30:, partners, or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.
94:
326:) began a project intended to clarify the role of a contract manager, which has since been updated on several occasions. This work identified that among contract managers themselves, there is a "widespread belief that the title (and its variants, such as Commercial Manager) masks massive variations in job role,
252:
A unilateral decision to vary the contract, contemplated and allowed for by the existing contract. This would normally have notice periods for fairness and often the right of the other, especially in consumer contracts, to cease the contractual relationship. Any one-way imposition of change should be
143:
A partnership agreement may be a contract which formally establishes the terms of a partnership between two legal entities such that they regard each other as 'partners' in a commercial arrangement. However, such expressions may also be merely a means to reflect the desire of the contracting parties
232:
and the implementation of core contract management processes may be appropriate tasks for a dedicated contract manager. CIPS also notes that in some cases the procurement team may have an extended role in maintaining contract management. Contracting for services may be more complex than supply-only
334:, Contract Management Departments) are very similar" and applied across a range of tasks from bid preparation and contract negotiation to a "middleman" role between an organization's employees and its customers, and compliance and ensuring contract close-out, extension or renewal at its end point.
275:
During the post-award phase, it is important to ensure that contract conditions and terms are met, but it is also critical to take a closer look for items such as unrecorded liabilities, under-reported revenue or overpayments. If these items are overlooked, the margin may be negatively impacted. A
139:
A purchasing contract is a contract between a company (the buyer) and a supplier who is promising to sell products and/or services within agreed terms and conditions. The company (buyer) in return is obligated to acknowledge the goods / or service and pay for liability created. When the purchasing
108:
is a written or oral legally-binding agreement between the parties identified in the agreement to fulfill the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a contract, amongst other things, is the condition that the parties to the contract accept
313:
Another dimension of contract management relates to the interplay between contracts and trust. In particular, management scholars have discussed the nature of the relationship between contract and trust development. On the one hand, some have argued that contracts and trust would substitute each
358:
No commercial director/head of procurement rated the level of resources allocated to the management of their major contracts as 'good', and 22% of contract managers considered they did not have time to perform their responsibilities well. Most contract managers had undertaken relevant training,
337:
Scholars in business and management have paid attention to the role of contracts in managing relationships between individuals or between organizations. In particular, contracts work as instruments of control and coordination. On the one hand, contracts can moderate the risks of exploitation or
387:(NAO) felt that the government was "starting to improve how it manages its contracts", but important improvement work remained to be done. In December 2016 the NAO re-published a good practice contract management framework which had been first published in 2008 with the help of the
109:
the terms of the claimed contract. Historically, this was most commonly achieved through signature or performance, but in many jurisdictions - especially with the advance of electronic commerce - the forms of acceptance have expanded to include various forms of electronic signature.
276:
contract compliance audit will often commence with an opportunity review to identify the highest risk areas. Having a dedicated contract compliance (and/or governance) program in place has been shown to result in a typical recovery of 2-4% and sometimes as high as 20%.
283:” perspective, with the focus on creating a governance structure in which the parties have a vested interest in managing what are often highly complex contractual arrangements in a more collaborative, aligned, flexible, and credible way. In 1979, Nobel laureate
180:
Application of commercial levers designed to secure the anticipated benefits of the contract, ensure that risk remains where it has been placed by the contract and discharge the incentives built into the contract to secure good performance and discourage poor
241:
There may be occasions during the post-award phase when what is agreed in a contract needs to be changed later on. A number of bases may be used to support a subsequent change, so that the whole contract remains enforceable under the new arrangement.
140:
contract is between a retailer and manufacturer, the contract also includes conditions for processing returned items. However due to the cost of reverse logistics, retailers often dispose of returns rather than sending them the back to the vendor.
287:
wrote that the governance structure is the “framework within which the integrity of a transaction is decided”. He further added that “because contracts are varied and complex, governance structures vary with the nature of the transaction”.
80:
A study published in 2007 found that for "42% of enterprises ... the top driver for improvements in the management of contracts the pressure to better assess and mitigate risks" and additionally, "nearly 65% of enterprises report that
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other; that is, the use of one mechanism decreases the advantages of the other. On the other hand, others suggest contract and trust complement each other; that is, the use of one increases the benefits of using the other mechanism.
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228:(CIPS) suggests that the requirement for dedicated contract management depends on contract value, contract length, complexity of services and level of risk, although in the initial stages of a contract, the
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In the post-award or "downstream" phase, some organisations have a contract management team, others may require operational managers to include the management of contracts within their role. The
391:, then part of HM Treasury. The NAO "believed", based on practitioner feedback, that this framework was "one of the best references for the basic tasks necessary for good contract management".
394:
As of April 2021 the UK government has in place a "Contract
Management Capability Programme" aiming to develop the skills of government staff involved in contract management roles.
260:
A bilateral decision to vary the contracting, within the variation or change control process outlined in the existing contract. These are often called change control provisions.
809:
Zhou, Kevin Zheng; Xu, Dean (2012). "How foreign firms curtail local supplier opportunism in China: Detailed contracts, centralized control, and relational governance".
782:
Ryall, Michael D.; Sampson, Rachelle C. (2009). "Formal
Contracts in the Presence of Relational Enforcement Mechanisms: Evidence from Technology Development Projects".
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Williamson, Oliver E.|1979|"Transaction-Cost
Economics: The Governance of Contractual Relations"|Journal of Law and Economics: Vol. 22: No. 2, Article 3|accessible at:
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A mutual agreement of both parties to vary the contract, outside the framework of the existing contract. This would be an independent basis for changing the contract.
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402:
225:
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An exit management plan as a controlling mechanism to encourage the organizations to make ethical, proactive changes for the mutual benefit of all the parties.
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367:, and have been updated periodically. These standards were developed as a result of a 2013 "Cross Government Review of Major Contracts", commissioned by the
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misappropriation by an opportunistic partner. On the other hand, contracts can help foster communication and information sharing between parties.
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A relationship management structure (how the parties work together to make both day-to-day operational decisions as well as strategic decisions)
384:
920:
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where the company agrees to sell products and/or services and the customer in return is obligated to pay for the product/services bought.
613:
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and responsibilities". However, the IACCM's research found indications that "the core responsibilities of
Contract Managers (and by
1023:
323:
739:
Lui, Steven S.; Ngo, Hang-Yue (2004). "The Role of Trust and
Contractual Safeguards on Cooperation in Non-equity Alliances".
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arrangement of a partnership which by definition creates fiduciary duties and which also has 'joint and several' liabilities.
439:
388:
82:
419:
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A joint performance and transformation management process designed to track the overall performance of the partnership
1004:
279:
Current thinking about contract management in complex relationships is shifting from a compliance “management” to a “
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Compliance to special concerns and regulations, which include the more traditional components of contract compliance
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Cross
Government Review of Major Contracts: Summary of Findings and Recommendations endorsed by the Oversight Group
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contracts. Complex contracts are often necessary for construction projects, goods or services that are highly
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in 2009 regarding resourcing and training in relation to contract management. The committee reported that
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125:
117:
62:
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post-award phase (often referred to as contract compliance/governance), including contract termination.
1000:
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Management - The Operational Guide, Van Haren Publishing, October 2011,
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although 60% of organisations did not provide a structured training programme for their staff.
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of the original contract, enabling the other party to terminate the contract and seek damages.
492:"Best Practices in Contract Management: Strategies for Optimizing Business Relationships<"
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to act 'as if' both are in a partnership with common goals. Therefore, it might not be the
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In 2008, the
International Association for Contract and Commercial Management (IACCM, now
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The business-standard contract management model, as employed by many organizations in the
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665:"Do formal contracts and relational governance function as substitutes or complements?"
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34:
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870:"Strategic alliance contracts: dimensions and determinants of contractual complexity"
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978:, published December 2016, archived at the National Archives, accessed 12 May 2022
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The cost of poor contract management – are you using all tools at your disposal?
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offer certification in the skills required for government contract management.
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Nations Convention on Contracts for the International Sale of Goods
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A sales contract is a contract between a company (the seller) and a
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383:. Having highlighted previous failings, by September 2014 the UK's
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to assess the management of major contracts held by the companies
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Civil Service: helping you with managing contracts and suppliers
513:"Contract Management: Optimizing Revenues and Capturing Savings"
112:
Contracts can be of many types, e.g. sales contracts (including
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contractually justified, otherwise it may be interpreted as a
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Central government's management of service contracts: Summary
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Contract management standards were published in 2014 by the
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in Liverpool, operated by G4S under a UK government contract
61:, goods or services with detailed technical specifications,
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A collaborative governance framework has four components:
85:(CLM) has improved exposure to financial and legal risk".
582:
Chartered Institute of Procurement & Supply (2013),
600:
Chartered Institute of Purchasing & Supply (2010),
210:
Contract management can be divided into three phases:
73:. Most larger contracts require the effective use of
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last updated 8 February 2021, accessed 10 April 2021
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Commercial capability: contract management standards
26:
is the management of contracts made with customers,
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http://chicagounbound.uchicago.edu/jle/vol22/iss2/3
233:contracts and therefore require closer management.
467:Risk management § Contractual risk management
965:, published 4 September 2014, accessed 8 May 2023
952:, updated 8 February 2021, accessed 10 April 2021
447:– for contracts with the United States government
910:, published 28 April 2009, accessed 29 July 2022
855:, updated 24 January 2014, accessed 14 May 2021
350:, concerns were raised by the House of Commons
226:Chartered Institute of Procurement & Supply
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445:Office of Federal Contract Compliance Programs
403:National Association of Government Contractors
77:to aid administration among multiple parties.
1007:, updated 5 January 2021, accessed 8 May 2023
963:Transforming government’s contract management
379:, and led by Bill Crothers, the government's
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991:, updated 21 April 2021, accessed 8 May 2023
906:House of Commons Public Accounts Committee,
976:Good practice contract management framework
811:Journal of International Business Studies
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614:2008 Building Energy Efficiency Standards
435:National Contract Management Association
399:National Contract Management Association
1005:What is Government Contract Management?
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950:Contract management framework summary
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936:, Autumn 2013, accessed 29 July 2022
33:Common commercial contracts include
663:Poppo, Laura; Zenger, Todd (2002).
638:Vitasek, Kate; et al. (2011).
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342:Public sector contract management
189:Growth (for sales-side contracts)
177:Contract visibility and awareness
706:The Academy of Management Review
324:World Commerce & Contracting
616:. California Energy Commission.
536:. Cornell University Law School
853:The Role of a Contract Manager
586:, p. 24, accessed 31 July 2021
265:Contract compliance/governance
153:Contract management activities
1:
640:The Vested Outsourcing Manual
440:Group purchasing organization
389:Office of Government Commerce
200:Phases of contract management
83:contract lifecycle management
874:Strategic Management Journal
669:Strategic Management Journal
602:Guide to Contract Management
420:Contract management software
75:contract management software
245:A change may be based on:
165:Authorizing and negotiation
16:Concept in business systems
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948:Crown Commercial Service,
919:Crown Commercial Service,
515:. Aberdeen Group. May 2007
397:In the United States, the
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584:Contract Management Guide
381:Chief Procurement Officer
352:Public Accounts Committee
174:Communication management.
116:), purchasing contracts,
868:; Ariño, Africa (2007).
753:10.1016/j.jm.2004.02.002
365:Crown Commercial Service
217:contract execution phase
1024:Enterprise architecture
974:National Audit Office,
961:National Audit Office,
451:Uniform Commercial Code
53:and professionals, and
49:for the appointment of
24:contract administration
796:10.1287/mnsc.1090.0995
557:, accessed 31 May 2021
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118:partnership agreements
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741:Journal of Management
415:Commercial management
385:National Audit Office
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171:Commitment management
126:intellectual property
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63:intellectual property
47:letters of engagement
1001:Villanova University
318:Managerial functions
192:Contract compliance/
823:10.1057/jibs.2012.7
462:Relational contract
430:Government contract
425:Document automation
309:Contracts and trust
271:Relational contract
185:Document management
168:Baseline management
98:HM Prison Altcourse
71:international trade
20:Contract management
784:Management Science
472:Vested outsourcing
237:Contract variation
230:assessment of risk
214:pre-contract phase
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572:978 90 8753 627 5
285:Oliver Williamson
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1018:Categories
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519:2008-07-10
498:2008-07-10
478:References
346:In the UK
281:governance
269:See also:
204:See also:
194:governance
146:common law
41:, utility
894:1097-0266
839:167843632
831:0047-2506
769:144788583
761:0149-2063
712:(1): 13.
691:0143-2095
332:deduction
89:Contracts
59:regulated
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409:See also
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604:, p. 13
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726:258627
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Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
