In this article, you will find out the following:
- What is a contract manager?
- What are the roles and responsibilities of a contract manager?
- What is important to be(come) a good contract manager?
Why this article?
More and more companies are currently looking for contract managers. Indeed, having a professional project management organization in place is crucial to succeed in the successful completion of a project.
The function of a contract manager is relatively new.
Why ?
In my experience, because of the increasing complexity of legal and contractual issues that companies face during the last
Complex contractual discussions can end in disputes as customers and suppliers have become more and more demanding.
Yet the skills of an experienced contract manager can avoid disputes and improve the handling and management of these contractual issues.
Not all companies have the knowledge and skills for complex contract management.
This explains why the role of contract manager is emerging as a critical competency in today’s organizations.
So, what is a contract manager?
Based on my experience, I would define a contract manager as an allrounder with a contractual and/or legal background.
Ideally, a good contract manager has a thorough understanding of the business he works with and is able to give hands-on assistance on the field.
Contract management support can be focused on one or several projects.
What is a contract manager doing essentially?
Contract managers have a wide range of responsibilities as they are accountable – together with the project team – for all contractual activities going on in a project as from the Bid phase till the Take Over phase.
The role of a contract manager is considered as a key role within a company that has as main focus the execution of various projects in a complex and international environment.
Contract managers are capable due to their broad background and wide experience to work on different projects in various countries.
Below you find a list of main responsibilities of a contract manager within an organization:
- Identifying, monitoring and managing contractual risks and opportunities;
- Reviewing and analyzing incoming contractual correspondence and preparing/drafting outgoing contractual correspondence;
- Creating awareness within the project team of the contractual obligations and key elements of the contract;
- Drafting, maintaining and updating legal documentation in relation to the project;
- Performing risk assessments of the project in cooperation with the project team;
- Preparing relevant guidelines or documentation in relation to the contractual framework of the project;
- Getting involved as a member of a project team in all contractual correspondence, procedures, communication, processes and contractual related topics;
- Supporting and assisting the project team by analysing, commenting and reviewing all relevant contractual documentation;
- Assisting the project team with negotiations and discussions with customers and suppliers in relation to contractual topics;
- Drafting and preparation of claims and participating in settlement discussions in the event of a dispute with a customer or supplier.
3 essential skills of a good contract manager
As contract managers have a wide range of responsibilities covering the lifetime of a project, good contract managers should have a set of different skills and possess various competences.
Essentially you can divide the skills of a good contract manager in three different skill sets.
Technical skills
First of all a competent contract manager should have technical skills needed to understand the complexity and the particularities of the business he is involved in.
These technical skills include:
- excellent understanding of the business and how the services should be delivered to support and improve the project team in a pragmatic and efficient way,
- thorough understanding and excellentknowledge of the principles of contract law, FIDIC and applicable legislation,
- strong analytical skills in order to have a good overview of the contractual issues and set expectations within his organization about the boundaries and opportunities of the contract what the contract can realistically deliver
- detailed knowledge of the contract so that the right delivery, performance, notification and pricing principles can be applied to ensure that the project team successfully provides the goods and/or services within the set deadline,
- basic comprehension of the operational, technical and financial risks linked to the project execution in order to provide on hands support,
- thorough knowledge of the risks and opportunities of the project on the basis of a detailed risk assessment.
Interpersonal skills
A contract manager with technical skills is good but it is the interpersonal and communication skills that make a good contract manager stand out.
As a member of the project team a contract manager needs to maintain and keep a good relationship with suppliers and customers under all circumstances. For instance if a customer starts writing formal notices about the poor performance of the project, a good contract manager needs to be able to write a proper reply. He/She should do so using the right argumentation based on its knowledge of the contract and the particularities of the project.
Especially if the execution of the project lacks behind or in times of crisis, it is important that a contract manager in its communication with customers or suppliers uses the appropriate arguments in order to maintain a good working relationship.
A great contract manager is the bridge between the business and the supplier or customer in order to manage complex situations. To ensure expectations are set realistically and milestones achieved, the following are essential tools in every contract manager’s toolkit:
- negotiation and influencing skills,
- effective communication and project management skills,
- the ability to communicate with every member of the project team and
- the competence to understand the main financial, operational and technical aspects that influence a project.
Negotiation skills
Last but not least good negotiations skills are a must-have in each contract managers tool kit.
Negotiation is an important element of contract management. This is true on both sides of the negotiating table as most vendors and buyers are open to negotiation to achieve a contract. This is based on the grounds that it is usually better to make the deal than to abandon the deal.
A good contract manager should understand that negotiation is only the right to seek – i.e. to work towards a better deal – but not to impose or enforce a deal at any price.
Successful negotiation only occurs when both parties come to an agreement and until the parties do agree, there is no binding obligation (legally speaking) for either party to accept the deal. That probably sounds pretty obvious, but it is surprisingly often that the arms of contractors are twisted into accepting a deal imposed by the employer they don’t feel is in their best interest.
During my experience I have seen that projects often turn wrong because one party absolutely wanted to close the deal without assessing or taking sufficiently into account the risks. The result is that one ends up signing a contract that is largely in its disadvantage after little or no negotiation.
If problems occur later during the project execution, the party that signed the contract is facing a lot of difficulties as the signed agreement does not protect its interests and contains no contractual remedies in its favor.
The support of a contract manager during negotiations is therefore essential as its objective should be to conclude a fair and balanced contract with equal rights and obligations for both parties.
If a contract manager feels during negotiations that such balance cannot be reached, he should use his knowledge of the business and the contract in preparation to flag out the risk of signature to the management.
How Can I Help You?
As an experienced contract manager, I will happily help you and your organisation. You can contact me here and even book an appointment.
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