The terms Contract Management and Contract Administration have factors in common. Many companies assign the responsibilities of both facets of the contracting process to the same team of experts. Although both apply to a deeper understanding of the contract and the obligations addressed within a contract, they are concerned with different timings. Contract Management and Contract Administration respond to different phases of the contract lifecycle.

The main difference is based on the timing of each task. There are technical differences between the two processes. Contract managers assure that each party of the contract has the capabilities to accomplish the contract’s obligations before it is formation. Contract administrators are concerned with the state of the contract after the contract formation.

Contract Management vs Administration Infographic

Contract Administration

The tasks developed during the administration process are related to the development of a contract. Administration involves recording and filling in information about a contract or several contracts in an accessible way. Mutually beneficial contracts and fair agreements are key to business’ success.

Contract Administration is focused on the planning and implementation of contracts. Usually planning a contract includes researching for potential contracting partners and sending proposals. An important task of contract administration is negotiating on contract items such as schedules, prices, and performance expectations.

The Importance of Contract Administration

It is essential to any organization to be able to rely on a proper administration of its contracts with any person or organization, whether internal or external, that enters into a legal agreement. Contract Administration will guarantee that the respective parties accomplish what is outlined in the contract.

The recording of the agreements and discussions, as well as the creation of a contract, helps to minimize any kind of confusion or misunderstanding. This safeguards the business and ensures that the parties exchange money and assets on the previously agreed deadlines, which serves to provide consistency to company budgets and ensure that tasks are completed in a timely fashion.

Although the Contract Administration’s objective is to ensure the contract’s consideration of both parties, it is critical in case one of the parties does not meet their promises. Having accurate records of the communications and agreements between parties proves that your company has done its part to meet all the business obligations in case of any future disagreements or litigation.

Contract Administrator Responsibilities

The Contract Administrator will be responsible for the planning, drafting, and closing of the contract process. Typically, the first responsibility that the contract administrator issues regarding the contractual process is requesting proposals from potential partners or vendors.

Also, the contract administrator is in charge of establishing the terms of the contract, such as

  • Delivery Dates
  • Payment Dates
  • Evaluation of the contract performance of both parties
  • Renewal Clauses

A contract administrator maintains the contract file, records, registers, and all of the relevant documentation. They also deal with revisions requested from the parties while drafting the contract. Furthermore, the contract administrator is the person in charge of making the contract information available to all the parties that may need access or have a role in the contract.

Contact Management

After the contract has been completed and has taken effect, the Contract Management works to guarantee that the terms and conditions that the contract contains are effectively adhered to. They also monitor the contract´s performance to maximize financial performance and minimize risks.

Contract Management ensures that each party meets its obligations. As with every type of management, this requires an accurate and timely use of the company’s resources.

Furthermore, along the contract management process, the contract agreement might need to implement certain changes. This generally stems from any changes in the circumstances that were not foreseen or accounted for within the original draft. In this case, contract management tasks also will include the negotiation related to any change or new term that could be required from the parties.

These potential changes in the terms and conditions are actually one of the main reasons why contract managers and contract administrators (in those situations where they are two different teams) tend to work so closely together.

Contract Management Importance

The most important role of Contract Management that makes this phase into an essential key for businesses is the ability to oversee and control agreements. This includes keeping a timely tracking of terms, transaction components, and re-establishments.

The most important objective of Contract Management is to ensure that all the parties involved in the companies’ contracts fulfil their duties and commitments. At the same time, the Contract Management will work from different areas to ensure that the company, its members, and the other parties of the agreements understand and have access to the contract.

Contract Manager Responsibilities

The Contract Manager is responsible for the correct and timely accomplishment of the company’s responsibilities and commitments. At the same time, they monitor the other party´s compliance.

The Contract Manager is responsible for ensuring that the partners have everything that is required to fulfil the contracts and agreements. Eventually, the Contract Manager might need to arrange different types of educational sessions for the company’s employees when necessary.

When there is any change made on the original contract or agreement, it is the Contract Manager´s responsibility to negotiate these new terms.

Overlapping Areas Between Contract Administration and Contract Management

These two specializations remain in constant communication. They will establish that the terms and furthermore, the language used in the contract, are accurately understood between all concerned parties.

Usually, the Contract Administrators will share the details about the original negotiations in any case that the Contract Management needs to modify the original deal. Both have to be focused on ensuring that every agreement with a third party proceeds by avoiding future litigation processes.

No matter the size of the company, it is essential to understand that both are separate entities that work together to guarantee that each has the necessary resources and power to fulfil their role within the larger system.