Contract administrators are often in charge of any task involving contract oversight. This comprises:
Before an agreement is finalised: Requesting, drafting, negotiating, receiving approvals, and signing
Once a contract is executed: tracking of storage, renewal, and expiration
What is contract administration?
Contract administration is the process of planning, creating, implementing, and ensuring that a contract meets all of its specified objectives. refers to the actions performed to accomplish the intended business results and manage the contract lifecycle.
Contract administrators must keep open lines of communication in order to design, carry out, and expedite the contracting process as effectively as feasible. Establishing contract requirements calls for careful oversight. Therefore, cooperation between internal departments (such as legal, finance, procurement, sales, SCM, IT, etc.) and external counterparties is necessary at all times.
Key stages of contract administration
Regardless of the contract type, contract administrators need a clear yet flexible contract administration plan that promotes and makes collaboration simple in order to maximise performance. As a result, time-saving, contract compliance-promoting, and friction-eliminating standard procedures immediately enhance contract administration.
Stage 1: Contract planning
Planning is the first step in contract administration when there isn’t a contract in place yet. Additionally, planning is crucial in this situation and involves the hierarchy listed below.
- Defining the objective, scope and deliverables
- Setting up a timeline
- Laying out financial terms
- Planning the work
- Factoring in the risk involved
- Drafting the contract
- Legal review
Stage 2: Contract negotiation
It’s time to distribute the draught to the other party after it’s finished. Your contact administrators will need to, if necessary, defend your position because they may recommend a few changes to ensure that their interests are considered. Redlining is a process that requires much negotiating.
Stage 3: Contract execution
You and the other party have so agreed on the conditions of the contract. The draught has been finalised, and the signing of the contract is the last step before it takes effect.
Signing on the dotted line and notifying all parties that the contract is now in effect are both necessary steps in contract execution.
Stage 4: Contract Management
The main goal of contract management is to make sure the agreement is effective. At this point, a contract manager enters the picture and functions under the administrator’s direction.
This work contains:
- Keeping track of the parties’ progress toward the project’s milestones
- Resolving problems that emerge along the way
- Taking advantage of unanticipated occasions
- Revisions and modifications to the contract
- Handling contract renewals
- Updating senior management on the development.
Stage 5: Contract closing:
Each contract contains a set of objectives. And once those objectives are achieved, the relationship’s advantages will have been fully reaped, and you might be tempted to end it right then. However, that can be a mistake. Your contract outlines the commitments you and the other parties have agreed to uphold in addition to its objectives.
Stage 6. Post-contract review
Although the contract has been closed, the work is not yet finished. Calculating the cost and benefit of the relationship is still necessary.
Contract administration starts with a concept, develops into a document, and concludes with demonstrable outcomes and introspection. Contract management is one of the stages in this procedure.
The contract administrator is the person who makes sure that this process is successfully completed from beginning to end. They collaborate closely with each contracting party to achieve this.