The American politician and lawyer Bob Taft once said, “Contracts are based on merit, based on qualifications, based on experience and performance under our administration" Simply running an effective tender process does not mean that you have unlocked values in the contract. Effective contract management helps unlocks those values.

There have and always will be public scrutiny and publicity on various public services provided by government. This provides feedback to help gauge how we have managed public services that are being outsourced. Every Ministry should give priority to contract management as it is an essential procedure. It entails managing contracts from their creation to their implementation and eventual closure. Good contract management is essential because it makes sure that everyone involved knows their responsibilities and is upholding the terms of the agreement. The value that was agreed upon during the tender and evaluation process is attained, which is of utmost importance. Sadly, inadequate contract management can have a number of unfavorable effects, including legal issues, financial losses, strained friendships, and reputational damage as a result of complaints from the public. These are explained further below:

•  Legal disputes: When contracts are poorly managed, misunderstandings and disagreements can arise, leading to breaches and disputes that can result in legal action. For instance, if the terms of the contract are not clear or are misunderstood, one party may breach the contract unknowingly, leading to legal disputes and possible financial losses.
•  Financial losses: Contracts are legally binding agreements that involve the exchange of goods, services, or money. When contracts are not well-managed, it can result in financial losses for both parties. For example, if one party fails to deliver as per the agreement, the other party may incur financial losses or even lose business opportunities.
•  Damage relationships between parties: Contracts are often entered into between parties who have a pre-existing business relationship. If the contract is poorly managed, it can lead to strained relationships and mistrust between the parties. This can impact future business deals and collaborations, causing reputational damage to both parties.
•  Reputational harm: When contracts are poorly managed, it can result in public scrutiny and negative publicity. This can impact the reputation of both parties, leading to a loss of business and potential legal action.

It is essential to have a well-defined contract management process to ensure that both parties understand their obligations, the terms and conditions are followed, and the agreement is delivered as expected. Here are the steps involved in contract management:

1. Contract Creation: The first step in contract management is creating the contract. This involves defining the scope of the agreement, outlining the terms and conditions, and identifying the responsibilities of each party. The contract should be drafted with clarity and specificity to avoid confusion or misunderstandings.
2. Contract Review: Once the contract is created, it should be reviewed by all parties involved. This is to ensure that everyone understands the terms of the agreement, and any questions or concerns can be addressed before the contract is executed.
3. Contract Execution: After the contract is reviewed and agreed upon by all parties, it can be executed. This involves signing the contract and ensuring that all parties have a copy of the agreement.
4. Contract Monitoring: The next step in contract management is monitoring the contract to ensure that both parties are meeting their obligations. This is an important step as it involves tracking deadlines, milestones, and other key performance indicators to ensure that the contract is being delivered as expected.
5. Contract Changes: If changes need to be made to the contract, they should be done through a formal change management process. This involves identifying the changes, getting agreement from all parties, and updating the contract to reflect the new terms.
6. Contract Renewal or Termination: At the end of the contract term, the contract can either be extended or terminated (and a tender called). If the parties decide to renew the contract through extension, the process begins again from step one. If the contract is terminated, both parties should ensure that all obligations are fulfilled before closing the contract.
7. Contract Archiving: Finally, after the contract is closed, it should be archived for future reference. This involves storing the contract in a secure location and ensuring that it is easily accessible if needed in the future. Any lessons learnt must be documented and used to draw specifications for the new tender.

Contract management is a critical process that every organization should prioritize. Choosing the right supplier during evaluation will only be successful if effective contract management is caried out. It can help ensure both parties understand their obligations, the terms and conditions are followed, and the agreement is delivered as expected. On the other hand, poor contract management can result in legal disputes, financial losses, damaged relationships, and reputational harm. Following sound contract management procedures and investing in qualified contract management personnel are therefore crucial.

Ask yourself “Are the values that were agreed to during evaluation and contract negotiation being received?” If not, then a focus on contract management must be prioritized immediately.