Best Practice Contract Lifecycle Management – 5 Key Capabilities

The demand for value for money, accountability and outcome-based reporting means organisations must have better visibility and control across the full contract lifecycle.

The Importance of Contract Lifecycle Management Practices

Managing contractual relationships is core to successful program delivery. The demand for value for money, accountability and outcome-based reporting means organisations must have better visibility and control across the full contract lifecycle. Enhanced transparency enables greater risk management and contract compliance. Without a system, program managers can quickly become overwhelmed – leading to errors and delays throughout the contracting process.  

Government audit offices continue to report challenges, many of which stem from a lack of effective contract management. Today, there are still many organisations using paper and Excel based systems that rely on shared file systems. Very few have engaged systems necessary for full contract lifecycle management (CLM). As a result, there is much to be gained from implementing best practice CLM solutions that can eliminate operating silos, connect disparate data, and support effective online collaboration.

Best practice contract lifecycle management solutions must address 5 key capabilities: 

 

5 Key Capabilities of Contract Lifecycle Management

 

1. Shorter cycle times and administrative efficiencies

Through automating contract milestone, payments, processes, and reporting, organisations can benefit from proactive contract management and reduced administration costs. 

2. Managing contract performance and risk from inception to closure

With systematic capability performance requirements can be flagged, monitored, measured, and reported on to avoid surprises, and ensure all parties are synchronized.  

3. Consistent variations management via a holistic approach

Changing conditions, terms and other aspects of contract and project data challenge organisations without purpose-built contracting software to control and manage variations. CLM solutions, such as Enquire, deliver integrated variation management to track and report on such changes while interfacing with budget and finance systems in real time. 

4. Process automation and enhanced digital transformation

Administrative procedures and business operational processes can be automated with simple workflows, notifications, and document version management. Eliminating ad hoc processes reduces risks, making contract management more predictable.  

5. Leveraging contract data for insights and decision making

Advanced CLM systems are embracing machine learning and deep learning artificial intelligence techniques to further automate processes, manage data and deliver analytical capability that can predict risks and deliver insights that enhance decision making. Predicative AI based insights and analytics can be used to influence policy and strategy, and inform financial, risk and compliance management.  

 

Implementing Lifecycle Management Practices

Getting started in managing the contract lifecycle must be based on best practice, but that does not mean it has to be a huge and complex project itself.  

Typically, best practice adoption is based on 3 phases, each building on the capability and success in adopting the previous. These phases are: 

Phase 1: Contract Insights

  • Better visibility of contract status, milestone and payment obligations with improved document and data management  

Phase 2: Contract Management Process

  • Implementing lifecycle process management, online collaboration, and MS Office, ERP integration  

Phase 3: Contract Management Analytics

  • Optimisation through AI insights and data analytics to enhance financial, compliance and risk management and supply chain efficiencies.  

 

The Future of Lifecycle Management

The global contract lifecycle management market size reached US$1.7B in 2021 and is expected to reach US$3.3B by 2027. Organisations will need to mature in how they implement contract management to meet volume demands and increasingly dynamic external factors. By increasing their capability through digitisation and better systems, benefits will be realised, reinforcing gains, efficiencies, and improvements across their service delivery relationships. 

 

Tactiv’s Experience

Tactiv’s experience in fund and contract lifecycle management over the past decade has informed how our solution delivers best practice contract management for publicly funded programs.  

In New Zealand, the government has demonstrated international leadership in assessing investment impact in the delivery of aid across the Pacific and many developing countries. The Enquire software provides more efficient, and effective, process management, system rationalisation and information management across their international aid program contracts.  

See how Enquire can help your organisation to improve your contract lifecycle management via the button below. 

 

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