Are you drowning in a sea of paperwork? Do contract deadlines keep you up at night? Are you concerned about compliance risks and potential legal issues? Many businesses find that contract management is…challenging. Some may describe it as “painful”…others see it as a necessary evil.
Fortunately, there’s a solution. A well-crafted Contract Lifecycle Management Policy with the right technology can change your contracting process and how you approach contract management once the contract is in place, turning a source of stress into a strategic advantage.
What Are the Phases of a Contract Lifecycle?
The contract lifecycle consists of distinct stages, each with specific tasks and considerations. Let’s break down each step to help you understand how a well-defined Contract Lifecycle Management Policy optimizes this process.
Pre-Award
The initial phase of the contract lifecycle process is called the pre-award or pre-contract phase. This is when all of the activity that leads up to a contract being written, negotiated, and executed. Reasonably, this starts with identifying what your organization needs. Conduct thorough market research to pinpoint potential vendors who can fulfill these needs. Develop a clear and comprehensive request for proposal (RFP) or solicitation that outlines your requirements and expectations. Additionally, assess and mitigate potential risks to minimize future complications. The level of effort expended, though, should always align with the value and importance of the item or service that is the subject of the procurement. For example, compare acquiring paper clips to acquiring an ERP system–one clearly would require much more effort and attention to detail.
Great Minds Software’s document generation tools can help with this phase. Create accurate and compliant RFPs efficiently, saving valuable time and reducing errors.
Award
The award phase begins after you identify the right vendor. This phase entails negotiating the contract terms, hammering out the finer details, and finalizing the agreement. Once all parties agree, secure the necessary approvals and signatures. This process may seem tedious, but Great Minds Software’s electronic, customized workflows can automate approvals, speeding up the transition to the next phase.
Post-Award
In the Post-Award phase, you manage the contract and ensure a successful partnership. This includes contract administration, continuous monitoring, and performance management. You will track deliverables, manage any necessary amendments, resolve disputes, identify and track relevant KPI’s (Key Performance Indicators), and decide whether to renew or terminate the contract at the end of its term.
Great Minds Software’s compliance tracking features, Key Dates, and Deliverable Action Dates help you stay on top of these tasks, ensuring adherence to contract terms and identifying potential risks early on.
How To Build a Strong Contract Lifecycle Management Policy
A well-structured Contract Lifecycle Management Policy ensures everyone is on the same page, follows the rules, right-sizes the level of effort, and minimizes risks. Let’s explore the key elements that make a Contract Lifecycle Management Policy effective.
Define Clear Goals and Boundaries
Clearly state what you want to achieve with your Contract Lifecycle Management Policy. Ask yourself: Which types of contracts does it cover? Are there any exceptions? This clarity helps everyone understand the purpose and applicability of the policy. One size does not fit all.
Assign Roles and Responsibilities
A well-organized policy assigns specific roles to individuals for managing through the different phases in each contract’s lifecycle. The policy should outline who does what
- from the moment a contract is requested,
- to the contract being accepted for processing by the procurement or legal team,
- to drafting the contract documents, negotiations, and signatures…and then
- through the operational life of the contract until it ends or requires renewal.
This helps to ensure a smooth process, clear decision-making, and accountability throughout the organization.
Proactively Manage Risks
Contracts always carry a certain level of risk, like potential financial losses, legal disagreements, or damage to your company’s reputation. Your policy should include a plan for identifying and addressing these risks before they become problems. This involves assessing potential risks at every stage of the contract, from choosing the right vendor to ending the contract if necessary.
Regularly review and update your risk assessment to ensure your policy stays relevant and effective as your business environment changes.
Track Performance Effectively
A contract is only as good as how well people carry it out. Your policy should detail how you will monitor contract performance to ensure everyone involved meets their obligations.
Set clear goals (called Key Performance Indicators or KPIs) that align with your business objectives. Establish ways to track and report on how well others fulfill the contract. You can catch problems early and correct them.
Maintain Accurate Records and Documentation
Keeping well-organized records of your contracts helps with compliance, audits, and resolving disagreements. Your policy should outline how to create a central storage system for all contract-related documents, including any changes, communications, and performance reports.
Ensure that there is a mechanism to track document versions and control who can access them. Of course, a solid contract management system will automatically version your contract documents during the editing process and allow comparisons between different document versions. And critically, controlling access keeps your contracts and data safely hidden from unauthorized users.
Resolve Disputes Efficiently
Even with the best-written contracts, disagreements can happen. Your policy should clearly outline handling and resolving conflicts promptly and fairly. This might involve setting up communication channels, identifying whom to escalate issues to, and considering alternative dispute resolution methods like mediation or arbitration.
Make Your Contract Lifecycle Management Policy Work for You
After creating a Contract Lifecycle Management Policy, you need to turn that policy into a tool that streamlines your contract processes and drives better results. This involves clear communication, effective training, leveraging technology, and continuous improvement.
Spread the Word and Train Your Team
Think of your Contract Lifecycle Management policy as a new language everyone in your organization needs to learn. Communicate the policy clearly to all involved in the contract lifecycle, explaining their roles and the procedures they need to follow. Regular training sessions reinforce this understanding and equip everyone with the knowledge and skills to use the policy effectively.
You can create a communication plan outlining how to introduce the policy, conduct training, and answer any questions. This might include workshops, online training modules, or providing informational materials.
Use Technology to Your Advantage
Contract Lifecycle Management software can automate tasks, centralize information, and provide insight into contract performance. This saves time and resources while reducing the risk of errors.
When choosing a Contract Lifecycle Management solution, find one that works with your existing systems. Great Minds Software offers solutions that streamline Contract Lifecycle Management, from contract requests and approvals to document generation and electronic signatures to compliance tracking and risk management.
Commit to Continuous Improvement
Your Contract Lifecycle Management policy should evolve with your business and the changing regulatory landscape. Regularly review and update your policy based on feedback from stakeholders, lessons learned, and new industry trends. This ensures your policy remains relevant and effective in meeting the needs of your organization.
Optimize Your Contract Lifecycle Management with Great Minds Software
We’ve covered the essential elements of a Contract Lifecycle Management policy and the best practices for implementation. Now, you need to take action. Assess your organization’s current practices and identify areas for improvement.
If you want to learn more about Contract Lifecycle Management, find out how Great Minds Software can help you attain greater success. We can guide you through the process, from implementing our software to tailoring a Contract Lifecycle Management policy that fits your business.
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