Developing and Managing Contracts
Developing and managing contracts can be complex and difficult, as you will need to oversee the agreement made with all parties involved.3 min read
Developing and managing contracts can be complex and difficult, as you will need to oversee the agreement made with all parties involved, which can include suppliers, customers, partners, and even employees.
The oversight of such contracts is crucial, especially to prevent lost sales and regulatory penalties if contracts are not managed properly.
The following steps can be taken in order to properly develop and manage contracts for your business:
- Contract provisions
- Phased contracts
The orientation should be the initial meeting held to go over the work that is to be done, along with the parties who are involved and what their responsibilities are under the contract. The way in which the contract will be managed will also be identified in this meeting.
Now onto the plan. The more prepared you are, the higher your chances of success with contract management will be. The plan itself should include the goals and objectives of the contract, along with the budget. The plan should also identify who is in charge of what, and what the deadline is for completing their respective jobs.
The business should choose one person to be responsible for managing the contract. This person is usually referred to as the purchasing manager. This person will take on a strong project management role and ensure that all steps of the contract are carried out successfully and on time.
Now that you have a plan and the personnel involved to carry out the contract, you will need to identify the process for carrying out the contract. You should draft a workflow that identifies what is to be done, how it is to be done, and what other personnel members should be contacted once certain phases of the work have been completed.
Once everyone involved in the contract knows of his or her responsibilities, they might need to obtain training. As the purchasing manager, you will need to ensure that everyone has the necessary skills needed to complete their work. For example, if you choose to hire someone to create the workflow, along with the projected timeframe, this person will need to have experience with using such software. It is also important for everyone involved to know the “lingo” so that they can understand the terms being used when discussing the scope of work.
Once the contract has been drafted, you’ll have to know what will happen once the work under the contract is underway. Therefore, you should hold a pre-closing meeting and prepare closing checklists so that you can ensure that the work to be completed is done properly and to your business’s standards. Therefore, the other party should be well aware of what is expected of them.
You’ll need to have metrics in place to measure the effectiveness of the contract management function for your business. For example, if any issues arise with a particular contract, i.e., employee mistakes, work not being done, timeframe for work being done had to be extended, etc., then you’ll want to do things differently for the next contract entered into.
You should have your contract management department audited by your internal audit team. The audit should consist of a specific checklist, which can help you identify where this department is struggling, and alternatively, where it is succeeding. After the audit is complete, you can enhance certain areas within your contract management department to meet the expectations of the business as a whole.
You should include specific language in your contract that will prevent future disputes. Therefore, don’t be vague. Don’t include language that isn’t strong and doesn’t hold any weight. Include the minimum requirements that you expect of the other party. Leave no room for interpretation in the contract so that the other party fully understands its rights and responsibilities.
You can use a phased contract, which is essentially a “practice” contract that is used during the planning phase. That way, you can amend the contract several times during this stage before using a live version with the other party. Remember that there are several types of contracts that can be used, especially when entering into a construction project, i.e., fixed price, time and materials contract, or target price contract.
If you need help developing and managing a contract, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.