Systematic Management of Rights and Obligations
Contract Performance Management is colloquial for a process that systematically ensures that contracts derive optimal value for the business during their lifetime. The contract lifecycle contains the following phases: contract creation, approval, filing, retrieval, (renewal), and the destruction of the contract.
According to a survey conducted by The Global Contract Management Association, companies lose on average 20% of the value expected from a contract, 12% on hard leakage (e.g. invoicing errors and price adjustments) and 8% on soft leakage (eg. delivery failures, poor experience).
As lawyers, the purpose of our services to minimize your legal risks. This purpose is the cornerstone on which all legal services are developed and delivered. Our Contract Performance Management advisory and support services aid in identifying, evaluating, and managing contractual rights and obligations. By starting with contract management, clients ease contract negotiations and contract creation; prevent disputes, and allow for effective risk management.
Contract management creates systems for: archiving of contracts, the renewal of contracts, improving understanding, and reporting of contents of contracts.
Level 1: Contracts are stored by individuals at any location in the company. Terms and conditions are not monitored and the management just becomes aware of the significance of efficient Contract Management.
Level 2: Consolidation of existing contracts begins, and possibly Excel sheets are used for a better overview of contract data.
Level 3: central storage and monitoring of contracts during the lifecycle and contract reports are submitted to management.
Level 4: contract management system is integrated and used by many users to work together on the same platform. There are elaborated functions available for contract creation, monitoring, and management reporting.
First Steps Towards Contract Management
First, define the contract responsibilities. Who is in charge of the contract creation, the contract approval, the storage/archiving/reporting, renewal, and destruction of contracts?
Second, make it possible for stakeholders to identify and analyze the content of contracts. What are the different kinds of contracts used in your business, what are your standard conditions, and why? Do all players have a consistent understanding of the terms and deliverables of every contract?