Comprehensive Report: Contract and Compliance Management

This report provides a comprehensive overview of contract and compliance management, emphasizing its significance in ensuring fair deals and mitigating risks between parties. It delves into the core concepts, including performance monitoring, budget control, reporting, dispute resolution, evaluation, and auditing within the contract lifecycle. The report highlights the importance of effective contract management in enhancing business efficiency and meeting regulatory requirements, particularly in today's globalized market. Furthermore, it identifies key challenges in contract management, such as maintaining written contracts, managing contract costs, avoiding unnecessary legal delays, and ensuring data protection. The report uses IBM as a case study and explores the company's approach to contract management and compliance, underscoring the need for continuous improvement and advanced software applications. The study concludes by emphasizing the role of contract managers in maintaining systematic approaches to contract management and compliance.

Running head: CONTRACT AND COMPLIANCE MANAGEMENT
Contract Management and Compliance
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Table of Contents
Introduction......................................................................................................................................2
Background......................................................................................................................................2
Concept of Contract and Compliance Management........................................................................3
Importance of Contract Management..............................................................................................6
Challenges in contract Management................................................................................................7
1. Maintenance the contracts not in writing.....................................................................................7
2. Lack of information regarding the contract costs........................................................................7
3. Unnecessary extension of the legal reviews................................................................................8
4. Lack of proper protection of the data..........................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
Contract management signifies the fair deals between two parties by ensuring the
expected transactions. According to Abdullah, Indulska & Sadiq (2016), the contract
management is the standardized interaction process between the parties by signing an agreement
that includes the detailed norms and policies. Many of the government agencies reply on this
contract management process. The compliance process is the integral part of the contract
management that helps in resolving the conflicts and reduces the risks associated with the
business functions (Schneider, 2015). It is important to point out that the compliance
management depends on the proper monitoring process that allows insights to the opportunities
of considerable changes. The study would reflect on the contract management process in IBM,
US. The development of the literature study would provide the adequate knowledge about the
contract management and compliance process.
Background
Contract compliance management is an important business functionality that helps in
increasing the business efficiency and reducing the risks. The contract compliance management
ensures integrity in monitoring the compliance process. It aligns the available contract terms with
the approved practices and corporate policies (Sadiq & Governatori, 2015). This process is
developing or overseeing the standardized contract templates and the monitoring process of the
compliance. The managers deal with the entire paper works and manage the transparency while
communicating with the business clients. It is the responsibility of the contract manager to keep
the clients apprised of progress towards the business objectives. The improvements brought to
the contract management procedure helps in satisfying the compliance needs if the process is

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much formal and structured (Elgammal et al., 2016). At the transaction level, it sometimes
include the proper review and approvals of the process associated with the terms and conditions.
However, it is essential to input the necessary data for taking the control of the system. At the
final stage, it is essential to report to the management.
IBM has undertaken the contract management process that covers the different stages of
the contract lifecycle (Ibm.com, 2017). The contract management software is quite useful for the
company to enabling the different types of the contract management, such as enterprise, sales,
and procurement contracts (Christensen, Nikolaev & Wittenberg‐Moerman, 2016). However, the
company is focusing towards improving the contract and compliance process these days by
gathering more knowledge regarding this aspect. The application of the adequate knowledge and
skills would be beneficial for the company to develop more advanced contract software. In order
to gain the adequate knowledge, it is essential to conduct the extensive market research on the
contract and compliance management process. The exploration of the conceptual analysis would
be much significant in developing the ideas regarding the contract and compliance management
process.
Concept of Contract and Compliance Management
The contract management often considers the standardized version of managing the deals
between two parties. It helps in reducing some of the situational hazards that the workplace may
face (Alfe et al., 2013). The contract management process deals with the administrative purpose
of the employees. The compliance management deals with the following factors:
Performance Monitoring

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It is notable that the contracts are generally administered on the contractual relationship
developed by a contract manager. The contract managers serve the contract point when the
process remains active. The contract managers are responsible in monitoring the performance
parameter of the vendors (Pegram et al., 2014). They often inspect the sites and follow the right
track of the vendor’s performance. The managers deal with the entire paper works and manage
the transparency while communicating with the business clients. It is the responsibility of the
contract manager to keep the clients apprised of progress towards the business objectives. They
submit the payment requires and inform the clients the milestones are reached.
Budget Controlling Process
The contract Management is largely involved with the budget controlling process. It is
notable that the contract manager needs to pay the closer attention towards the expenditures. If
the project crosses the budget limit, which was submitted by the vendors, it is the responsibility
of the contract manager to make modifications of the budgets (Girth, 2014). It is essential to
identify the alternative solutions to the challenges.
Reporting
Reporting is another most significant part of the contract management process. It is
essential for the contract manager to utilize the submitted report by the vendor that includes the
information about the adequate functionalities. These functionalities are generally structured to
lead the contract towards the successful completion of the project (Mackay, Letts & Casey,
2014). In some of the cases, it has been noted that the reports are aligned with the payment
schedule of the vendor. In order to assist the contract management, vendors require submitting
both the performance and the financial reports.

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Resolution of the emerging Disputes
Dispute resolution is the integral part of the contract and compliance management. It is
much important for the contract management process to develop the procedure for the dispute
resolution. It is notable that the contracts can span longer years. During this contract
management period, there is the high chance of emerging conflicts between the two parties. It
might be possible that both parties are proposing the better way of dealing with the particular
contracts (Khan & Khan, 2013). In fact, in some of the cases, it is even noted that both the
parties are getting into a disagreement of driving the functionalities against the contractual
obligations. Especially, when the underlying circumstances are transformed, such conflicts
become observable. The contract managers then require mediating the process by agreeing to the
dispute resolution procedures (Zou, Wang & Orgun, 2016). It is required to be ensured that the
works would not stop, but the issues would be resolved as soon as possible.
Evaluation
The contract compliance process deals with the evaluation process, which is the most
important factor during this phase. The evaluation process is informing the vendors the details of
the objective standards that determine whether the company has been meeting the contractual
obligation or not (Vyas, Hayllar & Wu, 2017). Furthermore, the evaluation process allows the
clients to keep focus on the merit level of the vendor’s performance for the future recruitment
purposes.
Auditing
Even after the completion of the contracts, it is still needed to be managed. In many of
the cases, it has been observed that the organisations retain the audit power for a particular

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contract even after the completion. This continuous auditing process is mainly undertaken for
ensuring the clear payments done to the eligible parties after maintaining the standards of the
works (Sheikh, Jalil & Khan, 2014). The contract manager is the main responsible person for
finalizing the work by determining the contract is completely documented.
Importance of Contract Management
In today’s date, it has been noted that both the private and public sectors are experiencing
the increasing pressure for improving the financial and operational performance and reducing
costs. On the other hand, it is necessary to maintain the regulatory requirements that are new to
the globalised business market. This new regulation is significantly increasing the contract
volume and complexities (Cips.org, 2017). It ensures the recognition of the benefits and
importance of the effective contract management process. The improvements brought to the
contract management procedure helps in satisfying the compliance needs if the process is much
formal and structured. It increases the availability of the software applications that are
significantly addressing these requirements. It is necessary to keep focus on the following factors
that have the significant influence on the contract management process.
 The contract management process would be much successful if the service delivery
arrangements are satisfactory enough for both the parties. It can be expected that the
value for money be realized in the business process.
 The contract management process would be called successful if the expected value for
money and the business benefits are achieved (Mijumbi et al., 2016).
 The suppliers are needed to be much responsive and cooperative towards their duty.
 It is essential for the organisation to understand the obligations under the contracts.

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 The disputes are needed to be resolved as soon as possible.
 An objective and professional debate over the changes are needed to be monitored
properly.
Challenges in contract Management
More obstacles that are apparently preventing the organisations from achieving the pre-
determined objectives surround contract management field. Whereas some of the obstacles are
too minor, some are creating the significant issues for the sustainable future of the organisation.
This section of the study would provide the detailed ideas about the probable challenges faced
during the contract management procedure.
1. Maintenance the contracts not in writing
The verbal contracts are open to the interpretation derived from each of the party
involved in the contract management. The contract manager often faces the challenges when
some of the factors associated with this process are not controlled. The verbal contracts
sometimes entirely depend on the effective relationships between two parties (Sheikh, Jalil &
Khan, 2014). This verbal contract may be interrupted if the conflicts between these two parties
arise. The lack of written contracts is taken as the significant challenge for the company
2. Lack of information regarding the contract costs
The lack of adequate knowledge about the capital amount to be invested in the contract
management procedure has become the major issue. Most of the government contracts face this
significant issue. It has been observed that some of the government agencies do not maintain the
advanced digital systems for keeping the complete track of the costs (Mackay, Letts & Casey,

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2014). In such cases, they need to depend on the manual system to keep the data and the cost
accounting measurement. This cost accounting become ineffective since the clients or the
business contractors cannot have a real snapshot of a budgetary factor of the project.
3. Unnecessary extension of the legal reviews
During the business transaction process, many functions are complied with the legal
review. It has been observed that the business people tend to extend the legal review in the
contract management process that takes too time. The clients often lose interests due to the
unnecessary extension period persists.
4. Lack of proper protection of the data
It has been observed that while working on the internal systems, the sensitive data
remains protected. Therefore, in time of need, it becomes too difficult to get proper access. On
the other hand, the mismanagement of the data protection security sometimes is breached
(Sheikh, Jalil & Khan, 2014). In such case, the contract may face the high level of risks.
The above challenges suggest that the contract management procedures are sometimes
becoming much riskier that can destroy the system functionalities. The project manager,
however, is responsible for maintaining the systematic approach of the contract management. It
is even important to mention that the involvement of the third party in the compliance process
can even complicate the contract more specifically. Hence, the contract manager needs to be
much cautious about the selection of the negotiator during the compliance process (Mackay,
Letts & Casey, 2014). If not the conflicts, the mismanagement of the other associated activities

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can also lead to contract management failure. It is necessary to develop the adequate ideas about
the structured and sequential process of compliance management.
Conclusion
The study reflects the development of the contract management process to structure the
organizational functionalities. The ideas obtained from the conceptual analysis determine that the
contract managers requires maintaining the responsibilities towards the secure and systematic
contract management and compliance process. The contract managers are responsible in
monitoring the performance parameter of the vendors. They often inspect the sites and follow the
right track of the vendor’s performance. The managers deal with the entire paper works and
manage the transparency while communicating with the business clients. It is the responsibility
of the contract manager to keep the clients apprised of progress towards the business objectives.
The improvements brought to the contract management procedure helps in satisfying the
compliance needs if the process is much formal and structured. It increases the availability of the
software applications that are significantly addressing these requirements. The lack of adequate
knowledge about the capital amount to be invested in the contract management procedure has
become the major issue. It is necessary to develop the adequate ideas about the structured and
sequential process of compliance management.

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References
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Alfes, K., Truss, C., Soane, E. C., Rees, C., & Gatenby, M. (2013). The relationship between line
manager behavior, perceived HRM practices, and individual performance: Examining the
mediating role of engagement. Human resource management, 52(6), 839-859.
Christensen, H. B., Nikolaev, V. V., & WITTENBERG‐MOERMAN, R. E. G. I. N. A. (2016).
Accounting information in financial contracting: The incomplete contract theory
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appling compliance patterns for business process compliance. Software & Systems
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<http://www-03.ibm.com/software/products/da/contract-management> [Accessed 25
Aug. 2017].

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Khan, A. W., & Khan, S. U. (2013). Critical success factors for offshore software outsourcing
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