Maximize financial and operational performance through creating, executing, and analyzing contracts.

When you do business with another company, you need to use a contract to specify the activities that both of you will perform and the terms that need to be fulfilled. Sadly, companies put a lot of stress and pressure on themselves when creating a valid contract that will reduce costs and improve performance.

When a contract is created incorrectly, you might end up losing thousands of dollars. The foundation of good contract management includes setting the right expectations, focusing on the outcomes, and using a proactive approach. The steps to achieve this include the following:

1. Set expected goals.

Are you sure about what kind of contract you aim to deliver? If not, then you should have a meeting with all key stakeholders. This is essential in order to come up with a common understanding about your expected outcome with any given contract. Grasping in the dark in the middle of production will only lead to a lot of problems. Clarify everything before you seal the deal.

2. Build a strong working relationship.

The success of a project largely depends on how you and your business partner works. If you can’t see eye to eye, then you might always be in a middle of an argument and won’t have a productive relationship. When this happens, productivity is affected. Hence, always make an effort to build a good relationship culture with another.

If there are things that you can’t agree upon, make sure that you discuss it prior to or during the drafting of the contract. To help you with contract management, you can employ the services of ContractWorks.

3. Understand the risks and learn how to minimize them.

In every action, there is a risk. You and your business partner should be able to set clear measures to address the issue of late or non-delivery. When doing this, you’d want stakeholders to be present.

When dealing with a company for a long time, you might want to review your risk status. Issues that were not prevalent before may happen in the next month. Discuss with the stakeholders about what actions you’re willing to take in order to lessen the risk. Write them down on the contract.

4. Get updates from stakeholders.

Since you don’t handle all business processes, there’s no way for you to know how the contract is performing in all divisions. That is unless you ask the stakeholders. In fact, you might feel that the contract is performing well without considering that there are departments or individuals struggling to meet the expected goals outlined in the contract.

Since all stakeholders are involved in the contract, make sure that everyone has a voice. Ask for their concerns and try to address them within the language of the contract.

5. Review the contract.

It’s important that you know whether the contract is working well or not. To determine this, you should review the contract regularly. When you notice any discrepancies or unfulfilled terms, it’s best that you report this to the stakeholders.

Final Words

The success of a contract largely depends on the flexibility of both parties and their willingness to adapt to the stated terms. While you can't always avoid problems, you can at least minimize them through employing a  good contract management system.