Contract Lifecycle Management (CLM) is a process that manages contracts from creation to renewal or termination. Contract management is useful for many reasons, from reducing risks to nurturing strong supplier relationships, but it can also be complicated. This is especially true for large contracts or contracts with complex procurement requirements.
This is why contract lifecycle management software is so important. It provides a single platform that contains all of the contract processes, as well as the tools to optimise contract lifecycle management to boost supplier performance and ensure a satisfactory experience for all stakeholders.
We’re going to look at six steps in public sector contract management and how CLM software streamlines the process in the public sector, making it more efficient and cost-effective.
First up, we look at CLM software.
What does Contract Lifecycle Management Software Do?
CLM software provides a central platform that is the foundation for all CLM functions. It facilitates transparency and collaboration in contract management, providing real-time updates to all stakeholders, including legal teams, suppliers, and buyers.
One of the things that makes contract management software so effective is its ability to automate many processes. CLM software can create automated contract approval processes, enabling both sequential and parallel approvals. This increases the accuracy of contract data and ensures contracts are easily and securely stored and recalled when they’re needed.
Automation also schedules alerts and reminders to keep everyone on the same page. It tracks contract progress, monitoring timelines and deadlines.
CLM software solutions speed up the procurement process because they eliminate a lot of back and forth between parties that still use outdated email systems and PDF documents. Not only is it easier to keep track of contracts and their progress, but the real-time collaborative features drastically reduce the time it takes to finalise a contract and get it going.
Basically, if you want to successfully manage your contracts, you need contract management software.
Now to business …
What is Contract Lifecycle Management?
Contract lifecycle management (CLM) is the process of managing contracts from creation to execution, including all stages in between. It involves the use of technology to streamline and automate contract processes, reducing manual errors and increasing efficiency.
In essence, CLM systems provide a data-driven approach to contract management.
6 Stages of Contract Lifecycle Management
There are six key stages for effective and efficient contract lifecycle management. Contract lifecycle management tools play a crucial role in supporting each stage of the contract lifecycle.
1) Contract Creation
Also known as authoring and document generation, this starts the process by defining key terms, conditions, and deliverables.
Obviously, contracts differ in their requirements, but it’s a good idea to use or create contract templates that contain all the ‘static’ information that stays the same across all contracts, including regulations and compliance requirements. You can tailor the ‘fluid’ information, including the exact details and definitions unique to a specific contract.
Delta eSourcing’s contract management tools include templates that you can easily customise to suit new contracts published by public sector contracting authorities. The CLM system ensures regulatory compliance while embracing transparency and collaboration.
2) Negotiation and Approval
Contract negotiation is a delicate process that requires finesse rather than a hammer. But, it’s more common in the private sector than in the public sector. Of course, the aim is still to ensure that all parties are happy with the agreement, but public bodies tend not to have as much leeway for negotiation as private businesses.
Budgets are stricter and criteria narrowly defined, so there’s little wiggle room and the terms are clear with no ambiguity.
That’s not to say there is no negotiating in a government contract. Delta eSourcing’s platform is structured to facilitate contract negotiations through collaboration with real-time adjustments to shorten the process. Workflow is automated, which reduces bottlenecks and clears a path to final approval.
3) Contract Execution
Work begins once contracts are approved. It’s at this stage – the execution phase – that the contract becomes legally binding.
It used to be that contracts weren’t legally binding until all parties signed the agreement. Modern procurement has the potential to be global, with parties on different continents, let alone countries – or postal codes. It’s not always possible or feasible to have each stakeholder sign in person.
Digital signatures are the way to go and Delta eSourcing provides digital signature tools that meet all compliance and security requirements in the contracting process.
4) Contract Performance Management
Buyers need to be able to check suppliers’ performance regularly to ensure they are on schedule and maintain quality standards.
Delta eSourcing’s CLM tools are primed for supplier performance management. They monitor performance, track milestones, and ensure all parties meet their obligations. Transparency is important here because performance tracking can work both ways. Suppliers should also be able to see that buyers are keeping their side of the bargain; for example, by providing paperwork that authorises certain actions at a certain place and time. Without authorisation, work can’t continue and that isn’t something that can be held against the suppliers.
Transparent and collaborative performance management helps to prevent these situations. This is great from a relationship standpoint because the last thing contract management needs is fractious stakeholders.
5) Compliance and Risk Management
Compliance and risk management in the contract lifecycle are similar to performance management. They ensure the contract terms are being met by both parties and that regulatory requirements and industry standards are being upheld.
Once again, Delta provides the solution by providing real-time insights and alerts to help manage and, preferably, prevent risks. By enabling buyers to be proactive, they can address issues before molehills become mountains.
6) Contract Renewal and Termination
Some contracts come to a natural end and the project is terminated. Other contracts tick over with options for renewal. In this instance, buyers must be able to assess suppliers and their performance in delivering the contract.
Delta has ongoing management tools that enable performance evaluation, giving buyers the information they need to decide if they want to renew or terminate the contract. Contract lifecycle management tools ensure that all necessary steps are followed for contract renewal or termination.
Sticking to the deadline is important because both parties face unnecessary risks and costs if work continues without a valid contract in place. Delta’s platform includes automated notifications to remind buyers and suppliers that the deadline is nearing. This gives them enough time to prepare for contract renewal or termination.
Either way, the contract life cycle begins again with all the activities and management that entails.
Implementing Effective Contract Processes
Implementing effective contract processes is crucial for contracting authorities to manage contracts efficiently. A well-structured contract process ensures that all necessary steps are followed, this includes using contract lifecycle management solutions to automate routine tasks, set up alerts for important deadlines, and provide real-time insights into contract performance.
Delta eSourcing Supports Contract Lifecycle Management
Delta eSourcing provides many essential services to help facilitate the procurement process for public sector buyers and suppliers. Contract lifecycle management is one of the most important for contracting authorities to ensure that contracts are delivered without a hitch.
Our eTendering portal simplifies the CLM process, from contract creation to renewal or termination, while ensuring compliance, transparency, and collaboration.
Contact us or book a free demo to find out more about how our services enable a renewed focus on strategic goals within public sector procurement.
