Contract Management = The process of ensuring that both parties to the contract meet their obligations and that the intended outcomes of a contract are delivered. It also involves building a good working relationship between the buyer and the supplier.
Many of the cost savings and improvements available from contract and supplier management are achieved by how the buyer and supplier work together after the contract has been awarded.
Key Elements of Contract Management:
- Contract Development – Formulation of a legally biding agreement; setting out detailed terms and conditions of business; and the specification of requirement.
- Contract Communication – Communicating contract documentation; delivery plans; and change control documentation to key stakeholders.
- Contract Administration – Implementation of procedures to ensure that contract obligations are fulfilled. Including: contract maintenance; change control; budgeting and cost control; ordering and payment procedures; and management reporting.
- Managing Contract Performance – Risk management; performance monitoring and measurement; continuous improvement; supplier motivation; and performance management.
- Relationship Management – Developing working relationships through regular communication and information sharing; resolving conflicts; collaboration and mutual support.
- Contract Renewal or Termination – Review the success of the contract and relationship; and the status of the supply need.
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