Transformation

Contract Collaboration

Great buildings that move the spirit have always been rare. In every case they are unique, poetic, products of the heart.

  • Overview
  • How we Help
  • Portfolio

Web Designing

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Web Development

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My Portfolio Works

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Overview

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Contract Management Maturity Self-Assessment

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Who is the course for?

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Expertise

Contract Management

Contract Performance Management

Often overlooked, particularly in fast-growing businesses, effective contract management can be a source of competitive advantage and the best contract management solutions can help you to maximise value. 

From inception and negotiations to performance and discharge, the health of your business is contingent upon “health of contracts”

Every business transaction is a strategic partnership. But all too often, many businesses see contracts as little more than a formality which, once signed, are stashed away in cabinets and uploaded on web servers.

Consider entering into a marriage without any knowledge or understanding of the promises made to your partner. Yet, everyday businesses create binding contracts without a proper understanding of what binds them. 

  • Overview
  • How it works

After lawyers rigorously negotiate what their clients will and will not do, the contract is signed, sealed, and securely put away.

A contract should be treated as a ‘living thing’.  It should be used as an ongoing guide to remind all parties of the requirements, deliverables, roles, responsibilities and obligations.

Contract Performance Management advice aids in identifying, evaluating, and managing contractual rights and obligations. By starting with contract management, clients ease contract negotiations and contract creation; prevent disputes, and allow for effective risk management.

Effective management ensures:

  • commitments and obligations from buyers and suppliers are effectively met.
  • both parties understand their obligations.
  • there are no disputes or surprises

If you’re unsure of how the contract management process works, it’s important to understand the basics.  Every corporation has some form of contract management processes. We begin by auditing your existing process. If possible, we optimize your existing processes and optimise it to cause the least disruption.

Phases

There’s the early stages or pre-award phase. This is all the work that takes place prior to a contract being given to someone, whether it be a business or an employee. The middle stage is when the process is awarded. This includes all the paperwork to make the agreement final. Third, there’s the post-award stage. This is where a lot of contract management and maintenance comes in.

REVIEW

First, we categorize your contracts based on their strategic and financial significance. For each contract, we fully document aspects that will cost and aspects that compensate.

We define the contract responsibilities. Who is in charge of the contract creation, the contract approval, the storage/archiving/reporting, renewal, and destruction of contracts?

“According to a survey conducted by The Global Contract Management Association, companies lose on average 20% of the value expected from a contract, 12% on hard leakage (e.g. invoicing errors and price adjustments), and 8% on soft leakage (eg. delivery failures, poor experience).”

Contract Playbooks

Playbooks provide legal and business explanations for all contractual terms, define pre-established fallback positions and outline clear escalation protocols.

Tip

Contracts must be stored in one place, have one copy, quick retrieval and limited-time retention after project closure.

Related: Contract Playbook

IACCM research indicates that, on average, good contract development and management could improve a company’s profitability by the equivalent of over 9% of annual revenue.

Fareya Azfar

Fareya Azfar

PARTNER

f.azfar@fareyaaraoui.com
+971 56 705 8483

Areas of Contract Management

Aware
Renewals, Deadlines
Contract Auditing and Reporting
Retreive
Dispute Prevention
Aware

 

  • Organization’s management understands the benefit and value of using contract management processes.
  • Contracts are stored by individuals at any location in the company.
  • There are mostly no standard processes defined and approval processes are not transparent.
  • Terms and conditions of contracts are not monitored and the
  • Although some established contract management process may exist within the organization, they are applied only on an ad-hoc and sporadic basis.
  • management just becomes aware of the significance of efficient Contract Management.

The obligation portion of the contract management process is focused on ensuring that the deliverables are being provided as agreed, and that the contract is holding its value.

Renewals, Deadlines

On the second level “Reactive” one or more departments of enterprises start to set up a Contract Management team. They start to define standard processes to react to upcoming problems or reporting needs concerning contracts. Responsibilities are being defined and subsequently central administration of contract information and documents can be started. Consolidation of existing contracts company-wide begins, and possibly Excel sheets are used for a better overview of contract data. The next step is the third level called “Proactive”: The focus of Contract Management has changed from reactive to proactive behavior. Department specific standard processes for contracts and approvals have been defined, a Contract Management system has been implemented for central storage and monitoring of contracts during the lifecycle and contract reports are submitted to management. The Contract Management team has to care for all phases during the contract lifecycle, including contract planning, contract creation, contract monitoring. The fourth level is called “Managed” and it involves the support of Contract Management within multiple departments of an enterprise. Contract Management systems are integrated and can be used by different users to work together on the same platform. There are elaborated functions available for contract creation, monitoring and management reporting. Interfaces to other processes and systems are defined and managed. “Optimised” means that the executive board of an enterprise determines the Contract Management for the whole enterprise. Contract Management is seen as a strategic issue and all departments which work with contracts need to control and optimise their Contract Management activities continuously. In addition, at this stage, management has access to all contract information at any given time and management reporting data is available quickly. Contract management automatically informs your team of important tasks, expiration dates, and other important details so that opportunities and revenues aren’t lost — and you can build stronger relationships with customers.

Contract Auditing and Reporting

It’s important to regularly audit contracts to ensure that the terms are being met, and that the contract is continuing to hold its value to your company. 

Retreive

The more important the contract, the more securely it is filed, but almost impossible to retrieve.

If you cannot retrieve it, why retain it? 

Companies securely stash away important contracts, which instead should be their daily point of reference.

Contracts must be stored in one place, have one copy, quick retrieval and limited-time retention after project closure.​

Dispute Prevention

The most effective strategy for disputes prevention and promoting efficiency in your business is to understand your contractual obligations and the long-term risks of non-compliance.

Step 01: Research

A significant amount of my time to understand the client’s business and their accounting practices and systems.

Step 02: Review
No two strategies are the same.

  • We categorize your contracts based on their strategic and financial significance.
  • For each contract, we fully document aspects that will cost and aspects that compensate.
  • We define the contract responsibilities.
    Who is in charge of the contract creation, the contract approval, the storage/archiving/reporting, renewal, and destruction of contracts?

    Storage

    Whether it’s an old-school filing cabinet or a software application, effective contract management requires you to store all of your contracts in a single, centralized location. 

    it is critical to ensure that contracts are safely stored in a centralized repository and organized in a coherent fashion.

    Tracking

    In many cases, when contracts are haphazardly managed, there is a good chance that they will not be renewed. This is clearly an irresponsible approach to building a business if contracting plays a big role in a company’s operations. 

    With an effective contract management process, you need a system in place to track all important contract deadlines and milestones.

    FAQs

    +

    What is Contract Management?
    A discipline that supports commercial management through the preparation, negotiation, implementation and oversight of legally enforceable performance commitments and risk positions
    +

    What are the goals of CPM?
    1. the contract is structured properly and reviewed appropriately;
    2. the contracting parties fully meet their respective obligations;
    3. business objectives such as profit and value for money are realised; and
    4. contract weaknesses are identified and addressed.
    +

    What are the results of effective contract management?
    The expected business benefits and financial returns are being realized.
    The supplier is cooperative and responsive to the organization’s needs.
    The organization encounters no contract disputes or surprises.
    The delivery of services is satisfactory to both parties.
    +

    What is Contract Value Leakage
    Every contract has a quantifiable economic value. The primary sources of value leaks are: 
    disagreements over contract scope.
    failures due to over-commitment.
    weaknesses in contract change management.
    performance issues due to a dispute over what was committed.
    missed expiration dates or deadlines.
    Doing more than the scope of agreed obligations.
    Not knowing or utilizing your rights.

    Self Assessment

    Do all players have a consistent understanding of the terms and deliverables of every contract?
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    What are the different kinds of contracts used in your business, what are your standard conditions, and why?
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    Do all players have a consistent understanding of the terms and deliverables of every contract?
    Accordion Content
    Who is in charge of the storage/archiving/reporting, renewal, and destruction of contracts?
    Accordion Content

    Every contract has a quantifiable economic value. The primary sources of value leaks are: 

    1. disagreements over contract scope.
    2. failures due to over-commitment.
    3. weaknesses in contract change management.
    4. performance issues due to a dispute over what was committed.
    5. missed expiration dates or deadlines.
    6. Doing more than the scope of agreed obligations.
    7. Not knowing or utilizing your rights.

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