Contract Management is the process where, based on the generated input, signed contracts and modifications are unambiguously being determined, managed and monitored: to facilitate complete utilization of contracts and generate management reports.

In practice, Contract Management and contract administration is hardly executed. The conclusion, execution and termination of contracts are often based on an ad hoc approach, by which they are depended on individual knowledge and experience. This shows, for example, in the use of unsuited standard contracts, the absence of evaluating and authorization by authorized persons, easily accepted general terms of business, inadequate recording of oral agreed modifications, not temporarily sending reminders with the consequence of not being able to terminate the contract on time, etc.

A Contract Management system enables the organization to be in control of all the contracts, SLA’s and corresponding documents and agreements, written as well as oral. The whole organization is able to use all the advantages of the above mentioned contracts.

Practice has shown that a lot of SME organizations have issues with IT contracts. A lot of organizations have already discovered this, others will in the future. Too many times a lot of things are not being arranged properly when drafting and managing a contract. Often errors are only discovered when something has gone wrong with the IT and the various parties find themselves already in the situation.

Contract Management is thus vital for SME organizations. The diversity in realization, shape and archiving of contracts restrains unambiguous, efficient en effective control and administration in a lot of organizations. Mostly responsibilities are unclear and fragmented. This often leads to unpleasant surprises. By means of a clear systematic and execution of Contract Management there is a lot to urn, LITERALLY.

Managing a contract is generally considered a secondary activity that is added to the role or functions of an employee with something other than “contract manager” on his business card. Mostly those are officials who have a financial background and were involved in the realization of the contract and are considered to take responsibility. It often occurs that the role of contract manager unwillingly is given to agents who are not equipped for the job. A consequence that often occurs is major issues regarding contractual obligations.

In construction contractors do not run only on technology anymore. Corresponding activities are more and more important. Contract Management is one of the rising specialities in construction and ensures the correct allocation of rights and obligations of the parties. Changes in government policy and the implementation of new forms of contracts in the construction industry are leading to different relations between the contractor and the principal. Due to financial limitations of the government as a principal, responsibility is demanded for all expenditures. On the other side the contractor is becoming more accountable for the realization of projects and carries more risks.

Contract Management needs to be supported by the organization. Recording of facts, identifying anomalies and such are everyday activities which form an essential part of Contract Management. Contractual awareness of a project organization contributes to successful Contract Management.

This leads to a more business like relation between the contractor and the principal, where the contract and its rights and obligations are important. Contract Management has a central role in this relation because it secures the rights and obligations of both parties, supervises a proper interpretation of the terms and ensures a right foundation of positions. (Eduhub)

In the past decade the IT-sector had to cope with, in spite of a sensitive slowdown in the 21st century, a substantial growth in size and complexity. Although there increasingly are large contracts, managing such contracts on a tactical and operational level is hardly developed into an independent, let alone mature discipline. This is worrying because meanwhile a mature form of Contract Management is a necessity. In the first place because legislation in the field of IFRS and Sabanes-Qxley demands that organizations are in control in terms of execution and evaluation of their contracts. This can only be accomplished if Contract Management is fully implemented.

In the second place because profit margins, especially on the large contracts, are limited in the current market. This causes financial risks to have a bigger impact on organizational results than before. In the third place because large principals have improved their professionalism of procurement processes, causing a disadvantage for suppliers. Besides it is noteworthy to mention that big megadeals have changed the proportions in the IT-market prominently. In these so called third generation outsourcing contracts – which involved in the year 2008 already a minimum of € 500 to € 800 million per deal spread over seven or eight years – principals and suppliers make a commitment for a longer period of time, supported by a directing third party. Whoever wants to play an attractive role in these megadeals cannot escape the necessity of organizing his Contract Management on a strategic, tactical and operational level. These developments highlight the need for parties to, in addition to standards for project- and service management, in such contracts find themselves in a facto standard for Contract Management. (Contract Management for IT based on CATS CM).

1. Lost contracts or contracts which wander through the organization without owner. As soon as a conflict occurs, the organization legally will be very weak.
2. No or limited possibilities to consults (parts of) contracts on a decentralized level.
3. Contracts are not or not fully utilized.
4. A contract often refers to appendices or other documents. If these documents are not available it will lead to huge vagueness.
5. Incorrect or incomplete compliance of commitments.
6. Certain product (groups) lack contracts or have several contracts for the same products with different parties and different conditions and prices.
7. No on time warning to renew or cancel contracts, with adverse financial consequences as a result.
8. General management information is lacking (e.g. overview of to be renewed contracts).
9. The contracts do not describe all rights and obligations which have been agreed with the third party. Conflicts and unambiguousness can be a result. 
10. (Non-) authorized persons can close contracts on behalf of the organization, which binds the organization to rights and financial obligations.
To prevent these issues INCONTO offers you her INCONTO Contract Management application. The applications with which you support you contract administration process electronically and which results in correct contract data on the right time, the right place and the right person.

A vital instrument to optimize the contract process is a Contract Management System (CMS). This is more than just an IT-system. It covers the entire process around Contract Management. Thorough procurement knowledge and process experience is an absolute must. This is where the key to successful implementation lies.
1. Demarcating too tight, leaving only the technical side enlightened instead of also the organizational aspects;
2. Insufficient application of diversity in the project;
3. Not appointing a full-time project manager on the project progress;
4. The end user is not involved on time;
5. Taking insufficient time to discuss the functional and technical design with the software supplier;
6. Taking insufficient time for testing;
7. Not giving responsibility to the project team to move the implementation when necessary;
8. Poor performing of the system (slow);
9. Insufficient communication to the entire organization of usefulness and necessity.