Contract management is a fundamental components and driving force with all law department. Contract management is the contracts made with customers, vendors, partners or employees. It plays a significant role in smooth function of legal outfits. Contract management has broader scope than document management. It includes negotiating the terms and condition in contracts and ensuring compliance with terms and condition, as well as documenting and agreeing any changes that may arise during its implementation or execution. As businesses grown complex commitments and obligations to customers, suppliers, the use of contract s has grown rapidly. Contract management assist law department to develop and implement more cost-effective approaches to contract management for both buy and sell side . Contracting is actually one of the crucial activities in determining the success of any business arrangement.
Contract management includes:
• Contract management • Contract review and analysis • Contract abstraction and summarization • Contract drafting and negotiation • Integration of proper and electronic document • Contractual risk analysis
Commercial contract includes employment letters, sales invoice , purchase order. Complex contracts are often necessary for construction projects, goods or services. Contract can be of many types e.g. –sales controls, purchasing contracts, partnership agreements and intellectual property agreements. Contract management is the process of systematically and efficiently managing contract creation, execution and analysis for the purpose of maximizing, financial and operational performance and minimizing risk.
Contract management has four key methods such as visibility and access, managing and tracking contract commitments, and managing. Contract risk in this counsel will be assisting your clients that you work closely with clients to meet mutual expectation. In negotiation drafting, finalization and monitoring a contract.
There are certain areas of contract management-Authority and negotiation, Baseline management, Commitment management, communication management, document management.
It is critical part of today’s business environment, otherwise any negligence can cause business harm and proved expensive to an organization many fraud, and criminal activity etc. are the reasons of failure contract management which can be overcome through contract management training. Contract management training helps you to understand tools and techniques. It is important to have training because in business environment competition is increasing day by day. This helps organization to get good benefits to both seller and buyer.
Contractor and manager should have great bonding. Give proper attention to audits and should be careful about transparency. They should do regular meeting, on which future of an organization depend. Goals should be always kept in mind. Proper training arrangements for coming youth.
In today’s business environment contract management software allows share contractual document and track different versions of document. Many software developers concentrate too much on terms like signing date ,effective and signatory date to compromise with others vital terms like indemnity, warranty etc. An attempt is being made by contract management software companies to outsource repository and other core competencies to India which will broaden their horizon and limit costs. It also ensures entire data is securely stored in digital formats. They make all contracts easy to store, access and retrieve.
There are two types of two contract management certification which two associations include NCMA (National contract management association) and another is CPCM (Certified professional contracts management). The phases of contract management are initials, bid, development, manage, maintaince.There may a circumstances when contracts needs to be changed later on which is based on mutual agreement b/w both the parties to vary the contract, a unilateral decision to vary the contracts . It is a methodical management of contracts from inception to conclusion.
Effective skill needed
1) Technical skills are required for preparing documents, analyzing and proposals, doing bids so on. 2) Investigation of business and legal background of contract should be checked. 3) After finalizing documentation you should prepare transaction. 4) Skill of conceptualization so that manager can visualize company’s goal. 5) Condition of purposed business relationship satisfied or waived.
Consequences of poor contract management
In 2010/11 department of public enterprises discovered poor contract management in the SEO’S supply chain management audit findings. This led to lack of internal control, wasteful expenditure and irregular procurement practices.
Contract management also associated with risk factor which can be reduced by contract management training. In this there is good scope of career and earning .It is a tool for a growth of an organization. In year 2009 struggle year in which contract management overall firm reveal many organization saw slightly dip while tier2 and tier 3 saw growth of 2.4% and 2.6% respectively.