Contract management is often a long, complicated and tedious process. Having to liaise with many different parties, from legal teams to upper management to potential executives in your business, just to produce one document might be overwhelming for some people. With so many steps and so many people to get approval from, a lot can be lost along the way. For example, you may misphrase a crucial sentence in a lower clause, which makes the meaning of that part of the contract completely different. Or, your legal counsel overlooks an important condition to the contract after the fact. There’s a lot of places where your contract could go awry. By implementing some contract management best practices, which this post will discuss below, you can try to mitigate those errors and maximize your contract’s success.
Contract management best practices are good to keep in mind as you are engaging in the contract creation and management process. Depending on how often you create new contracts, this may not be very often, but it’s good to have in the back of your mind.
Setting goals from the start
Like any project your team is undertaking, setting KPIs (key performance indicators) will not only help you assess the success of your contract after its end, but also give you some guidance as you author the contract. By setting specific measurables you want to hit, your team can get a better sense of what you want to get out of the contract. Establishing these goals and values will go on to shape what the contract says, the language used and the terms and conditions included.
Creating templates to use for the future
Chances are, you will be using similar, if not the same, contract documents multiple times. Whether that’s an employee new hire form or a procurement contract for the same type of service, your business will probably be using these same contracts over and over.
Instead of having to do everything from scratch every time you need a new contract, create some templates to streamline your processes. With the help of your legal team, you can create templates for the types of contracts you use most so when time comes, all you need to add is some details and minor adjustments.
Collaboration, collaboration, collaboration
Contract management is not a one-person job. You should be constantly sharing your contracts with relevant team members, getting their feedback and updating what you have. Keeping your team up-to-date on the status of the contract while receiving their feedback during the authoring stage will save a lot of time later on in the approval stage.
The benefits of collaborative teams have been proven across all areas of work, but keep it in mind when drafting contracts as well.
Plan ahead – consider scalability
When you’re creating a contract, you may only be thinking of your business needs at that point in time. But, if you’re working on a large or evolving project, thinking about how your project will grow might save you a lot of money in the long run in terms of contracts. A key best practice when it comes to contract management is to take into account the long-term view of the company’s needs and capacities. These plans should address changes that the business may experience and how that would affect existing contracts.
A common term in contract management, “scope creep” refers to the instance where a company needs more work to be done that is not authorized under the agreed-upon scope set out in the original contract. This can be detrimental to the efficiency of a project as a new contract and new guidelines will have to be put in place. Dealing with scope creep can be avoided by thinking about how a contract will scale in the future and possibly adapt to a wider scope.