Commercial contracts bleed into every aspect of a business operation. Making the most of clients, suppliers, and vendor relationships requires effective contract management throughout the lifecycle. However, most companies operate on the belief that managing contracts ends with signing. However, to ensure that businesses continue to benefit from their business agreements, they must closely monitor them throughout the contract lifecycle.
Therefore, the post-execution phase is a crucial component of any business operation. All the parties must do their part to establish compliance, performance, and obligations associated with the contract. It helps to promptly deal with all the issues arising during the implementation of the contractual agreement. To help you with this, we will go into great detail about post-award contract management in this blog post, including its essential components, advantages, and best practices.
Post-award contract management describes the period of the contract lifecycle that follows execution. This phase mainly deals with ensuring all the parties stay true to the commitments and conditions outlined in the business agreement. The primary objective is establishing compliance, performance, and adherence to laws and regulations. Therefore, the post-award phase mainly involves monitoring the contract lifecycle, tracking metrics, and maintaining business relationships.
Effective post-award contract management is crucial to the ongoing success of a project or venture. It’s an essential effort for all the parties to mitigate risks and identify any bottlenecks that arise during the business relationship. It helps businesses to guarantee operation efficiency and achieve desired outcomes. Post-award management and upholding the integrity of the contractual agreement requires transparency, collaboration, and communication. It’s quite easy even for companies with umpteen number of active contracts. How, you ask? We have best practices for that, but before we get into that, here’s all you need to know about the key elements of the post-award phase.
Whether it is a sales or procurement contract, the main value-producing actions happen after the business agreement goes into effect. A legal agreement can only accomplish its goals if all parties strictly abide by the commitments, rules, guidelines, and standards stated. That’s where post-award contract management comes into play. This phase of the contract lifecycle wholly concentrates on upholding and acting upon the contractual terms and conditions. It includes:
Contractual terms and conditions are the specific details and provisions outlined in a legally binding agreement between two or more parties. These stipulations define the rights, obligations, and responsibilities. Ensuring that both parties adhere to the agreed-upon terms is essential for successful post-award contract management. Compliance ensures that each party fulfills its responsibilities and meets the expectations outlined in the contract.
These stipulations range from confidentiality clauses to payment terms to warranties. Clearly stating these terms and establishing compliance guarantees that all the parties achieve what they set out to when signing the contract. It shields companies from future legal disputes and legal, financial, operational, and reputational repercussions.
Deliverables constitute any tangible or intangible goods, services, or outcomes that a party must deliver or attain under a written contract. They are usually specified under terms and conditions and serve as the basis for measuring the performance and success of the contract. The nature of deliverables can vary widely depending on the contract type and the parties’ needs.
Goods can include raw materials, finished products, equipment, or any other tangible items. Service deliverables can range from consulting and advisory services to maintenance, repairs, or other specialized tasks. Post-award contract management entails ensuring the timely delivery of these goods and services as per the standards set in the contractual agreement. Failure to do so can lead to a breach of contract and further consequences.
Business agreements require both parties to comply with applicable laws and regulations. The document includes clauses specifying the jurisdiction whose laws will govern the interpretation and enforcement of the contract. Contracts also specify the precise regulatory standards parties must follow when carrying out their obligations. It varies from industry-specific regulations to environmental standards to safety regulations.
Adherence to legal, regulatory, and industrial standards is a critical aspect of post-award contract management, and it is the shared responsibility of the involved parties to ensure compliance. Failure to comply with these standards can lead to legal consequences, financial penalties, damage to reputation, and may even result in the termination of the contract.
Post-award contract management involves maintaining a productive relationship between the parties. The key to this is open and transparent communication between the parties throughout the contract lifecycle to update each other on project progress, changes, and potential issues. Relationship management helps them to stay on the same page on major points. Thus, they can promptly address and resolve any issues that arise during the contract period.
Relationship management during the post-award phase helps businesses establish clear procedures for resolving problems and prevent escalation. It also improves the likelihood of contract extension or renewal. As a result, businesses do not have to rely solely on new customers or suppliers to generate revenue.
Amendments are formal changes made to the existing contractual agreements and typically require the agreement of all involved parties. They enable businesses to accommodate changes, address unforeseen circumstances, or modify unfavorable terms and conditions. That is why a critical aspect of the post-award phase is to track and manage contract amendments.
It’s up to all the involved parties to ensure the changes comply with legal, regulatory, and industrial standards. Businesses must also guarantee every stakeholder, from the legal to financial to sale, is apprised of the contract amendments. Everyone must be on the same page and use the most recent contract version to achieve the desired results.
Provides an opportunity to identify and mitigate risks that may arise during the contract period. This proactive approach can help prevent potential issues from escalating and negatively impacting the project.
Continuously tracking contractual obligations, commitments, and conditions during the post-award phase enables businesses to ensure adherence of all parties to production, quality assurance, packaging, and delivery requirements.
The post-award phase allows for the ongoing monitoring of the contract lifecycle to ensure that both parties are meeting their respective obligations. It includes tracking deliverables, milestones, and key performance indicators (KPIs). Thus, businesses can consistently make efforts to maintain contract performance.
Now that we understand how critical post-award contract management is for achieving the desired results, the next step is to make the most of it. Like every other stage of the contract lifecycle, automated solutions can help streamline the post-award phase. Because manually keeping track of obligations, milestones, and amendments for scaling businesses can be challenging and inefficient. Here’s how you can overcome these challenges using our best practices:
Post-award contract management has to be a shared responsibility between all the stakeholders. Disconnected contract management systems can hinder the involvement of other departments and parties in the contract lifecycle. Businesses can transcend these shortcomings by adopting a centralized platform open to collaboration among involved parties. For instance, Dock 365 allows vendor portals where vendors and suppliers can take the initiative to fill in their information, including industrial and insurance standards. It lessens the burden on a single side and paves the way for a collaborative post-award phase.
Dock’s integration with CRM and ERP platforms like Microsoft Dynamics, Salesforce, Business Central, and NetSuite serves the same platform. The integrated system enables sales, procurement, and finance teams to manage the contract lifecycle within either platform. They can make their contributions towards tracking milestones, obligations, and amendments.
Staying on top of essential obligations and responsibilities is a key part of post-award contract management. Dock 365 makes the job easier for businesses by enabling users to extract clauses within minutes. It saves the time and effort it takes to manually go through complex and lengthy documents to identify essential terms and conditions.
Dock 365 also enables its users to create obligations for extracted clauses. They can assign obligations to necessary parties and set up due dates to ensure compliance. Thus, organizations can easily track terms and conditions throughout the contract lifecycle.
Most contract management software comes with automated reminders for critical contract milestones and deadlines. For instance, Dock 365 enables its users to set up notifications for a variety of activities associated with the contract lifecycle, from workflow status to contract notes.
Thus, organizations can trigger automated reminders when it’s time for contract renewal or expiry. Thus, businesses can stay alert regarding endless contracts during the post-award phase and never miss a deadline again. They can also improve collaboration by providing notification for any contract-related activity by an external party, such as document upload or comments on documents.
Contract performance monitoring is an essential component of post-award contract management. This is where contract management software can help by offering a visual representation of contract performance through scalable dashboards. Furthermore, Dock 365 enables organizations to create and analyze custom reports to monitor contract value (customer and vendor), duration, contract risk, average number of days to execution, and more. This ensures that relevant performance metrics are associated with specific contracts, making it easy to monitor and evaluate performance. Storing all the contracts in a centralized repository also makes essential contract data accessible across the business to monitor KPIs.
Version control in post-award contract management is crucial for tracking changes made to contracts over time. It helps to maintain an audit trail and ensure that all stakeholders are working with the latest and authorized versions. Collaboration tools like Word, Outlook, and SharePoint available through Dock contract management software record information about the individuals who made changes to the contract. This accountability and version history are essential for understanding the origin of modifications and for future reference or audit purposes.
Stakeholders also receive automated notifications to alert when a new version of the contract is created or when changes are made. This helps keep all parties informed and reduces the risk of working with outdated information. Access controls in Dock help to ensure that only authorized personnel can make modifications to the contract. This helps maintain the integrity of the document and reduces the risk of unauthorized modifications.
Delivering on contractual obligations, rights, and benefits requires effective post-award contract management. Organizations can develop solid and fruitful relationships with their customers and vendors by following best practices for the post-execution phase. Leveraging the latest technology and contract management software helps businesses optimize contract performance, achieve value for money, and minimize disputes. From consistent monitoring to automated reminders, a wide variety of strategies can come in handy to improve your contract management lifecycle.
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