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February 16, 2025
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Insights Team
Insights Team

Contract administration vs. contract management: a breakdown

Understand contract administration and how it differs from management to ensure smooth execution and compliance.

Understand contract administration and how it differs from management to ensure smooth execution and compliance.
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A contract's journey doesn't end at the dotted line. A contract is a living document that requires ongoing attention to ensure both parties fulfill their obligations and achieve desired outcomes. Here's where two key concepts come into play: contract administration vs. contract management.

While both are crucial for ensuring smooth contractual relationships, they handle distinct phases within the contract lifecycle. This blog discusses the differences between contract administration and contract management, helping you understand their specific functions. 

We'll explore best practices to optimize each process and introduce DocJuris, a powerful AI contract management platform that streamlines both contract administration and management, to examine how its features can simplify the entire contract lifecycle. 

Key takeaways from this article:

  • Contract administration focuses on the initial setup and execution of a contract, ensuring all terms and conditions are clear and agreed upon.
  • Once the contract is signed, contract management oversees its ongoing performance, ensures compliance, and facilitates renewals.
  • By applying best practices to both phases, businesses can increase efficiency, minimize risks, and optimize contract value.
  • DocJuris offers features that streamline both contract administration and management, creating a seamless workflow from drafting to execution and beyond.

What is contract administration?

Alt text: A person conducting an in-depth review of a contract

Contract administration refers to the activities undertaken before a contract is officially signed and put into effect. It's the groundwork phase, ensuring all terms are clearly defined, risks are identified, and the agreement sets a solid foundation for successful execution.

Scope of the contract administration process

A contract administration plan is created by contract administrators, and the process typically involves:

  • Drafting and negotiation: Collaborating with internal and external stakeholders to draft a clear and comprehensive contract that aligns with business needs.
  • Review and approval: Conducting thorough internal reviews to ensure all contractual elements are accurate and legally sound before seeking approval from authorized signatories.
  • Risk assessment: Identifying any potential risks associated with the agreement and mitigating them through appropriate contract clauses.
  • Obtaining approvals: Ensuring all internal stakeholders and the counterparty have reviewed, signed, and returned the final contract document.

Key responsibilities of a contract administrator

Contract administrators play a crucial role in the execution of agreements, overseeing various aspects to guarantee that contractual obligations are successfully met. Their responsibilities include: 

  • Identifying and evaluating potential partners who align with organizational objectives.
  • Developing and managing proposal requests to accurately reflect business requirements.
  • Collaborating with stakeholders to agree on terms that serve organizational goals while protecting interests.
  • Clearly outlining contract objectives and timelines to ensure deliverables are achieved efficiently.
  • Developing standards to measure and evaluate ongoing contract performance.
  • Setting clear definitions of contract breaches and outlining potential consequences.
  • Managing the routing and approval process to ensure contracts are validated by appropriate parties.
  • Ensuring all contract documents and related records are current and accessible for stakeholders.

What is contract management?

Alt text: A binder used for managing contract amendments, with a pen and glasses on top

Contract management goes beyond the initial setup. Once the contract is signed, the focus shifts towards its management. This involves ongoing oversight of the contract throughout its entire lifecycle to ensure that both parties fulfill their obligations and that the contract delivers the expected value. 

Scope of contract management processes

Contract management is a process handled by contract managers, which typically involves:

  • Monitoring performance and reporting: Tracking deliverables, deadlines, and service levels as outlined in the contract to ensure compliance. Maintaining clear communication channels with the counterparty to provide regular updates on progress and address any performance issues.
  • Amendment management: Proactively managing and negotiating any necessary changes or amendments to the contract terms.
  • Renewal and termination: Planning for contract renewals or terminations well in advance, ensuring a smooth transition based on the agreed-upon terms.
  • Compliance audits: Conducting regular audits to verify adherence to all contractual terms and relevant regulations.

Key responsibilities of contract managers

Understanding the core responsibilities of contract managers is instrumental in managing the complexities of contracts and ensuring smooth operation from start to finish. Here's what falls within the role of contract management responsibilities:

  • Overseeing the overall performance of the contract and identifying any potential deviations from the agreed-upon terms.
  • Building a collaborative relationship with the counterparty to ensure open communication and timely resolution of any issues.
  • Facilitating efficient management of amendments to the contract and maintaining a clear audit trail for future reference.
  • Developing strategies for contract renewal or termination, ensuring a smooth transition based on the contract's end-of-term clauses.
  • Conduct regular compliance audits to mitigate risks associated with contractual non-compliance.
  • Monitoring deadlines and deliverables on a day-to-day basis.
  • Track and analyze contract performance data.
  • Managing requests for all changes to be documented and agreed upon.

Key differences between contract administration and management

Now that you've developed a clear understanding of both functions, let's explore their key differences:

Process focus

  • Contract administration: Primarily concerned with the pre-execution stage, ensuring a well-drafted and clear agreement.
  • Contract management: Focuses on overseeing the post-execution phase of contract lifecycle management, assessing performance, and ensuring compliance.

Stakeholder interaction

  • Contract administration: Primarily interacts with internal departments to secure approvals and ensure alignment.
  • Contract management: Interacts with both internal and external stakeholders – vendors/suppliers and internal teams responsible for fulfilling the contract.

Risk management approach

  • Contract administration: Primarily focuses on identifying and mitigating risks associated with ambiguous language or incomplete information in the contract itself.
  • Contract management: Deals with broader risks that may arise throughout the contract term, such as performance delays, unexpected market changes, or potential breaches.

Outcome measurement

  • Contract administration: Success is measured by the clarity, comprehensiveness, and fairness of the drafted contract. It's about preventing future contract disputes and ensuring a solid foundation for the contractual relationship.
  • Contract management: Success is measured by the contract's performance against its objectives. This includes factors like on-time delivery, quality of goods or services, and overall satisfaction with the contractual relationship.

Best practices for contract administration

Alt text: A person drafting a contract on a laptop with a cup of coffee

Contract administration is a critical aspect of any business, ensuring that contracts are executed effectively. By following these five best practices, you can minimize risks, improve compliance, and maximize the value derived from your contractual relationships.

Thorough contract drafting and review

A well-drafted contract is clear, concise, and comprehensive, avoiding ambiguities that could lead to disputes. Legal review ensures compliance with applicable laws and regulations. 

Actionable tips:

  1. Avoid ambiguous language and ensure all terms are clearly defined. 
  2. Include essential elements like scope of work, deliverables, timelines, and payment terms. 
  3. Consult with legal experts to ensure compliance with laws and regulations.

Leverage standardized templates

Standardized templates create a consistent and compliant framework, but they should be adjusted to meet the specific needs of each project. By customizing templates, you ensure that everyone understands their responsibilities and reduce the chances of misunderstandings or disputes.

Actionable tips:

  1. Adapt templates to project requirements to save time and eliminate inconsistencies. 
  2. Keep templates up-to-date with legal changes and industry best practices. 
  3. Leverage automation tools to expedite the creation of templates.

Conduct pre-contract risk assessments

Identifying potential risks before signing a contract allows you to develop mitigation strategies and incorporate appropriate clauses to protect your interests.

Actionable tips:

  1. Assess potential financial, performance, and legal risks. 
  2. Create plans to address or minimize identified risks. 
  3. Include provisions in the contract to manage risks, such as liquidated damages clauses. 

Ensure stakeholder alignment

Involving key stakeholders in the contract review process fosters buy-in, addresses concerns, and ensures that the contract aligns with the organization's goals.

Actionable tips:

  1. Involve key stakeholders in the review and approval process.
  2. Maintain open communication and address concerns promptly.
  3. Ensure that the contract aligns with the goals and objectives of all stakeholders.

Organize a contract approval workflow

Establishing a clear approval process with defined roles and responsibilities helps prevent delays, ensures accountability, and maintains compliance.

Actionable tips:

  1. Define clear steps for review, approval, and execution.
  2. Assign specific roles to individuals involved in the process.
  3. Employ contract management software to streamline the workflow and track progress.

Best practices for contract management

Alt text: A stack of contracts beside a calendar for tracking deadlines

As with effective contract administration, contract management requires specific best practices that help streamline your contract processes and maximize the value derived from your contracts. Here are five key practices to adopt today:

Monitor deliverables and deadlines

By tracking the progress of contract tasks and ensuring timely completion, you can prevent delays, avoid penalties, and maintain positive relationships with vendors.

Actionable tips:

  1. Regularly monitor the progress of contract deliverables to ensure timely completion.
  2. Establish clear milestones and deadlines to track progress and identify potential delays.
  3. Maintain open communication with vendors and internal stakeholders to address issues or concerns.

Implement contract performance tracking

Using KPIs to measure contract performance allows you to identify areas for improvement, optimize contract execution, and demonstrate value to stakeholders.

Actionable tips:

  1. Define relevant KPIs to measure contract performance against agreed-upon objectives.
  2. Conduct regular evaluations to assess performance against KPIs and identify areas for improvement.
  3. Provide clear and concise performance reports to stakeholders.

Facilitate proactive contract renewals

Anticipating contract expiration and initiating renewal discussions early helps to avoid disruptions in service or supply, negotiate favorable terms, and maintain continuity in business relationships.

Actionable tips:

  1. Identify potential contract renewal needs well in advance to avoid disruptions.
  2. Initiate negotiations with vendors to discuss renewal terms and conditions.
  3. Assess the vendor's performance and consider any necessary changes for renewal.

Manage contract changes and amendments efficiently

A well-defined process for handling contract modifications ensures that changes are implemented smoothly and that all parties are aware of the updated terms.

Actionable tips:

  1. Establish a formal process for requesting, reviewing, and approving contract changes.
  2. Communicate any changes to all parties involved in the contract.
  3. Ensure that all contract documentation is updated to reflect any amendments.

Conduct regular compliance audits

Regularly assessing adherence to contract terms helps to identify and address any non-compliance issues, mitigate risks, and maintain a positive relationship with the other party.

Actionable tips:

  1. Conduct regular audits to verify compliance with contract terms and conditions.
  2. Identify any instances of non-compliance and take appropriate corrective actions.
  3. Document audit findings and corrective actions for future reference.

How contract management software can streamline the entire process

Contract management software represents a leap forward in managing contractual obligations efficiently. By using advanced technology, businesses can optimize their contract-related processes from drafting to fulfillment. Here's how: 

  • One of the most significant advantages is the creation of a centralized repository for all contracts. This ensures that every team member has access to the most current contract versions, reducing the risk of discrepancies and improving efficiency.
  • Automation reduces manual intervention by standardizing workflows. This results in faster turnaround times, minimizes the likelihood of human error, and allows teams to focus on more strategic tasks.
  • Contract management software ensures seamless communication and collaboration by enabling collaboration among stakeholders. This is crucial for synchronizing activities and making necessary modifications in real-time.
  • The software comes with built-in compliance checks, ensuring all contracts adhere to legal and organizational standards. This reduces the risk of legal issues and enhances regulatory compliance.
  • Generate detailed reports and analytics to gain insights into contract performance and efficiency. This enables informed decision-making and the identification of areas for improvement.
  • Advanced security features protect sensitive contract information, ensuring that only authorized personnel have access. This mitigates risks related to data breaches.
  • As businesses grow, contract management software can scale accordingly to handle the increasing volume of contracts without compromising on efficiency or accuracy.

Integrating contract management software into your workflows simplifies processes while empowering your teams to manage contracts with greater confidence and control. It's an investment that pays dividends in organizational productivity and compliance.

Experience seamless contract management with DocJuris

If your contract management team is tired of the complexities of the process, it's time to upgrade your strategy with our AI-powered platform.

DocJuris offers comprehensive contract management features designed to streamline the entire contract lifecycle with: 

  • Automated contract workflows: Eliminate repetitive tasks and delays with automated workflows. Set up automated notifications, reminders, and approvals to keep your contracts moving forward.
  • Collaborative drafting tools: DocJuris's collaborative drafting tools promote collaboration among stakeholders. They allow for real-time edits and revisions, ensuring everyone is on the same page.
  • Contract screening and review: Spend less time combing through documents. The software uses advanced algorithms to automatically screen and review contracts for completeness, accuracy, and compliance with pre-defined standards.
  • Reporting and audit trails: DocJuris provides comprehensive reports on contract performance, compliance, and risk and maintains detailed audit trails for all contract-related activities.

Ready to unleash the true potential of your contracts with DocJuris? 

Contact our sales team to discover how our software can transform your contracting processes.

Request a demo today!

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