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hello and welcome in this lesson we will discuss what contract management is and how you can manage your contracts well so let's Dive Right In from the word itself contract management is a process of managing your contracts as part of legal documentation in other words it is the process of managing agreements with your chosen supplier or service provider in negotiations and procurement the contract is the foundation of a business relationship the contracts should allocate all aspects such as risk quality of services needed value for money mechanisms review procedures and regular Communications and resolutions for disputes now let's discuss why contract management is important it plays a crucial role in creating executing and analyzing contracts to optimize financial and operational performance by effectively managing contracts organizations face increased pressure to reduce costs and improve overall performance in my time as a procurement manager I did not like the contract phase at all because of the administrative character are rather close deals instead of making contracts but I learned the hard way that the information of a clear contract is priceless when contracts are poorly constructed it can lead numerous problems even a simple technical error in the stipulations can result into the loss of thousands of dollars that's because the terms and conditions which our suppliers are outlined in the contract and a mistake can be quite costly what I experienced in my work as a procurement manager is that you could end up in Endless discussions in gear when your final deal is not put well enough on paper with effective contract management you can establish a strong business relationship that opens up opportunities for greater profitability to achieve this it's essential to manage contracts efficiently now I will run you through the process steps of contract management that will make it easier for you to manage your contracts the first stage is the creation of the contract contract management starts by identifying contracts and Gathering other necessary documents that are essential for the contract's purpose creating a contract manually can be a lengthy process it requires extensive paperwork manual data entry and coordination among multiple parties involved in the contract process fortunately contract management system streamline this process making it more efficient and time saving the second stage is negotiation this involves employees reviewing the draft contract to identify and correct any discrepancies or errors the purpose of this step is to ensure that all terms and conditions are thoroughly understood before entering into negotiations ultimately reducing the time spent in negotiations the third stage is execution the contract management process involves the important steps of approving and executing contracts however we often encounter delays and bottlenecks during the approval stage but don't worry there's a solution you can tackle this issue by creating customized approval workflows approval workflows are like personalized pathways to make sure contracts get the necessary approvals smoothly and without any unnecessary hold UPS by setting clear and efficient workflows you can ensure that contracts move through the approval process quickly and efficiently the fourth stage is tracking this is part of the contract management process where obligations and revisions are dealt with the contract requires project management to make sure that all deliveries are delivered promptly additionally Gathering documents that are important to your contract's initial drafting is a hard task when there are discrepancies or items are not found systems will be able to amend the original contract the last stage is renewal the manual process of contract management can sometimes result in misrenewal opportunities but don't worry there's a better way by embracing automation organizations can proactively identify renewal opportunities and create new contracts with ease manual contract management can be time consuming and prone to human error it's easy to overlook important renewal dates or fail to recognize potential opportunities for extending contracts however with automation at your site these issues become a thing of the past now that you know the stages of contract management it's time to tell you some strategies to have effective contract management first you should conduct a background check by agreeing to or signing anything it's important to observe due diligence take the time to get to know the other party involved and understand their legal background while it's good to give everyone the benefit of the doubt it's equally important to ensure that the other parties legally capable of entering into a contract you can start by conducting a friendly investigation and gathering information about their reputation track records and legal spending check your business history look for any legal disputes or issues and verify their credentials or licenses if applicable this way you can establish a foundation nation of trust and confidence in the other party second make your contracts clear as you begin the meeting is crucial for you to have a clear understanding of the individuals who hold the authority to make a final decision to create a friendly and efficient environment both you and the other party must work together to establish a transparent channel for review this will Empower both of you to prevent any potential misunderstandings and expedite the review process by clearly defining the review pathway you'll both have a clear picture of who needs to be involved and how decisions will be made third allocate time to review the contract we understand that Gathering answers to important questions can sometimes cause bottlenecks thus you must take proactive measures to address them additionally clients often request faster tournament times however it is crucial that you budget enough time for drafting reviewing discussing revising and completing deliverables fourth stipulate the consequences of having delays time is gold and we want to make sure you are aware of the potential consequences when contracts encounter delays or fall through we understand that such situations can result into additional cost and extra hours for your company which can disrupt your projections budgets and other business opportunities to protect your interest it's important for you to ensure that the other party understands the impact the delayed can have on your company that's why we recommend including specific classes in your scope statement that address change requests these Clauses should clearly Define what qualifies as a change request outline the applicable cost ranges establish a smooth process for handling change requests and provide Clarity on how changes would impact existing timelines lastly do not skip the post-execution process once you've wrapped up the documentation and you're ready to sign the contract it's common to be eager to jump right into the next project however you must remember the importance of not overlooking the post execution documentation and evaluation stages of any contract to continue growing and improving you must carry your team for friendly internal meeting this is your chance to have open discussion about pain points you encountered during the contract progress It's A Wrap I hope you gained valuable insights into the process and learned how to efficiently manage your own contracts thank you for joining us today and we look forward to seeing you in the next lesson foreign