6 Contract Management Skills You Need To Excel in Procurement

Several contract management skills are crucial in procurement to ensure smooth operations and successful partnerships.

Do You Know: The average organization's contract renewal rate is approximately 72%, indicating the need for effective contract management.

Specializing in the right skills can significantly enhance your ability to manage contracts effectively.

In this guide, we take a look at 6 essential contract management skills you need to excel in procurement.

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Skill #1- Effective Communication

The first of six contract management skills you need is clear and concise communication. You'll be liaising with various stakeholders throughout the contract lifecycle, including internal requesters, legal teams, and external vendors.

Here's how effective communication translates to success in contract management:

Effectively communicating your organization's needs and expectations to vendors during the negotiation stage ensures all parties are on the same page and minimizes risk.

You need to be adept at active listening to build trust and strengthen relationships.

Maintain clear and concise contract documentation to avoid legalese and ensure all parties understand the terms.

Skill #2- Negotiation Skills

Another one of the key contract management skills required are negotiation skills, as they directly enable you to secure favorable terms and conditions.

Effective negotiation can lead to cost savings, better quality products or services, and stronger relationships with suppliers.

A successful negotiator understands the interests and motivations of both parties and works towards a win-win outcome.

Here’s how you can enhance your negotiation skills:

Research and understand the other party's needs and constraints.

Establish a positive relationship to facilitate open discussions.

Know when to compromise and what to ask for in return.

Check Out: Advanced Procurement Negotiations Training

Skill #3- Risk Management

Contracts are inherently risk-laden. Unforeseen circumstances can disrupt project timelines or impact deliverables.

This is why, having strong risk management skills is must-have contract management skill for you to implement effective contract management:

Here are 3 ways to implement risk management in contract management effectively:

Identify potential risks associated with the contract, such as delays, performance issues, or financial instability of the vendor.
Develop mitigation strategies to address identified risks. This could involve including performance guarantees, termination clauses, or alternative sourcing options in the contract.
Continuously monitor potential risks throughout the contract lifecycle. Stay informed of industry trends and market fluctuations that might impact the project.

Check Out: Supplier Selection, Evaluation, and Performance Measurement Training

Skill #4- Attention to Detail

Contracts are very detail-oriented legal documents, and even minor errors can have significant consequences.

Here's how you can use meticulous attention to detail for successful procurement contract management:

Thoroughly review all contract clauses, paying close attention to pricing structures, delivery terms, intellectual property rights, and termination clauses.

Ensure all information in the contract is accurate and clearly stated. Double-check for typos, inconsistencies, and missing details.

Verify the contract complies with all relevant organizational policies, industry regulations, and legal requirements.

Skill #5- Legal Knowledge

Having adequate legal knowledge is another one of the key contract management skills for you to have.

This includes knowledge of contract law, compliance requirements, and industry-specific regulations.

Legal knowledge helps in drafting clear and enforceable contracts, understanding the implications of various clauses, and ensuring that contracts adhere to relevant laws.

It also aids in resolving disputes and protecting your organization’s interests.

Here’s how you can improve your procurement-focused legal knowledge:

Attend legal training sessions and procurement certification workshops relevant to contract management.

Work closely with legal experts to gain insights and advice.

Stay updated with changes in laws and regulations affecting contracts.

Remember: While you don't necessarily need to be a lawyer, having a fundamental understanding of contract law is invaluable. Be able to identify potentially problematic clauses or ambiguous wording in a contract.

Skill #6- Project Management

Another one of the essential contract management skills to have are project management skills. These skills are necessary for overseeing the entire contract lifecycle, from initiation to completion.

Here's where project management skills become indispensable in contract management:

Successfully developing a system for managing the contract lifecycle, encompassing negotiation, approval, execution, monitoring, and performance management.

Effectively managing communication and expectations with all stakeholders involved in the contract, including internal teams and vendors.

Establishing key performance indicators (KPIs) to track contract performance and identify any deviations from agreed-upon terms.

Improve Your Contract Management Skills Today!

By specializing in these six essential contract management skills, you'll be well-equipped to perform procurement processes the right way.

Don’t forget to stay updated on industry best practices and continuously refine your skills to ensure optimal value for your organization.

Interested in improving your contract management skills? Register yourself in our 2-day Procurement Category Management Training Course with your team today!

FAQs

Q: What makes good contract management?

A: clear communication, thorough documentation, and proactive issue resolution are some of the key contract management skills you need to have to develop a good contract.

Q: Is contract management a technical skill?

A: Yes, it involves technical skills like understanding legal terms, compliance, and using contract management software.

Q: How do you demonstrate contract management skills?

A: Showcase your skills through successful project completions, timely contract renewals, and maintaining compliance with contract terms.

Q: What are the principles of contract management?

A: Key principles include transparency, compliance, risk management, and continuous improvement in contract performance.

Q: What is the key objective of contract management?

A: The key objective of contract management is to steer a signed agreement towards successful completion. This involves ensuring compliance, mitigating risks, maximizing value gained, and keeping things efficient throughout the project.

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