Contract Management - Essay Example

Contract management is the central aspect in ensuring contracts are carried out according to the highest standards possible to achieve procedural, regulatory, and contractual compliance, which is critical in ensuring contracts are carried out above board, at the optimum cost possible, they are within the laid down procedures and completed in the required time and within the required standards.

 In the interview, it was revealed that the company had both strengths and weaknesses in meeting the standards outlined above. For example, the system met procedural criteria as the system alerted when a contract was close to expiring,  had mistake proof that informed managers on contract dates,  and observed regal standards in meeting all regulatory criteria before a contract is executed. Saxena (74) regulatory compliance has to be addressed in detail to avoid costly penalties and even the cancellation of contracts by a government. The company has a detailed system that ensures all regulatory mechanisms in contracts are met; contracts have to go through the required regulatory approval before commencement.

In contractual criteria, Apics (6) argues that a company has to develop and put in place measures and strategies that offer an integrated action plan in achieving the desired level of performance, as well as process maturity, which addresses all components of contract management, capability, and covers the contract period. For example, the company in question can adequately compare and analyze data from several contracts, can report and analyze a contract by a particular vendor, and conform to the required contractual terms. On the other hand, the company meets some procedural criteria in that standards are used in gauging and analyzing each contract, there is strict adherence to legal and regulatory requirements, and each contract is considered and analyzed before it commences to ensure it meets all the laid down criteria.

Despite the above strengths, the company has glaring faults in its contractual system that makes it prone to major risks and even may edge closer to closure. For example, the company does not coordinate contracts across departments and cannot locate any contract in a short time with ease or reliability. This indicates that in a procedural approach, the company cannot manage its contracts effectively; it cannot link different departments to analyze all the details and have a holistic contract management system. The system cannot facilitate the maintenance of a contract portfolio, implying the company has to depend much on mechanical records in managing its portfolio. This is against the requirements of a good contractual system that has to present diverse utility to the contract manager; the system has to be a versatile tool through which the entire project is managed. According to the Institute of Chartered Suppliers and Management (3), a contractual process has to be automated and improved to satisfy the needs of compliance, and analytical needs in adopting a formal and structured contract management system. Structure in this case implies an orderly, planned, and integrated way of accessing and controlling all the aspects of a contract. Such a process has to offer the maximum utility at the optimum cost possible. However, the company in question is obliged to have been paying unnecessary annual software maintenance, which is additionally overcharged.  The system shows signs of being redundant as the company has been paying penalties for missed payments to suppliers. Such a system fails in meeting the aspects described above and is in fact a cost to the company. Moreover, the contract development process is not updated daily as required, meaning the company may not tell the exact position of the contract at a particular time. Such a situation may lead to losses, fraud, or even more fines as clients litigate the company for lateness, due to the use of unreliable and ineffective management systems. This is more informed by the statement that the company does not know when a contract has been violated, and there are even no records to show whether a company has suffered due to a breach of contract. Such a system is a liability to the company and does not help in the management process.

 A contract management system has to indicate all details regarding a project and has to be updated daily as the project continues. Moreover, such a system has to detect any anomalies and warn in case of such anomalies, or when important reminders and hates have to be observed. An ideal system has to integrate all departments of a company and more advanced levels of reliability, effectiveness, and cost efficiency.