Contract management refers to the continuous process that begins with evaluation and analysis of a customer’s inquiry and goes on until closure of the contract or fulfillment of all the contractual obligations. It can also refer to management of the contracts which involve partners, employees, vendors or customers.
Personnel in the department of contract administration should support, negotiate and manage contracts that are effective and easy to retain. It also involves negotiations of the conditions and terms in contracts as well as ensuring that the conditions and terms are complied. Through contract management documentation of the terms and conditions should be provided as well as any changes or amendments arising during the execution or implementation of the contract.
In essence, contract management can be summarized as processes of efficiently and systematically managing the creation of contracts, their analysis and execution for purposes of maximizing the operational and financial performance as well as minimizing risks.
There are commercial contracts which are common and they include sales invoices, employment letters, utility contracts and purchase orders. There are also complex contracts which are a necessity for highly regulated services or goods, construction projects, services or goods with technical specifications that are detailed and international trade.
There are different contract management areas that come into play. In the standard business contract management model that is used by most organizations in the US, the exercises typically fall in the business disciplines stated below.
- Document management
- Commitment management
- Baseline management
- Negotiation and authoring
- Awareness and contract visibility
- Communication management
Ideally, there are different stages that need to be followed through during any contract placement and these include requirement analysis, evaluation plan, invitation to tender and proposals evaluation.
Once these steps are followed through, those candidates who meet the rigorous standards which include training, education, knowledge and experience are awarded the certifications. There are two major certifying associations and they include National Contract Management Association (NCMA) and International Association for Contract & Commercial Management (IACCM).
Both bodies offer their own class of certifications. There are also a couple of Universities in the United States which offer versions of certification and training such as the University of Virginia, Villanova University and Saint Louis University. All these universities provide contract management certificates.
Contract management can be divided into 5 major phases which include:
- Initial phase
- Bid phase
- Development phase
- Maintenance phase
- Manage phase
Contract management is an important and crucial aspect of any business or organization. It is therefore important to ensure that it is carried out by trained professionals who understand the concept well and who are able to follow through with all the stated phases.
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