What is the difference between contract administration and contract management?
Contract administration and contract management are often thought of as being the same thing; however, they actually refer to different stages of the contract lifecycle. This article offers a brief overview of the differences.
The contract administration stage of the life cycle takes place prior to the contract being formally signed. It can include such activities as identifying potential contractual partners and inviting requests for proposal. Contract administration also encompasses finalising contractual arrangements and negotiating such crucial terms as price, delivery dates, and expectations concerning the performance of the parties.
The role of the contract administration team is therefore to assist the organisation in ensuring each contract entered into is sound, fair and beneficial to all parties. This requires well-developed skills in business acumen and negotiation. The contract administrator also needs to have a strong grasp of the whole contractual process.
The contract management stage of the life cycle takes place after the agreement has been entered into. Whether working in the private or public sector, the contract management team works to ensure compliance with the contract’s terms and that all contractual obligations are met. Contractual management also involves staying on top of performance; in this way, should any changes be required, the contract can be modified accordingly. In some cases, the relationship does not function as expected and the organisation may need to consider searching for new contractual opportunities.
As this is such a complex and important function, many businesses use supplier management software from providers such as contractswise.com/ to ensure everything remains organised. A contract that is not performing optimally can have wide-reaching implications for an organisation in terms of cost and the quality of the service provided to end clients and customers. A good contract management team will stay on top of performance issues and remain in communication with the contract administration team so that the organisation can act to improve or change a contractual relationship.
As you can see, the roles of the contract administration and contract management teams are quite separate; however, both feed into the whole of the contract lifecycle and are equally important functions. Both teams need a strong understanding of the contractual process and the ability to work closely together for the benefit of the whole organisation.