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An introduction to contract management

Whilst it has always been a fundamental part of the business process, contract management is becoming increasingly important in a commercial world, which is ever more complex. Regulatory requirements, globalisation and increasing contractual complexity mean that there is an increasing recognition of the benefits of effective supervision.

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The process of managing contract creation, analysis and execution are the fundamentals, but results such as reducing financial risk are also desirable. The pressures of improving company performance are consequently weighing more heavily on procurement departments.


As contract management becomes more time consuming, there is a growing need to examine effective automated management systems.

A Contract Management System is increasingly an option, and software is readily available from sites such as

The key elements of a successful system will involve ensuring service delivery satisfies both parties, releasing benefits and value for money on each side. It should also help both sides to be satisfied by the outcome and ensure there are no surprises leading to disputes which can be costly.

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A contract management guide can be found via the Chartered Institute of Procurement and Supply. It is important to understand the fundamentals and goals of contract management before trying to update your systems. When two companies enter into an agreement, benefits for both parties are anticipated. Effective contract management means creating a mutually beneficial relationship which can lead to future deals and profits.


When an efficient contract management strategy is in place organisations can expect financial returns, good business relationships, a fall in disputes and successful delivery of services.

Key to this success involves pre-agreement and post-agreement assessment of the requirements of the completion of obligations. Understanding the reason behind the award of the contract needs to link to the process of delivery and how the contract will work in the future. Problems can be limited, but there needs to be flexibility in place to ensure they are dealt with efficiently if they arise.

Having an overview of the successive stages of contract management means the process can be broken up and potential problems identified.

From initial inquiries to authoring the contract, and from negotiating to agreeing delivery, the process must be transparent to allow adjustment where needed through revisions and amendments.

Finally, auditing and reporting the process will form part of the overview, hopefully leading to repeat business.

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