13 - Management of Contracts
Management of contracts is a powerful measurement to control the contracting activities and the contracting results in the company. Management of contracts covers contracting procedures (use of contract manuals and samples in the process of contract development, legal review of contracts etc) as the contract handling after the sign-off (e.g. performance measurement and documentation). Management of contracts and contract controlling should be dealt with by the management.
What do we look for?
- No legal review on contracts at all.
- Poor documentation of contracts and contract related documents (e.g. decision process).
- No specific training of involved employees on contract issues.
- Contracts have significant weak points compared with the contract legislation.
- Use of contract manuals and samples.
- Legal review of contracts with important contents.
- Procedures regarding documentation, communication and controlling the content of contracts.
- Clear regulations about contracting authorities.
- Contracts with Standard Terms and Conditions, Hold Harmless Agreement, Insurance requirements for contractors / vendors, product specifications, materials list, prohibited materials list.
- Contracts should have a clause that contractors / vendors that there be changes to subcontractors, materials, design, etc. without express permission.
Risk improvement ideas
- Implement a clear contracting and contract policy with approved contract manuals and samples and with clear regulation of sign-off authorities.
- Implement legal reviews for all important contracts.
- Implement requirement of co-signatures for contractual documents.