Contract management refers to contract-related administrative activities, such as bid invitation, bid evaluation, contract awarding, contract implementation, measurement of work completion and payment computation. Moreover, it involves the monitoring of a contract, making important changes and modifications to the contract and dealing with related problems. It ensures that both parties meet or exceed the expectations of one another.
Contract management involves active interaction with the contractor to achieve the contract’s objectives. It is also commonly known as contract administration. A project involves two or more different legal entities, typically in the form of a customer and contractor, a contractor to contractor or a sub-supplier relationship. The parties involved sign a contract before the implementation phase of a project.
Contract management starts by analyzing and evaluating the customer’s inquiry and continues until contract closure, when all contractual obligations are fulfilled. Contract management activities are generally handled by a project manager and the entire project team. In larger projects with big contracts, a full-time contract manager takes responsibility for managing the contract and ensures that all team members contribute to the project's completion.
The preparation of a contract involves analyzing the requirements that the contract makes for both parties. Next, the two parties negotiate to reach a mutual agreement. Once the contract is signed, the implementation team makes sure that it completely understands what was signed and what needs to be implemented. Any necessary changes are implemented with mutual agreement among all of the involved parties.