Contract Management is done according to the on-going requirements of the contracts and organizational needs, and should be tailor-made to suit the requirements accordingly. However, a theoretical procedure of contract management can be broken down to the steps listed below and in practical situations some of the steps may be omitted as necessary;
- Information from the management: The contract management professionals are informed, or become aware of the particular procurement requirement from the management, or management channels.
- Triggering the contract management process. Contract management professionals start the vendor sourcing.
- Requesting pre-qualification documents from short-listed new vendors.
- Reviewing suitable vendors from established & new vendors for relevancy of the service/goods required to be procured.
- Commencement of the process by identifying the right contract format, terms & conditions and pertinent documents to support the contract’s purpose.
- Compiling the contracts. Compilation of a suitable contract is carried out from previous similar contract and revising and adding relevant clauses depicting right terms and conditions as relevant.
- Reviewing the contract. Upon completion of drafting the contract, a senior contract professional is tasked to check and rectify errors and risky clauses for minimizing possible disputable matter.
- Approving the contract. Contract and its risky areas marked with the level of risks involved is produced for management approval. Usually it is performed at top level management meeting attended by senior contract management professionals.
- Getting the acceptance of the other party/s to the laid out terms and conditions of the contract.
- Execution of the contract. Signing the contract by the parties.
- Monitoring the contract. Contract professionals must maintain regular vigilance to monitor the contract on regular basis. This should ensure deliverables are being met by involved parties and terms and conditions of the contract is followed.
- Revisions and amendments. During the execution of the contract and at the end of contract period, it is quite usual to find certain terms and conditions requiring revisions for smooth functioning of the contract and clauses which have potential for giving rise to disputes. When such items are found, revisions or amendments should be made to the original contract.
- Auditing and reporting. Contract audits are carried out for determining organizations’ compliance to the terms of the agreement, statutory regulations, identification of any loop holes and any clauses that have the potential to arise disputes. Any findings are reported to the management for further review.
- Renewal. The contract can be made to renew automatically by incorporating relevant clauses therein, or manually renewed, or renewed by automation.
Contract Closure. After the scope of the contract is completed, the contract is closed after completion of any obligations, disputes resolved and final payment is issued.