Contract Management Best Practices

Here are a few best practices in the way that you negotiate and manage contracts and relationships:

  1. Contract length should be no longer than 3-5 years in most cases. Technology is changing so quickly that most ideas are obsolete in five years. Give yourself the opportunity to see what else is out there.
  2. You should have no more than two contract renewals for the same agreement and they should be no more than one year in length. Contract renewals become an excuse to avoid doing work to find a better return on investment. You get a good deal on a renewal, but how do you know it is better than what you would have gotten somewhere else.
  3. Ensure that you get all contract renewals, amendments and extensions in writing. You never know who may leave your company or who may need to review the information.
  4. Manage the service levels that have been agreed to in the contract. Why bother having service levels if you are not going to measure them?
  5. Meet regularly with your suppliers. Regular meetings help to strengthen the relationship, which means you collaborate more.

These are just a few pointers to help improve contract performance in your organization.

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