When Contract Managers begin working on a new Project, particularly when that Project is just beginning, there is a long list of Contract Management tasks ahead of them. For new Contract Managers, the responsibilities can sometimes seem overwhelming. However, with the right mindset and knowledge about Contract Management Best Practices, you can excel in your role whether you are a new or experienced Contract Manager.
In this article, we will discuss the initial steps you should take after being appointed as a Contract Manager on a Project and the best practices for managing a Contract in your industry.
Table of Contents
Understanding Your Role as a Contract Manager
Familiarising Yourself with the Contract
Communicating with Stakeholders
Identifying and Mitigating Risks
Reviewing Contract Performance
Establishing Contract Administration Processes
Building Relationships with Vendors
Implementing Contract Changes
Ensuring Compliance with Regulations
Developing and Managing Contract Budgets
Improving Contract Processes
Monitoring Contract Termination and Renewal Dates
Staying Up-to-Date with Industry Trends
Seeking Professional Development Opportunities
Conclusion
1. Understanding Your Role as a Contract Manager
It’s critical that you understand your role and responsibilities as a Contract Manager, both generally as well as for:
the particular Project you are working on; and
the Contract you will be managing.
General Contract Management role
All Contract Managers have certain responsibilities and obligations that can be attributed to their role, regardless of their industry, the Project or the specific Contract they manage. These include:
acting in accordance with the terms of their Contract;
complying with their employment (or engagement) contract; and
safeguarding the Project by performing the best they can in their Contract Management role.
Roles and Responsibilities for the Project
There can’t be a Contract without a Project.
So while this role is intended to relate to the Contract, Contract Managers always need to consider the Project as a whole and the needs of their organisation. This often applies for the larger projects, and includes issues that affect the Project, such as delay on one part of the Project causing delay to the Contract that the Contract Manager is administering.
Roles and Responsibilities for the Contract
Unless Contract Managers are appointed as an independent Superintendent, it is well-understood that they will be acting in the interests of their own client. Both parties will usually have a Contract Manager, with each having responsibility for managing the contract from their own organisation’s perspective.
Although they may have been involved during the Project Planning stage or during the Contract Planning, Contract Drafting (contract creation phase), Contract Review and Contract Negotiation stages, Contract Managers are usually brought in after execution of the Contract.
They then become responsible for the:
performance of the Contract;
contract lifecycle management software;
Contractor management (including Contractor management best practices); and
enforcement of the Contract by the Client should this become necessary,
and are also the primary point of contact for all formal communications related to the Contract.
Project Managers vs Contract Managers
Keep in mind that the roles of Project Managers and the role of Contract Managers is often different.
Project Managers are responsible for implementing and completing the Project, while Contract Managers are responsible for managing or administering the Contract for the performance of part or all of the Project (ie a scope of work relating to the Contract rather than to the overall Project).
2. Familiarising Yourself with the Contract
Review the Contract
After being appointed, Contract Managers should thoroughly review the Contract to understand its terms and conditions, including deliverables, timelines, obligations on their party, and payment terms.
While reviewing the Contract will help them identify potential risks and opportunities for improvement in the area of contract performance, at this stage the most important focus should be on understanding what the Contract says.
Create (or have created) tools to help you keep track of the contract data
I often prepare Contract Summaries for my clients, which summarise the key obligations and contractual requirements for performance of the Contract, as well as key contractual timeframes. Doing so allows my Contract Manager clients to have a quick “cheat-sheet” that they can refer to and double-check information and contractual obligations without having to re-read the Contract.
Tools I use for effective contract management
When I act as a Contract Manager, these Contract Summaries are an invaluable tool for me on a day-to-day basis, particularly when urgent contractual issues arise that need to be dealt with on the fly.
For my clients (and myself), I also prepare Workflows that describe key contractual processes the Contract Manager will need to supervise. My Workflows can take 3 different forms:
a “picture on a page”, which sets out the necessary steps that must be taken for, say, payment to occur. Imagine taking a look at one of these Workflow diagrams on your office wall, and you can straight away see what a useful tool these Workflows are;
a Word, Google Sheets or Excel summary of the relevant contract obligations; and
a Workflow or Roadmap in contract management software, which picks up on timing requirements and contractual obligation to make managing contracts easier.
I’m always happy to prepare Contract Summaries and Workflows for your Contract, so feel free to reach out!
3. Communicating with Stakeholders
Effective communication is critical to successful contract management.
Establish a Communication Plan, and make sure you schedule regular meetings with all stakeholders, including the Project Manager (if there is one), the Contractor Representative, vendors, contractors, and internal teams (including the Legal Department if needed).
Open and transparent communication will help ensure that everyone is on the same page and that the contract is being performed as intended.
4. Identifying and Mitigating Risks
Various risk assessments should have been carried out before the Contract was signed, including in relation to compliance and regulatory risks.
Identifying and mitigating risks is an essential aspect of contract management.
Develop a plan to identify potential risks and implement risk reduction strategies. It could include establishing contingency plans, monitoring key performance indicators, and implementing risk reduction strategies.
5. Reviewing Contract Performance
Reviewing contract performance regularly is crucial to ensure that all parties are meeting their obligations. Develop a process for tracking and reporting on contract performance, including key performance indicators, deliverables, and timelines.
6. Establishing Contract Administration Processes
Establishing efficient and effective contract administration processes is essential to successful contract management. Develop processes for document management, change management, and dispute resolution.
7. Building Relationships with Vendors
Building strong relationships with vendors and contractors is vital to successful contract management. Establish a communication plan and engage regularly with vendors to ensure that they are meeting their obligations, and the contract is being executed as intended.
8. Implementing Contract Changes
Contracts are dynamic documents, and changes may need to be made throughout the life of the agreement. Establish a change management process to ensure that any changes are appropriately documented, communicated, and implemented.
9. Ensuring Compliance with Regulations
Compliance with regulations is a crucial aspect of contract management. Ensure that all parties are adhering to relevant laws, regulations, and industry standards.
10. Developing and Managing Contract Budgets
Developing and managing contract budgets is critical to successful contract management. Establish a process for tracking and reporting on contract costs, including budget vs. actual expenditures and cost savings.
11. Improving Contract Processes
Continuous improvement is essential to successful contract management. Regularly review and evaluate contract processes to identify opportunities for improvement, including process efficiencies and other improvements.
12. Monitoring Contract Termination and Renewal Dates
Monitoring contract termination and renewal dates is critical as a Contract Manager. Keep track of essential dates related to the contract, such as termination and renewal dates, to ensure that the contract is properly renewed or terminated when necessary.
13. Staying Up-to-Date with Industry Trends
Staying up-to-date with industry trends and best practices in contract management is essential. It will help identify opportunities for improvement and ensure that the most effective methods and tools are used.
14. Seeking Professional Development Opportunities
Continuing education and professional development are crucial for Contract Managers. Seek opportunities to learn new skills, gain new knowledge, and network with other professionals in the field.
Conclusion
Being appointed as a Contract Manager can be challenging. However, by following these steps, you can set yourself up for success and ensure Contract Management best practice.
FAQs
What is the role of a Contract Manager? A: The Contract Manager is responsible for overseeing all aspects of a contract, from negotiation to execution to termination.
What is the first step in contract management? A: The first step in contract management is to understand your role and responsibilities as a Contract Manager.
Why is communication important in contract management? A: Communication is vital in contract management because it ensures that all parties are on the same page, and the contract is being executed as intended.
What is the importance of continuous improvement in contract management? A: Continuous improvement is essential in contract management because it helps identify opportunities for improvement and ensures that the most effective methods and tools are used.
What are the essential contract management skills? A: Essential contract management skills include effective communication, risk management, negotiation, problem-solving, and decision-making.
