Contract administration and contract management are two terms that are often used interchangeably in business, but in reality, they are two distinct processes that are integral to the success of any contract-based relationship. Contract administration and contract management are two critical components of the procurement or acquisition process and are crucial for a business to ensure that their contracts are managed effectively and efficiently.
Contract administration refers to the activities that are focused on the day-to-day management of the contract after it has been executed. This includes tasks like creating and maintaining contract files, ensuring that the contract meets all legal and regulatory requirements, and managing any changes to the contract. Contract administrators are responsible for ensuring that the contract is executed according to the terms and conditions agreed upon by both parties.
On the other hand, contract management refers to the process of managing the entire lifecycle of the contract, from its inception to its closeout. This includes activities such as contract negotiation, contract drafting, and monitoring contract performance. Contract managers are responsible for ensuring that the contract is not only legally and financially sound but also that the contract delivers value and meets the needs of the buyer.
The primary difference between contract administration and contract management is that contract administration is focused on the immediate needs of the contract, while contract management takes a more strategic approach and considers the long-term relationship between the parties involved.
Here are some specific differences between contract administration and contract management:
1. Contract administration is focused on the tactical day-to-day management of the contract, while contract management takes a more strategic view of the contract.
2. Contract administration is primarily focused on ensuring compliance with the contract`s terms and conditions, while contract management is focused on the overall performance of the contract.
3. Contract administrators are responsible for managing contract changes, while contract managers are responsible for negotiating and drafting new contracts.
4. Contract administration involves managing the distribution of work, invoices, and schedules, while contract management involves managing relationships and ensuring that both parties are meeting their contractual obligations.
In conclusion, contract administration and contract management are two critical processes that are essential for the success of any contract-based relationship. While they may seem interchangeable, they are two distinct processes with different objectives. Both contract administration and contract management are critical to ensuring that the contract is executed effectively, efficiently, and to the satisfaction of both parties. Ultimately, businesses need to manage both contract administration and contract management effectively to ensure that they are getting the most value out of their contracts and the relationships they have with their suppliers.