Top 10 Contract Management Tips

Contract Management - Top10 Tips

one. The right contract is Key. Lay nice foundations by ensuring that the right contract is in place. Sounds obvious but the formal contract forms a framework around which a nice relationship can grow. If the contract was poorly constructed, it will be much more difficult to make the relationship a success.

two. Actively manage the contract. Be prepared to manage all aspects of the contract. Contract management activities can be divided in to areas: service delivery management; relationship management; and contract administration. Equal focus ought to be given to all areas and each managed by the right people. Inadequate resources will mean that full value won't be achieved.

three. Embed service levels in to the contract or create a Service Level Agreement as an addendum. This is where risks are managed and service continuity designs are put in to place in case of failure. Establish what levels of service are necessary, and make definite they are maintained noting, however, that there's costs involved with each additional requirement.

four. Measure quality as well as quantity. This means generating and using measurements that permit the quality of a service to be measured which may include assessing aspects such as completeness, availability, capacity, reliability, flexibility and timeliness.

five. Ensuring value for funds is about the balance between service quality and value received. Encourage innovation and continuous improvement from the supplier. All costs associated with the contract must be thought about, including: set up costs, recurring costs, fixed costs, unit costs and the organisation's own overheads in managing the contract. Benchmarking can assist in providing cost comparisons.

Six. Manage your risks. Risk is defined as uncertainty of outcome, whether positive opportunity or negative threat in contract management. Managing risk means identifying and controlling factors that may have an impact on fulfilment of the contract. Identified risks ought to be formally recorded in a risk register, assigned to an individual owner and actively managed in accordance with nice risk management practice.

Seven. Manage the relationship. The key factors for success are:

• Mutual trust and understanding

• Openness and excellent communications.

• A joint approach to managing delivery

Lovely communication allows issues to be identified and resolved early. Understanding the business culture at the supplier helps to reduce tension and promotes harmony.

Eight. Deal with issues promptly. Issues ignored can fester and grow. A dispute resolution and escalation method ought to be defined in the contract to prevent crises. Objective to prevent issues as well as resolve them.

Nine. Administration of the contract is important. Contract administration is concerned with the mechanics of the relationship between the customer and provider. Its importance ought to not be underestimated. Clear administrative procedures make sure that all parties to the contract understand who does what, when and how. Put in an alert method to advise expiry dates.

ten. Document everything. Establish procedures to keep contract documentation up to date and make sure that all documents relating to the contract are consistent and that all parties have the correct version. Changes must be controlled.