Key Takeaways
- Signing is not the end of the contracting process. It is when many contractual obligations begin.
- Good contract management helps protect commercial value as well as manage legal risk. Missed price increases, uncharged variations and unmonitored performance can all cost a business money.
- Contract professionals can help turn contractual obligations into practical responsibilities. That means thinking about who needs to do what, when they need to do it, and how it will be managed.
Getting a contract signed can feel like the finish line.
The drafting is done. The negotiations are over. Everyone has approved the final version. The signatures are in.
Job done, right?
Not quite.
A business can spend weeks negotiating an annual right to increase its fees and then never exercise it. It can agree to detailed service levels that nobody monitors. It can negotiate a process for charging additional work that the delivery team does not know exists. Or it can miss a renewal deadline because nobody was responsible for tracking it.
The drafting in each of those examples might be perfectly good. The problem is what happened after the contract was signed.
Signing is a milestone, not the finish line
Once a contract is signed, the commercial arrangement it documents needs to happen.
Services need to be performed. Payments need to be made. Reports may need to be delivered. Service levels might need to be measured. Approvals may need to be obtained. Price increases might become available. Notice periods need to be observed. Renewal decisions need to be made.
This is why contract management can be just as important as contract drafting.
A well-drafted contract establishes the parties’ rights and obligations. Good contract management helps make sure those rights are exercised, and those obligations are performed.
In larger organisations, there may already be established processes for this. Dedicated contract managers, procurement or commercial teams may take responsibility after signature, supported by contract management or contract lifecycle management systems. In other organisations, there may be very little formal contract management at all.
Either way, the fundamental question is the same: How is the business going to make sure that what was agreed on paper actually happens in practice?
Does the business know what it agreed to?
The people who negotiated the contract are not always the people responsible for delivering it. Legal might negotiate a services agreement with input from a senior stakeholder, while an operational team delivers the services. Procurement might negotiate a supplier agreement that another team will manage day to day.
Those people need to know what the contract requires of them. That does not necessarily mean giving them the executed agreement and asking them to read it from cover to cover. It means identifying what matters operationally.
What does the business need to deliver? What does the other party need to deliver? Are there service levels, reporting requirements, payment mechanisms, approval processes, or notice requirements that someone needs to manage, and who is responsible for each of them?
A contractual obligation does not have an owner simply because it appears in a signed agreement.
Turn the contract into clear responsibilities
Once you know what needs to happen, you need to work out who is going to make it happen. One simple tool that can help is a RACI.
RACI stands for:
- Responsible: Who does it?
- Accountable: Who owns the outcome?
- Consulted: Who needs to provide input?
- Informed: Who needs to know?
For contract management, I like to take this one step further by also asking when does it need to happen? And how will it be managed?
Take an annual price increase as an example. The contract might clearly give the business the right to increase its fees each year. But to turn that contractual right into action, you also need to know who is responsible for applying the increase, who is accountable for making sure it happens, whether finance needs to be consulted, when the increase can be applied, and how the business will make sure the date is not missed.
The same thinking can be applied to service levels, reporting, variations, approvals, contractual notices, renewal decisions and other activities that need to be managed throughout the life of the contract.
Free Contract Management RACI Guide + Template
To help you put this into practice, I have created a Contract Management RACI Guide + Template. The guide walks you through what to consider when developing a RACI, including contract delivery, financial management, performance, changes, governance, compliance, key dates, contractual rights and exit. The template then gives you a practical way to capture:
Contract activity / obligation → Responsible → Accountable → Consulted → Informed → When / trigger → How it will be managed
I have also included some examples to help you get started, together with a checklist to use before finalising your plan. The idea is not to document every sentence in the contract. It is to identify the activities, obligations, and rights that need to be actively managed and make sure the right people know what they are responsible for.
Download the free Contract Management RACI Guide + Template
