10 Fundamentals of A Contract Management Manual

A contract management manual is a manual that a business or organization publishes either internally or externally to explain how it manages its contracts. A typical contract management manual consists of the following fundamental sections:

• Executive Summary
  This simply states in one or two pages what the manual covers. This is most useful for your immediate boss and Top Management as they have no time to go thru all the details of the manual. Ensure that you do a great job here, as this can actually move you higher the career ladder.


• Introduction:
  This will include: An introduction to the company.The benefits of using the manual.An overview of the process.Reviewers that are responsible for maintaining the vendor contract management process.
• Aims:
  This section will include the central aim of the contract management department and will mention: That contractual risk is minimized.That continual improvements are required from the contractual relationship.That acceptable and agreeable monitoring is in place.That Best Value is sought after.That services are provided by the vendor in accordance with their contracts.That quality services and products are provided in a timely manner.That the financial implications of any failure to perform are been taken into consideration and appropriate action taken.That financial penalties are raised against the vendor for any failure to deliver as per the contractual obligations.


• Purchasing Strategy:
  This will include such factors as the Green Policy, Value For Money (VFM) and other overriding factors that the company or organization must adhere to.


• Service Delivery Management:
  This will be quite a lengthy section of the contract management manual that describes how the company will ensure that the vendor service is being delivered correctly and to the required quality. It will included descriptions of such processes as: Establishing Service Level Agreements (SLA’s).Measuring vendor performance against their SLA’s.Measuring vendor performance against their contractual obligations.Measuring the delivery performance against required time frames.Measuring the products and services provided against the required quality standards.


• Contract Administration:
  This section would detail the contractual governance activities and will probably be the longest section of the contract management manual.


• Relationship Management:
  This section would describe how the relationship between the vendor and the business would be managed with the aim of keeping all communication open and tension free.


• Managing Change:
  This would include detailing how the following changes will be managed: Non-compliance with the contractual obligations.Non-performance against the SLA’s.Force Majeure.Mutually agreed changes to the contract or SLA.Under or over delivery.Fiscal difficulties including bankruptcy.


• Adding Suppliers:
  This section is not always included, but will detail how extra suppliers are chosen.


• Adding Contracts:
  This section details how a new contract or SLA is set up.


• Appendices:
  This would include acknowledgements and definitions as well as an expansion on any standard documentation.

A contract management manual may be just for internal use, most are published for all potential vendors to view. Any Contract management manual can be brief as in the case of a small business or large and complex as in the case of a government organization but there must always be a manual in existence.

 

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