How Effective Is Your Contract Management Process?

Posted by Jack Alford on July 6, 2018

contract management

As a project-centric business, most of your activity will be governed by binding contracts that spell out what you are expected to deliver, or what you are expecting others to deliver. Many contracts are sourced from a suite of interrelated documents. These documents define expectations for a number of areas, such as processes for the interchange of information and review, comment and change deadlines on design deliverable documents and processes for financial control.

Contract management is the process or processes of managing these interfaces, keeping accurate records, and maintaining properly documented records of information, change, and financial certification. 

As with other documentation and information that makes up your projects, having an efficient process in place to manage contracts is vital to your business.


Free eGuide

Gain control of your project information



Contract Management As Part Of Your Project Information Management (PIM) Strategy

Back in the day, contract management processes were carried out by sending standard forms to the involved parties, then capturing the responses. They were on paper, stacks of paper, that had to be shuttled about from party to party and stored in very safe places.

Today’s contract management systems are highly configurable to reproduce the formal documentation of the past, but they also allow immediate notification through email or extranet access, as well as immediate online response. The automation of these processes reduces the amount of work needed to administer the system.

Including contracts in your Project Information Management (PIM) strategy and taking advantage of PIM software, allows you to set out the process for managing and recording this documentation. With a PIM system in place, what used to be a long winded process involving reams of paper is now automated and allows for instant feedback and approval. Businesses using PIM have seen a considerable reduction in the amount of time and work involved in managing their contracts.

 TwitterTweet it: 'How effective is your contract management process?'

Contract Management For Contractors Vs Professional Services

effective contract management


As a contractor, there are a number of contractual obligations that you must fulfil throughout the lifecycle of a project. From informing the contract administrator when you require more information, to giving formal notice when something may affect the contract price or schedule. Therefore, it’s crucial that you keep detailed records of your communications and everything that may affect the contract.

When implementing your Project Information Management strategy and systems, there are a number of communication types that you need to manage. These include:

Requests for information (RFI): These are communications requiring clarification or provision of information that might be unclear or missing from the contractual documentation. In many cases the reply to an RFI will generate a change request.

✓ Change request: This is a formal request for a change to the contract. It might be the result of the reply to an RFI, or it might be a response to unexpected conditions encountered on site. Change requests are often time critical and therefore need to be recorded and responded to accordingly.

Site & other instructions: This instructs a subcontractor to carry out certain work or obtain certain materials or involves the passing on of information. This instruction may or may not result in the need for additional payment, but it’s vital that the instruction is formally recorded as it will act as proof of action and may form part of the evaluation of the project.

Completion certificate: This is proof of formal sign-off of a project in whole or in part and keeping a record of this against to project can act as proof of work completed.

Professional Services

Whether you are an architecture practice or a specialist project management business, centrally managing the contractual communications between everyone involved in the project is essential. For the professional services industry, there are a few communications types that you need to be aware of and that will need to be managed as part of your Project Information Management strategy:

Change orders or variation orders: These are instructions to vary the work to be carried out from the information that is spelled out in the contract documents. These changes often have an impact on the contract cost and, in some cases, the schedule.

✓ Interim and final valuations: These determinations are normally carried out monthly. The valuation ascertains the value of the work carried out so far.

Practical completion certificate: This is issued to signify that the contractor has completed the works to an acceptable standard. This, in turn, often triggers the release of retained amounts.

Getting Started With PIM

understanding contract management

For more information on how implementing a Project Information Management strategy and system will benefit your business, download our Project Information Management for Dummies eBook.

Understanding Project Information Management - An Introduction Series


Free eGuide

Project Information Management for Dummies

Download Your Copy