23rd January 2020
23rd January 2020
By Charles Dimov, VP Marketing, North America at ContractPodAi
In a previous blog post about contract development and contract award phases, we discussed three contract management stages: the pre-award contract phase, contract development and execution, and the post-contract phase. Today, let’s discuss that last stage of contract management: the post-award contract phase.
The post-award phase refers to the actions taken after a contract is signed and the agreement is made. In contract management, this stage is often overlooked. But just because the contract is signed, it does not mean that the work has been done and the negotiation has ended. The agreement must be referenced and monitored continuously. The company must ensure that all obligations, metrics, and commitments in the contract are met. And all of this requires consistency and a high level of organization in order to resolve all claims and disputes, and to abide by the terms and conditions.
Without a well-functioning system in place, it is quite easy to miss an important date. It is easy to overlook a key obligation in the contract that is important to all parties. This is where an effective contract management system comes into play. The post-award phase of the accord is just as important - if not more important - than the pre-contract phase. At this stage, you have a signed contract and obligations, and must honor and act upon the contract terms.
According to IACCM, 90 percent of organizations in the banking, financial, and insurance sector recognize the the importance of effective post-award contract and relationship management. The post-award phase deals with frequent change as a result of uncertainty and performance management. This phase ensures that you are managing contract amendments properly. It focuses your attention on tracking to make certain that all requirements of your agreement are met throughout the life of the written commitment. Plus, you need to track and implement changes made to the contracts, too.
This brings up the need for regular data and workflow, as well as the exchange of information between parties and other employees. Many activities continue to be handled manually. Perhaps you are using spreadsheets or emails. Both are good tools, of course, but it amounts to an inefficient, unorganized process when it comes to attempting to manage thousands of different contracts, each with different terms.
In the IACCM report, nearly 30 percent of companies said that they don’t have a contract management solution in place due to a lack of funding. General counsels also said that they prefer to use Excel spreadsheets instead. Yet adopting a contract management system will actually save your company time, effort and money in the long run.
PricewaterhouseCoopers states that the average Fortune 2000 company has 20,000 to 40,000 active contracts. But using Excel, for instance, is not the most effective way to manage contracts. It leads to a lack of organization, responsibility, and accountability. Simply put, a manual system is not efficient nor easy to use. It is also prone to human error, as editing manually in Excel can lead to missing deadlines and key aspects of the contract. This is an issue because those in procurement and on legal teams have limited engagement once the contract is signed. Then, if the contract is lost in a pile of others that are not referenced, it can become a casualty of ‘no-one’s responsibility.'
According to the same IACCM report, those that do not use a contract management system simply do not appreciate the scale of risk exposure and value erosion brought on by weaknesses in the contract and relationship process. Analysts instead saw contract management software as a tool to manage transactions, completely missing the point that businesses do this by creating relationships with contracts. It represents such a missed opportunity to improve ROI, along with contract effectiveness and usability.
Having a post-award contract management system has many benefits. It saves time and improves your overall contract performance. It will ease the burden of manually editing and reviewing contracts, as well as improve the efficiency and productivity of your work environment. As shown in the IACCM report, some of the specific benefits of having contract management include:
A good contract management solution can help you in all three phases of the contract management process. Without an effective solution, your legal team and general counsel are at risk of making mistakes, such as overlooking key amendments, that can affect your company.
So if your company is lacking organization, and you don’t have a solution to this issue, reach out to ContractPodAi for a pressure-free discussion on how you can benefit from adopting contract lifecycle management. You can also check out our contract management primer,which includes a handy checklist. The time for disorganized contracts is over!
VP Marketing, North America
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