Administering Contracts: Everything You Need to Know
Administering contracts and contract management can be used interchangeably. Though they have similarities on the lowest level, both have strictly different stages of contract lifecycle. 3 min read
2. Functions of A Contract Administrator
3. Functions of Contract Management
4. Contract Administration: The Work Done Before Contract Formation
5. Contract Management: The Work Done After Contract Formation
6. Process Output of Contract Administration
Administering contracts and contract management can be used interchangeably. Though they have similarities on the lowest level, both have strictly different stages of contract lifecycle. For most companies, there is only a single team that deals with the contracting process making it a reason why people tend to mix the terms. On the other hand, individuals at smaller businesses have various functions including the management of contract matters.
Contract Management vs Contract Administration
Contract Management and contract administration have common factors and both require an understanding of how the contract works and how the parties accomplish their responsibilities listed in the agreement. Contract administrators are responsible for how the contract will be worded while contract managers are tasked to ensure that all parties involved are capable of performing and delivering the obligations listed in the contract.
Functions of A Contract Administrator
Contract administration is required every time there are contracts. The entire process deals with the relationship of the contracting parties from the awarding of the contract to contract termination. Here are several functions under contract administration:
- Develop and plan the contract functions and understand the major components of the contract.
- Monitor the process from the awarding of the contract to completion of works or services, payments made, and handling of disputes.
- Make sure that supplies and services indicated in the contract are of best quality and be delivered within the specified time frame and within the budget.
- Serve as the head of the procurement process to ensure that the contract is executed successfully.
- Measure and monitor the performance of all parties to ensure that they're delivering.
- Initiate orientation or a kick-off meeting when a contract is awarded.
- Ensure that both parties have a clear understanding of the contract contents.
- Gathers the revisions, if any, made by both parties after contract review.
Functions of Contract Management
On the other hand, contract management starts when both parties agree to the contract terms and conditions. Here are few duties under contract management roles:
- Ensure that both parties meet their responsibilities as efficiently as possible.
- Confirm that each party has all the needed personnel and equipment for the delivery of the expected result.
- Work on needed modifications and alterations to an existing contract.
- On retail, contract managers are also tasked to ensure product delivery, stocking, monitor promotional materials, track sales, and receive revenues from retail stores.
Contract Administration: The Work Done Before Contract Formation
Most professionals involved in contract administration concentrate on the planning and implementation of contracts. The planning stage usually starts from finding potential contracting partners and sending out a request for proposal (RFP). Contract administrators are also in charge of polishing some details of the agreement and working with partners to negotiate on things like price, performance expectations, and even delivery schedules.
The word 'administration' seems to define the role to be more of an administrative work, the job requires a deal of strategy and business savvy.
Contract Management: The Work Done After Contract Formation
Contract management starts after a contract has been completed, signed, and put into place. This entails that contract management deals with ensuring that all terms and conditions of the contract are being practiced and all obligations are delivered satisfactorily.
During the contract management phase, the manager needs to check that the company's resources are fully utilized. Contract management also deals with changes and other modifications to the contract. Overall, the contract administrators and contract manager should be in close communication to make sure that all obligations of the parties involved are properly carried out during the process.
Process Output of Contract Administration
A process output is expected from a contract administrator. The output usually contains the following:
- A Contract Document that contains the contract and other documents like pre-versions or "unapproved contract changes".
- Requested Changes that are results of the contract administration process if ever one of the parties request for an amendment which must get the "approval through the Integrated Change Control process".
- Recommended Corrective Actions, anything that requires one party to comply with the terms indicated in the contract without changing the contents of the written agreement.
- Updates of Organizational Process Assets.
- Updates of Procurement Management Plans.
- Updates of Contract Management Plans.
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