The term contract administration is a bit confusing because many people confuse it with contract management. However, both are different while talking about overall contracting processes. While talking about administering a contract, it belongs to all the processes that are conducted before the start of the contract. It includes contract preparation, problem definition, terms and conditions that will be required to follow during the contract, and defined payment procedures.
To understand the term
administering contract, we need a more in-depth overview that will help us excel in this process of documentation.
What is Contract Administration?
Overall, contract administration is the management, planning, processing, and execution of the contract for the well-being of the company. Under this head, we identify all the concerned parties, who will be involved in the contract. We will also define the contract arrangement for the tasks that are needed, negotiations, schedules for completing all tasks, and performance indicators.
Another important aspect that we should learn
about administering contracts is that it is not a purely administrative task. In most situations, you should also be a good strategist and analyst. More importantly, business savvies are required to manage this task. Factually, contracts play a major role in getting financial success, so it becomes important to develop a legally sound contract with the maximum features to get more business benefits. Therefore, the businesses want to work with those partners that are excellent in performance and fair in fulfilling the requirements of the contracts.
How to prepare a plan for administering contracts?
Developing a contract administration plan is the best practice to keep your team prepared when the management wants a new contract to design. Through this planning, we will be able to develop a lifecycle of the contract that will help the
contract management system to keep an eye on every aspect of the contract.
Through this formal document, we can describe all the explicit details that all the concerned parties are expecting during the contract. It will also help the concerned parties limit the breaches that may arise during the contract. Through this plan, all the parties can address all the issues that may arise during or at the end of the contract to avoid any legal issues in the future.
We have classified the contract administration plan in five different steps that will help us design such a
contract that will be beneficial for not only the business but also for all the parties, involved in the contract.
Design the scope and deliverable
It means that we will ensure that the contract must be a successful one. For that, we will address all the expectations of all contracting parties. The experts recommend defining the scope and deliverable of the contract to achieve this target. The administrators make sure that they have incorporated all dos and don’ts in the contract to keep it on track.
Define a timeline for all the tasks
Some people may have the opinion that the timeline is discussed in the contract. However, the best practice is to include a detailed timeline in which the deadline for every task must be defined clearly. Moreover, there should be a contract start and end date as well. Besides, the deadlines for deliverables and all the phases of the contract should also be included.
Define the financial terms
Sorting out all the finances helps the contracting parties maintain a healthy business relationship. When the parties will sign the contract, they will know all the financial terms, defined in the contract. They will be informed about the total costs of the contract, the payment due dates after every interval, and expense management, etc.
The contract should also have a proper workflow to make everyone accountable and ensure transparency during the contract. For that, we need to discuss the deliverable and execution plan in the contract. Another important aspect in this regard is to define each part of the contract separately and the people, who will perform these tasks. This activity will help the business measure success of the project and the performance of every individual as well.
As risks are involved in every contract, risk management becomes necessary to address in the contract. Therefore, during administering a contract, we need to make a flexible contract in which the parties are allowed to redefine the timeline and budget to address minor issues related to budget, unexpected delays in tasks and payments, and insignificant sufferings during the contract.