Specificity is an important component of business success. In order to achieve commercial goals within an organisation, there must be a clear and concise mission statement that is supported by all involved, and there must be clearly defined roles for all those working within the business. For that reason, it is vital to take control of terminology.
In the same way that standardised clauses and language help maintain efficiency and productivity within a Contract Library, so accurate and standardised use of terminology within an organisation can boost efficiency and productivity in all departments. It removes confusion and the risk of staff time and skills being wasted on duplicated tasks. It also increases the efficacy of communication throughout the business. This is why your enterprise needs to be clear on both the difference between Contract Administration and Management, and the close, symbiotic relationship between the two.
What is the difference between Contract Administration and Contract Management?
Administration and Management are two different, but complementary phases in the contracting process. Confusion around this often arises from the fact that the word ‘administration’ within a business environment can have a variety of definitions, including general tasks that support all departments – such as filing. It is this confusion that leads to Contract Administration and Contract Management being terms that are often mistaken for each other – because the managing of contracts, or documentation, can involve tasks that fall under that particular umbrella term of ‘administration.’
In the context of your business contracts, however, ‘administration’ means ‘the application of,’ which covers very specific parts of the overall contracting process, and is distinct from ‘management.’
- Contract Administration
This refers to all steps taken in the planning and execution of the contract; everything involved in ‘administering,’ or applying the agreement in the first place. In essence, it is the design and implementation of the contract. This includes requests for proposal, the gathering of information, the negotiation of terms, drafting cycles, contract execution, and the extraction of metadata. In the course of their job, Contract Administrators are responsible for the content of the agreement – including details such as payment levels and dates, timelines and schedules of delivery, performance expectations, and the agreed circumstances that would constitute a breach of contract.
- Contract Management
This refers to the handling of the contract after its execution and largely involves tasks designed to ensure compliance with the terms and conditions set out in the Contract Administration phase. This means the day-to-day monitoring of the contract workflow, to ensure that milestones and deadlines are met. It also includes the monitoring of performance, and the identification of further business opportunities that may arise from this type of reporting. In the event that the circumstances around a contract change, it is the responsibility of the Contract Manager to renegotiate terms accordingly. This is also the case regarding the renewal options and phases of an agreement.
The relationship between Contract Administration and Contract Management is complicated by areas of common interest, which can seem like an overlapping of responsibilities. This is not the case, however. The areas of common interest are simply the points at which the two roles communicate and complement each other, rather than overlap.
Areas of communication between Contract Administration and Contract Management roles
While the two roles are separate, effective communication between them creates a more efficient contracting process. Contract Management is concerned with the agreement after the point of execution, but by working with Contract Administrators during the design and implementation phases, the tasks involved in Contract Management are made easier, and more productive. The earlier Contract Managers develop a thorough and comprehensive understanding of a new agreement, the more able they are to achieve set business goals in their day-to-day monitoring of the contract in action.
The most significant areas of collaboration between Contract Administration and Contract Management involve language and negotiation.
- Language – It is important for Contract Management to understand completely the intent of the contract language, in order to monitor the performance of the agreement, and identify any compliance issues from any party.
- Negotiation – Having a thorough familiarity with the detail of all pre-execution negotiations ensures that post-execution changes and amendments are handled from a fully informed position.
For these reasons, the importance of the relationship between Contract Administration and Contract Management cannot be overstated. Maintaining this close communication is a vital exercise in risk management. When those personnel responsible for day-to-day monitoring of contract compliance and performance are fully versed in the background of the document, then costly legal challenges launched during the contract lifecycle are more effectively avoided. If Contract Managers are privy to the detail of initial negotiation, then remedial work prompted by previously unforeseen events – such as the LIBOR-SOFR transition, Brexit, a global pandemic, or environmental catastrophe – can be more effectively completed, with the most appropriate language and clauses used.
How Contract Management Software facilitates this productive relationship
The best Contract Management Software packages – such as Symfact – provide tools for the entire contract lifecycle, which means that the software perfectly facilitates the productive relationship between Contract Administration and Contract Management in a single end-to-end product.
- Contract creation – Contract Management Software creates a central Contract Repository that includes editable templates based on your standardised terms. These templates can be configured to fit any requirement and, in the case of Symfact, can be edited in Microsoft Word, with a drag-and-drop document interface included. Permission-based access control means that all changes are controlled and tracked, with comprehensive audit trails created.
- Automated workflows – Configurable automated workflows mean that the document moves between the necessary personnel securely, and on time. This makes communication processes smooth and efficient, and further enhanced by options to integrate with cross-platform XML architecture. In overall terms, this enables milestones, events, and notifications to be visible across roles.
With the entire contracting process held within one software package, featuring a central Contract Repository, all relevant information is available to authorised personnel at any time, from any web-enabled location. Contract Administrators can record all activity and information, and Contract Managers can then work from a fully informed position – effectively mitigating risk and ensuring that the relationship between the two contract phases is a recipe for success.