Risky Business - When Contract Management is Overlooked

Procurement professionals spend a great deal of time and effort on the front end – developing specifications, issuing the solicitation, evaluating responses, and final contract negotiation and award. Afterwards, the contract often is handed over to the customer department to manage – sometimes as long as 5 years or more!

Straightforward as it seems, contract management can be the stuff of nightmares – lapses in insurance coverage, invoices with pricing that doesn’t match the contract, delivery delays, and possible miscommunications. When those problems arise, procurement usually is asked to come to the rescue. 

But why let it come to that when an automated contract management system can handle the afterlife of a contract.

Apart from the obvious benefit of having all documents and history through the life of the contract at your fingertips at any given moment, here are 4 key ways that automation can assist contract management:

1. Expiring Contracts. It’s essential to have enough lead time BEFORE a contract expires to either renew for an option year or begin a new solicitation process. With an automated procurement system, built-in reminders can be set to avoid having to deal with an expiring contract last minute – or worse, a contract that has already expired!
2. Insurance Renewals. While procurement usually obtains the initial insurance certificate, renewals are often the responsibility of the contract manager. At the end of a 5-year contract, five insurance certificates should be on file – but is that tracked across all your contracts? And what about insurance for any third-party subcontractors? Anything short of this exposes your entity to higher risk and possible litigation if something goes wrong.
3. Performance Management. Friendly reminders to key stakeholders can ensure milestone events or deliveries are kept on schedule. The relationship with your suppliers is managed through your contract terms and scope of work. Complying with delivery timeframes, customer service response times, and pricing is the only way to gain the full benefits of the contract.
4. Balance tracking. Contracts can easily get away from us, and it’s not until an audit that we discover that we’ve exceeded the contract amount. With simple invoice submission, purchase order record, payment and change order tracking, your organization can see exactly where you’re at on spend.

Contract management is not always the focus of many organizations, where responsibility is dispersed across multiple contract managers. A secure, cloud-accessed, centralized database of all contract documentation – through political changes, staff leaving, and public information requests – ensures that an organization can track and retrieve information during the life of a contract.

PlanetBids’ proprietary PB System™ contains an entire module devoted to contract management, including:

• Tracking subcontractor information
• Maintaining online contract document files
• Current and past contract history, with an audit trail
• Generating reports in multiple ways
• Searching contracts for key information
• Scheduling tasks
• Automating emails
• Generating dynamic graphs and charts
• Contract Management Compliance Tracking

To learn more about PB System™, which is utilized by public and private agencies, education and local, regional and state government throughout the U.S., Schedule a Demo and discover how PlanetBids can help your organization.