Contract Management
When two companies wish to do business with each other, a contract specifies the activities entered into by both organizations and the terms through which they will each fulfill their parts of the agreement. Contracts affect business profitability in a very large way due to the emphasis on revenue and expenses.
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When a contract is phrased poorly, one organization might lose countless thousands of dollars over a simple technicality they lacked the resources to identify. Effective contract management can ultimately create a powerful business relationship and pave the road to greater profitability over the long term, but only when managed correctly. It’s a good idea to include a legal department or a lawyer in contract management discussions. The precise wording of contracts is crucial to contract management.
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Generally, contract management involves a few key stages. There’s the early stages or pre-award phase. This is all the work that takes place prior to a contract being given to someone, whether it be a business or an employee. The middle stage is when the process is awarded. This includes all the paperwork to make the agreement final. Third, there’s the post-award stage. This is where a lot of contract management and maintenance comes in.
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Those three basic stages are a simple way of looking at contract management in three phases, but the process is more complicated than that and can be viewed in more stages depending on how detailed a view you’re taking. We’ll discuss a deeper view of the process later.
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