Contract Management in Project Management: A Detailed Analysis

This report delves into the critical role of contract management within the realm of project management. It begins by defining project and contract management, outlining the five phases of project management and the importance of effective contract management for successful project outcomes. The report then provides a detailed description of contract management, emphasizing its role in managing contracts with employees, vendors, and customers to maximize operational and financial performance while minimizing risks. It explores the three phases of contract management: pre-contract, execution, and post-award. The document then explores the underlying concepts of contract management, emphasizing the need for clear communication, incentives, and governance structures to mitigate conflicts and ensure cooperative project environments. It outlines the core principles of contract management, including clear understanding of contracts, defined roles, robust governance, risk-based approaches, change management, performance measurement, continuous improvement, and teamwork. The report discusses the main characteristics of a contract management framework, including team formation, planning, relationship management, and performance assessment. It traces the historical evolution of contract management, from manual processes to the adoption of SaaS and contract management software. Finally, the report analyzes the positive impacts of contract management on project management, highlighting its necessity in resource acquisition and negotiation, ultimately contributing to project success.

Running head: CONTRACT MANAGEMENT
Contract Management
Name of the Student
Name of the University
Author Note

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Introduction:
A project is known as the temporary criteria which are described by a start time and
by an end time (Kerzner and Kerzner 2017). A project also consists of a distinct scope and
some resources for its completion. The concept of the project management is effectively
managing the defined project to meet the goal of the project in the provided timespan.
Precisely it can be stated that it is the process or the application of the knowledge, tools,
techniques and skills to fulfil the requirements of the project in the given timespan. The
whole process of the project management is divided into 5 parts which are the initiating,
planning, executing, monitoring and controlling and the closing (Larson and Gray 2015).
This document particularly aims to discuss the contact management in the field of project
management which will be discussed in the further section.
This document aims to understand the impact of the contract management in the field
of the project management. The impact of this contract management has been introduced a
better understanding of the problems which has the project manager faced for a particular
project. The contact management has helped in the evolution process of the PMBOK.
In this document, the description of the contract management will be discussed. The main
characteristics and the principle of the framework will be discussed in this document with the
underlying concepts. The context of the origin of the contract management will be discussed
in this document. The impact of the contract management on the project management will
also be evaluated in this document. The example of the application of the contract
management will be evaluated in this case with the consideration of the project management.
Description of the Contract Management:
The contract management is the process of the managing the contracts which has been
made with the employees, partners, vendors and the customers. Basically, this is the process

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of the efficient and systematic management of the contract analysis, creation and execution
(Khan and Khan 2013). The main aim of the contract management is maximizing the
operational and financial performance with minimized risks. The common examples of the
commercial contracts are the purchase orders, utility orders, sales invoices and the
employment orders (Goode, Kronke and McKendrick 2015). In the case of highly regulated
service, complex contracts are required. The contract management has a total of three phases.
These phases are the pre-contract phase, the execution phase and the post-award phase (Van
Weele 2014).
For many organization, the contract management is the self-service portal legal playbooks
and the electronic signature. The contact management is very much important for every
business. This contract management has total 8 number of stages which are the request,
generate, negotiate, approval, execute, search, comply and the review (Turner 2017).
Through this eight stages, the contact management helps to improve the efficiency of the
business. With various types of benefit, this contact management has various types of
challenges also (Johnson 2014). The manual process of the contract management is one the
main reason for the bottleneck in the cycle of the sales. This bottleneck issue arises due to the
manual process of the contract management. This manual process also brings a various type
of errors in the system. This errors included the non-compliance, sales cycle time extension,
leakage of the revenue and jeopardised a relationship with the customer. On the other hand,
the automatic process of the contract management brings various types of advantages to the
organization.
Underlying Concepts of the Contract Management:
A contract is very much essential for the completion of a project of an organization as it
creates the project organization. Thus the contract management is an essential part for the

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project management. The problem of the organizing defines that it is a process of
transforming the conflict system into the cooperative system. In a conflict type of system,
every individual has some objectives, but it is not consistent as it is not joined (Harte et al.
2016). In a cooperative system every individual act rationally (Grønbæk et al. 2017). The
conflict system arises due to the opportunism and for the bounded rationality. To reduce the
chances of occurring the conflict system both the opportunism and the bounded rationality
need to be minimized. This minimization can be achieved, and for this, the clients need to:
 Increase the flow of the communication between the participants of the project. This
can ensure that every participant gets sufficient information about the project. Thus
they can behave rationally (Sherif 2015). With that, the chances of occurring the
deceit need to be reduced as on this the opportunism depends.
 The participants of the project need to be correctly incentivized. So that the
participants of the project share the common objective autonomously.
The relationship of the contract management determined an appropriate structure of
governance which can be used for achieving these points.
The analysis of the transaction cost is a typical cost examination of the comparative
planning cost, task completion monetarization under the alternative structure of the
governance and the adapting (Brouthers 2013). This helps to align the transaction with the
government structure in a perceptive way. In this case, the cost of the planning, monitoring
the task competition and the adapting will be determined under dissimilar contract terms for
the payment. Then it will be determined that how this different type of the contract generates
the arrangement which supports the cooperative system through the goal alignment.

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Principles of the Contract Management:
The contract management runs on some sets of principles. These principles are discussed
below:
 In the contract management, it needs to be ensured that the contract is known and
understood by all of the participants who are involved in the project (Grant, Wong
and Trautrims 2017). Adequate resources need to be identified before the award of the
contract.
 Roles, responsibility and the accountability needs to be clear for a perfect contract
project management. The contacts must have a contract management plan which is
documented.
 Strong governance plan must be arranged which is useful for enabling the strategic
oversight and for managing the risks. In this case, the governance structure is suitably
designed and empowered which can help to support the business objectives and the
business outcomes.
 For perfect contract management, a differentiated approach needs to be adopted which
is based on the risk. For this case, the strategical and the tactical contracts for the
business needs to be distinguished. A self-managing approach can be considered for
the high-risk contracts (Raj, Walters and Rashid 2017).
 The principle of the contract management defines that a change in the contract life
will occur and for that proper planning needs to be developed early. Flexible
approaches must be developed by combined working with the supplies of the project.
It also defines that changes may occur in the contract, but the main strategic intent of
the contract must remain the same (Hughes, Champion and Murdoch 2015). For this
senior level assurance need to be ensured.

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 The performance needs to be measured and also needs to report accordingly. The KPI
of the organization and the data efficiency can be used for incentivising the good
performance (Yin, Wang and Yang 2014). The contracts needed to be administrated
efficiently and proactively. This will maximize the use of the performance and the
benchmarking data. A balanced scorecard is used for measuring the relationship
management and the customer satisfaction with the focus of the outcome
achievement. Quick reactions are needed when issues arise.
 Continuous improvement is needed in the contract management. With that value for
money, service must be given, and innovation must be done (Clark, Silvester and
Knowles 2013). This can be achieved by the usage of the contract tools.
 The contractor and the project client must work together as a team to produce the
preferred outcomes of the project in the estimated time of the project.
 The wide SRM programmes must be linked with the government and with the
organization to capture the performance and the relationship issues.
 Mature commercial behaviours must be adopted and encouraged properly. For this, it
needs to understand that what controls the behaviour of the suppliers. Also, the
appropriate commercial structure needs to be implemented.
Main characteristics of Contract Management Framework:
The contract management is a very much complex process which includes various
types of activities. The main characteristics of the contract management framework divided
into four parts. First is creating the contract management team and the governance. The
second one is the establishing, planning and execution of contract management. The next is
the management of the relationship. The last one is the management of performance.

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In the first stage of the framework the time when the team of the contract
management will be formed as described with that the structure of the team and
responsibilities and roles of the team described. In the next framework of the contract
management, it is monitored that the roles and responsibilities are fulfilled under the criteria
of the contract and reported accordingly (Festing and Schäfer 2014). In the framework of the
relationship management, a brief engagement is done between the partners of the project.
This establishes a proper communication system between the parties throughout the life cycle
of the project. In the last stage of the framework, the performance is assessed. In this
assessment the services which are delivered by the service provider or the contractor is
assessed in the sense that it is meeting the required standards or not.
Context of the Origin of the Contract Management:
The main origin of the contract management was the contract laws of the early days.
In the early days, this process of the contract management was totally offline. In that time
only the simple word processor and the spreadsheets were used. For sharing this files, one
shared drive was used. For adding a new contract, the creator needs to find the most updated
template which was available on the shared drive on that time (Monczka et al. 2015).
Initially, this system was good, but as the number of the contracts increased with the time,
this system of the contract management starts creating problems.
To mitigate this issue, SaaS was introduced. By using the SaaS these systems were
able to improve the requesting processes, negotiating contracts, authoring and approving the
contract (Gallegos 2013). Initially, this system was performing well, but with the time many
of this internal system cluttered with the drafts which are outdated. This created a problem for
the staffs to find the latest editions of the document, track the changes and to react in a certain
amount of time when a contract expired.

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Finally, to solve all the problems contract management software is introduced. This
software automatically limits the error done by the humans. A contract can be done in this
software very easily and quickly after the approval of it. All the changes in the contract can
be tracked easily. The most important and the vital things for this contract management
software is that it is able to scale the liabilities issues and the relieving workflow to achieve
the greatest growth.
Impact of the Contract Management on the Project Management:
The contract management has various types of positive impact on the project
management. The project management particularly focuses on the operations of the business
that have an estimated time of finishing and a predetermined budget and revenue flow. Many
projects are often unique, and for this many times, the project manager needs to gather
resources from the outside contractors. For this reason, the contract negotiations become an
essential part for the project management and for this the contract management is the only
solution. Thus the contract management possesses various positive impact on the project
management which will be discussed below.
Service and price negotiations:
The contract management helps the project managers to generate more revenue for a
particular project. The contract management helps to negotiate the prices of service provided
by a particular contractor. In this negotiation process, the contract management helps to lower
the prices for a service given by a contractor. Both of the parties satisfied in this process, but
the quality of the service remains intact.
Timeframe importance:
In any type of project management, the time frame of the project plays a vital role in
the context of successful completion of the project. For meeting the deadline of a project the

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project manager gives a particular date to the contractor in which the contractors must finish
the job to get paid (Fleming and Koppelman 2016). To manage all of these deadlines of the
contractors the contract management is required. Thus the contract management helps the
project management process to complete within the particular time frame successfully.
Delegation and Liability:
The contract management helps the project management process by passing the
liabilities in certain cases that the current business of the organization cannot be kept on hold
for some activities which are not performed by that particular contractor. Thus it brings
fluency in the business process of the organization which is indirectly helping the project
management of that business or organisation. Also, the contract management defines how the
contractors of the project will hire and pay the external sub-contractors.
Ensuring desired project:
The contract management helps the project manager to ensure the desired outcome of
the project. In many cases, the project management process requires a project to be completed
in some specified specifications which will produce some particular results. In this case, the
contract management specifies that particular results to the contractors. For example, the
process of the project manager may require the project to be completed by using some
specified materials or standards.
Examples of the Contract Management Applications:
The Contract Management software not only managing the contacts of the
organization. With the contract management, the other applications of the contract
management are that it is able to connect the business cycle of the other companies. This
process is seamless where the data can be stored and easily according to the needs of the
users.

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One of the examples of this contract management software or the solution is the DocLogix.
The main features of the software are, it provides agreement, storage, signing, approval and
preparation. Some changes are determined in the sales after using the software which is the
higher team attention in the quota of the sales. The sales team is achieving more sales quota
compared to the previous one. The cycle of the sales also decreased with the introduction of
the DocLogix in the project management. It is determined that this solution has improved the
sales cycle by 24%. Conversation rate is also increased by the introduction of this software
solution. Proposal volume is also increased with the implementation of this software.
Conclusion:
From the above discussion, it can be concluded that the contract management has a huge role
in the context of project management run a project efficiently. The contract management
helps the project management by managing various types of parties involved in a single
project. Thus efficient project management can be achieved. In this document, a brief about
the contract management is discussed. Underlying concepts of the contract management is
evaluated in this document. The main principles of the contract management are also
discussed in this document, and with that, the context of the origin of the contract
management is discussed. In the second part of this document, the impact of the contract
management in the project management is discussed thoroughly. In the last part of the
document examples of the contract management application is given.

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