In any construction project one cannot ignore the importance of contract management. It is the process that starts from creation of contract and ends at the successful execution of the contract. In between it includes maximizing the operational performance and minimizing risks associated with the project. Every business has the pressure to cut costs and maximize profit. It is also a motive to minimize the business exposure to any legal case. Thus, all this is undertaken by the contract administrator. They undergo nine stages of contract management to ensure everything is fine.
9 stages of contract management
The total contract management is a compilation of nine stages that includes
- Initial Request
This is the first stage where the contract repository is built. This is a collection of all the documents that are required for forming the contract.
- Generating Contracts
This is stage for drafting the contracts. It can be done manually but that might take up some time. Apart from that automated contract management software can be used which will help in the process and speed it up.
This is the stage where any negotiations are to be done. The contract document is shown to the parties involved. They check it and after comparing confirm about whether there are any discrepancies or not.
- Contract Approval
This stage is for getting approval of the contract. For this tailored approval workflow is created that minimizes any bottleneck in the process. The process is completed fast so that the contract becomes valid.
- Execution of the Contract
Once the contract is signed and approved its time for its execution. A contract administrator is responsible for that. They need to ensure that everything that is agreed upon at the contract is fulfilled properly. One can become a contract administrator by joining contracts administrator course.
- Obligation Management
It is important to ensure that the contract is kept valid for years to come. Many times the value of contract deteriorates over the years. The project manager or the contract manager must ensure that nothing such happens.
With time it will be noticed that certain changes are required in the contract. For implementing the same there should be a structure that will be followed by the parties. For amending the original document must be there and that will help in implementing any new changes and thus amending the contract.
- Audit and reports
In order to ensure that a contract is executed as planned audits are important. When there are no audits it may happen that the contract is signed and then put into a file cabinet. Then there is no value of such contract. Thus audits and reports on such audit are very important.
finally a time will come when there will be requirement for renewal of the contract. If there are automated processes then time can be saved otherwise a manpower will be required for carrying on the renewal process.
In the construction project the contract administrator oversees all of these.