Contract management or contract administration is the management of contracts made with suppliers. When managing a contract you must follow the terms and conditions, as well as document and agree on changes that arise during the process. Contract management should maximise performance and minimise risk.
You should have developed a plan during the planning phase of buying. You can refine how you manage the contract when preparing your documents. You may need to manage changes while the contract is active.
Implementing contract management well
It’s your responsibility to manage:
- relationships with stakeholders including disputes
- supplier performance reviews
- contractual risks and issues
- risks to maintaining probity, including conflicts of interest
- costs and delivery progress
- contract price reviews
- finance and administration
- contract extensions and end dates
- consultant and contractor engagement that supports the main contract
For most service-based contracts, there is a need to ensure continuity between suppliers. In this instance you need to prepare and manage the re-tendering process while the current contract is active.
Mandatory requirements for goods and services
There are things you must do when managing a contract for goods and services.
Policy 5: Contract management and disclosure outlines them.
Your plans for contract management must reflect the complexity and risk of your purchase.
You must follow your organisation’s contract management planning strategy. Your organisation must have a strategy for buying categories where you spend the most money.
You must develop a contract management plan before you advertise the contract for tender.
- keep information about contracts a contracts register
- keep insurance certificates up to date and active
Tools and templates for goods and services contract management
Manage relationships and conflicts
Good relationships build trust, commitment and communication. To do this:
- meet at regular times in person or over the phone to discuss progress
- discuss issues and feedback in a timely manner
- remember your relationship is collaborative
- allow both parties to provide constructive feedback
- listen to and respect your supplier’s expertise
Most contracts include conflict resolution processes you should follow. If you have ongoing concerns about a supplier’s performance, ask advice from your legal team before you take action.
Manage changes to the contract
Changes to contracts are common, especially when a contract is active for a long time. Your contract should include processes about how manage changes to your contract.
Changes to contracts can be administrative or financial. Financial changes are separate from price reviews listed in the contract.
Examples of administrative changes are:
- changes to the billing process
- delivery address
- personnel assigned to the contract
- sequencing of work
- performance management and monitoring processes
If you need to make financial changes, get internal approval first. Then work with the supplier to agree to any changes. Make sure you document the changes.
Reviewed 18 November 2019