Our Contract Administration guide will cover:
• Contract administration and why it’s important
• Who is responsible for contract administration and how should this be carried out
• The contract administration process
• How contract administration can be improved using software
If any contract delivers the agreed obligations, it must be effectively managed from start to finish. Contract administration will begin after the awarding of a contract and will continue until the contract is closed or terminated.
Effective contract administration will improve the chances of successful contract delivery for the parties and continue to provide a profitable outcome for the wider business.
Contract administration is the planning, negotiation, execution, and performance of contracts between two or more parties. The contract administration process involves monitoring each contract to maximise operational performance and reduce the risk for the party concerned
Every company will enter legally binding contracts. They are the foundation of any commercial relationship to ensure each party understands expectations and what they need to do to fulfil the contract terms. That also means that either party is responsible if they fail to deliver on their requirements.
When entering a legally binding agreement, both parties involved will go back and forth on terms, clauses, pricing, and termination until both parties are satisfied. Contract Administrators act as the middleman - the point of contact between the two involved. Having an individual or a team dedicated to having these discussions streamlines the work and aids in a smoother set of negotiations.
Contract administration is not limited to the handling of post-signature duties. The negotiation stage of the contract is vital for the business to understand the company's obligations and rights from the earliest stage to ensure a smooth commercial relationship with the parties involved.
Contract administration plays a crucial role in the success of a project and the company overall. The contract administrator negotiates the terms, manages the fulfilment of contract terms, lowers the company’s exposure to legal risk, and increases the chances of higher profits.
Contracts are an essential aspect for a business to be successful. If managed correctly throughout the contract lifecycle, they can prove to be one of the most substantial assets in a company.
Depending on the company set up and the size overall, contract administration duties may fall to an individual or a team. The individuals are typically known as Contract Administrators. Contract Administrators have a crucial role within the contract lifecycle, as they will oversee and manage each contract.
The simplest definition of a contract administrator's responsibilities is managing and communicating a contract between parties. The employees responsible for a company’s Contract Administration will focus their primary efforts and work on the planning and execution of contracts.
Everyone’s roles vary and that includes a Contract Administrator’s. Their duties can often vary depending on the type of contract, as each contract will have a set of unique demands and obligations that need to be fulfilled.
Due to the word administration, some companies bypass or overlook the need for a contract administrator. But a contract administrator writes letters, responds to emails, and manages the bureaucracy, similar to a project manager's assistant.
The role requires the individual to have strong commercial awareness of the legal field. Entering binding contracts plays a critical role in the financial and operational success of many businesses globally, so finding individuals with the correct skill set and knowledge base is crucial.
In many ways, the Contract Administrator acts as a third-party agent on behalf of their company. The document is prone to multiple errors, party disputes, and miscommunications in contract creation. It is the responsibility of the Contract Administrator to oversee these types of issues and produce the best possible version of the contract.
Like any project, if the contract will deliver a successful business outcome, it must be planned from start to finish.
The Contract Administration process will vary depending on the business sector and the type of contract. However, we have included the fundamental stages of contract administration that apply to all businesses.
Firstly, contract administration begins with a clear understanding of the goals and objectives of a contract. Contract Administrators will set the scope and lay the foundations for the project, highlighting the deliverables, creating timelines, and determining how to measure KPIs (Key Performance Indicators).
With the foundations laid and the parties in agreement of the outcome and expectations, the contract moves onto the Contract Authoring stage. Also known as Contract Writing, the Contract Authoring stage involves the parties and stakeholders establishing the terms and conditions of a contract. Typically, a legal team or another party will write the contract that defines the agreement by bringing together standard clauses, key dates, pricing, and other crucial data.
Contract Negotiation is a formal process where the parties reach a legally binding agreement on their future relationship. Contract Negotiation, however, is much more than getting a deal with all involved. The process provides an opportunity to increase the economic value and ROI of the relationship and minimise the risk associated with your company. Negotiations typically begin with redlining. The redlining process allows each party to remove, modify, or exclude clauses and terms before signing the dotted line.
The most important stage of the process is the Contract Execution phase, in which the parties involved will sign the dotted line, meaning the terms of the contract now bind them. Monitoring compliance will be an ongoing process for the lifetime of the agreement by the person appointed as the Contract Manager.
Effective Contract Administration will significantly improve the chances of successful contract delivery and continues to provide a profitable outcome for the wider business until the contract finishes. But there is no doubt that it can be a complex, sophisticated and time-consuming process. Companies across the globe are exploring ways to replace outdated, inefficient processes with contract review, creation, and management tools like Summize.
Some of the main benefits include cost-effectiveness, accuracy, and speed. With Summize, users can reduce the time spent reviewing a contract by up to 85%, freeing up time and resources for other fee-earning activities. Using our software can simplify your business' processes and empower your legal team to focus on the future of your company.
Summize is also a flexible tool that helps you create contracts even more easily within an everyday program - Microsoft Word. Our Add-In links to your playbook and standard clauses, making it faster to generate contracts from scratch.
And that’s Summize’s Guide to Contract Administration!
Did you find it useful? Or perhaps there’s something we missed? Get in touch with us at [email protected] to let us know.