A number of process steps, which must ultimately be grasped, can be traced back from the contract management process:
Usually a number of process steps are highlighted during a contract management project to provide a focus, however the entire process must be taken on board during design and implementation. It is important the processes within contract management are at the heart of what happens and not the information systems. Of course, IT solutions can offer support such that the processes are optimally arranged but they should not become an objective unto themselves.
The process step ‘negotiation’ comprises all activities which precede the actual drafting of the contract. Often several draft contracts pass back and forth between the parties involved before a final contract is reached whereby various risks must be covered. This phase often also includes the tender phase.
Drafting a contract often takes place at the same time as the negotiation phase because, during negotiations, concept contracts are often drafted. So these steps are seen to be independent from each other as it is during drafting that various risk factors emerge.
This phase includes all activities within the approval process, from the approval of draft contracts to the actual signing. A distinction must be made between the decision to enter into a contract and the signing of the contract. It is important that both the internal and external proxy is observed.
This process step includes the registration of the actual contract information. The important aspect here is what is intended by the registration and the implemented details. By clearly specifying this beforehand, it is possible to determine which contract details must be recorded so that there is no need to play catch-up later. At the same time, where registration takes place (centralised or decentralised) plays an important role. After all, the choice for the used method of registration is important; often complicated (and expensive) software packages are not needed to attain targets set.
The archiving phase encompasses all activities to physically archive the original contract (legal standard is 7 years after contract expires). This, too, can be centralised or decentralised. In addition, the contract can be digitally archived by scanning it and including it in a potential application. Aside from various practical aspects, it is important to guarantee contracts are protected such that employees are only able to access those contracts for which they are authorised.
The most important thing about contract management for many organisations is proper monitoring of contracts; following contracts in terms of status, property/management and actual exploitation. The latter is often found in purchasing or sales-related agreements.
Often during the monitoring process actions arise which needed to be followed up. It is important to ensure that activities which flow out of the contracts are followed up by the correct individual in a timely fashion. In this way, the risk is minimised that contractual milestones are not reached, or not reached in a timely fashion, and negotiations are started too late.