Even when you think the contract management aspects of your business are going well, there could be unidentified bottlenecks and missed milestones.
By adopting a simple and clear list of five Key Performance Indicators (KPIs), you maintain control and will hopefully save both time and money.
1. Approval Delays
According to the experts at the Digitalist Magazine, the nature of contract management is rapidly changing as business become more digitalised. The management of contracts is now verging on a scientific discipline with its own terminology.
One of the key terms is ‘sub-cycles’, and these are elements of a contract that take place within another larger project. One critical KPI is the length of time that it takes to get approval for the various elements of a project. It can cause serious delays.
2. Interval Between Contract Initiation and Signature
You can use a contract management system such as one provided by www.contractswise.com/ to try to increase the speed of closing a deal. They help with the contract authoring and review processes.
These systems have a facility to embed clause templates and libraries. They also help with making assembling and negotiating contract terms more streamlined. The sooner the contract is signed off, the quicker you get your money.
3. Monitoring Volume
Volume monitoring is a quick and simple way to evaluate the performance of a contract. It provides data that can inform future business planning.
This is a very useful KPI because it allows teams to quickly see all the contracts in progress and how all the partners are performing in relation to their contract terms. It is relatively easy to compare different partners with each other in terms of performance. Volumes per trading partner is a very useful metric.
4. Analysis by Place
Analysing contracts by place (geographical location) or by other variables such as contract type allows managers to spot where bottlenecks are occurring.
They will show up in the data in the form of anomalies and can indicate issues with the organisational structure or with the workforce.
5. Qualitative Assessment
Qualitative data is very useful when evaluating terms and conditions as well as clauses and amendments. Local conditions can make a big difference.
Contract terms can be evaluated qualitatively by finding a systematic way to compare attributes and to monitor performance.