Contract lifecycle management is the process of systematically and efficiently managing contract creation, execution and analysis, for maximising operational and financial performance and minimising risk.
Successful contract management is most effective if upstream or pre-award activities are properly carried out.
According to the Association of Corporate Counsel, companies should get into the habit of going through a checklist when approaching any contractual agreement.
By acquiring and utilising contract management software, available at sites such as Contractwise, this task will be largely automated and provide a useful precedent for all contracts regularly negotiated, highlighting six key points.
1. Always carry out a background check on your counterparty, this will ensure that they are legally entitled to enter the agreement. By checking their existing commitments, you will also establish the viability of the terms and conditions from their point of view.
2. At the outset, it is important that the executives attending meetings and making decisions have the authority to do so from the parent company. A channel of review is vital to avoid any mistakes and ensure assessments can be carried out promptly and contracts completed.
3. You will need to be on the front foot to negotiate the best deal available. This involves establishing the lifecycle of the agreement, ensuring that you understand the documents needed. At this point, you will be able to agree processes, review periods and delivery dates. This will also set in place key dates for information from both parties to ensure the smooth delivery of the contract.
4. The above procedure will highlight any potential bottlenecks and enable you to plan ahead. Do not be inclined to accept pressure from the other side and ensure that you have provided enough time for re-drafting, revision and final delivery dates. Review periods are crucial and the length of these must be mutually agreed. Both parties must be held liable for this process since reviews will impact subsequent actions and deadlines.
5. Always ensure that any potential delays, and costs incurred thereby, are clearly set out with the burden on either party evident in the original agreement. Any changes during negotiation should be identified as a new project request.
6. Once an agreement is in place take time to evaluate the contract you are about to sign.
Contract management systems are key to successful negotiations.