivering contracts outside their field of expertise, which invites error and often results in financial penalties. If you are managing multiple contracts, covering a range of disciplines ensures you have access to appropriate contract-specific guidance to equip yourself appropriately.
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Step three
Monitor all contracts closely. No contract can be set up so well that it can run itself. Ensure your contract manager remains involved, carrying out regular audits of services and communicating with relevant parties.
You may choose to purchase a contract management system from a provider such as contractswise.com, which can be beneficial if you are starting from scratch or reviewing your approach to contract management. There are many existing systems that already have the templates, forms and processes required, usually incorporating a degree of adaptation to enable you to fit the model to your chosen discipline or company structure.
The Crown Commercial Service’s document Contract Management Principles provides guidance, underpinning the government’s approach to the whole subject.
Contract management is a time-consuming exercise and there is no getting around this fact; however, following these simple steps will maximise your productivity and promote success.
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