CONTRACT MANAGEMENT – it’s importance?
All business relationships stand on one basic foundation
and that is contract. An efficient contract management process is therefore
essential for the contracting parties to not only react to situations that
arise while performing a contract, but also to proactively anticipate future
needs of each other and manage their respective contractual obligations
In today’s increasingly litigious business climate, risk abounds as enterprises try to navigate the regulatory, governance and legal issues that impact business practices and ultimately profitability. Although organizations rely on contracts to protect their interests and their assets, the accelerating volume and increasing complexity of contracts present a daunting challenge across the enterprise.
Contracts, and construction contracts in particular that require a high degree of interdependence between the contracting parties and other external agencies, go far beyond than just ‘laying down the law’ and provide the framework on how the parties to the contract should interact with each other and with other stake holders to a contract. It also provides the rules and guidelines on how the obligations are to be performed so that all involved and responsible to manage a contract is clear on what is expected of them. These set of rules and guidelines allow the contracting parties to manage the contract and fulfill their respective contractual obligations.
An efficient contract management function not only assists in managing obligations of the contracting parties in an effective manner by improving the visibility of the obligations but also records deviation and breach of such obligations that create potential for claims.
The efforts and controls applied in Contract management should ideally be proportionate to the value, risk and complexity of the contract. Unfortunately, contract management starts getting its due attention only when a serious problem occurs and sometime it is too late as by that the time the contracting parties have either defaulted in fulfilling their contractual obligations or already in dispute on the boundaries of their obligations and at loggerheads on defending their individual positions.
In the present days of ever increasing cost and force of competition, a superior contract management is one of the key elements to achieve sustainable business growth.
Contract Management is the “need of the hour” to avoid dispute, balance cost, prevent loss of profit and remain compliant without missing on a single opportunity to earn the due revenue from contracts while working in a complex business environment with the ever changing factors influencing the performance of contracts. Our contract governance process with fully synchronized interfacing functions will help maximize our clients’ contract revenue.