Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing any changes that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creating, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.
A recent study found that 42% of enterprises indicated that the top driver for improvements in the management of contracts is the pressure to better assess and mitigate risks. In addition, nearly 65% of enterprises report that contract lifecycle management (CLM) has improved exposure to financial and legal risk. Common commercial contracts include employment letters, sales invoices, purchase orders, and utility contracts. Complex contracts are often necessary for construction projects, goods or services that are highly regulated, goods or services with detailed technical specifications, intellectual property (IP) agreements, and international trade. The sheer complexity and volume of corporate contracts have increased dramatically in recent years due to rising globalization, outsourcing, and regulatory requirements.
Areas of Contract Management
The business-standard contract management model, as employed by many organizations in theUnited States
A recent study found that 42% of enterprises indicated that the top driver for improvements in the management of contracts is the pressure to better assess and mitigate risks. In addition, nearly 65% of enterprises report that contract lifecycle management (CLM) has improved exposure to financial and legal risk. Common commercial contracts include employment letters, sales invoices, purchase orders, and utility contracts. Complex contracts are often necessary for construction projects, goods or services that are highly regulated, goods or services with detailed technical specifications, intellectual property (IP) agreements, and international trade. The sheer complexity and volume of corporate contracts have increased dramatically in recent years due to rising globalization, outsourcing, and regulatory requirements.
Areas of Contract Management
The business-standard contract management model, as employed by many organizations in the
- Authoring and negotiation
- Document management
- Baseline management
- Commitment management
- Contract visibility and awareness
- Issue and change management
- Transaction compliance
- Service level agreement compliance
