Contract Management vs. Contract Administration: Unlocking the Essential Fundamentals

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contract management

Contract management is too often confused with contract administration or vice-versa. These two terms sound so similar but logically except for their names nothing is related. It’s no sweat to think that these two terms are one and the same thing. To state it in a simple way, contract management and contract administration are nothing alike besides the fact that both are a part of contracting.

Although contract management and contract administration appear to be interchangeable terms both have very different concepts of operating and a very distinguished role in the company.

What Is Contract Management?

Contract management is the process of managing all the stages of an official contract. By official, we mean a negotiated and signed agreement. After a contract becomes official, there are several steps like keeping tabs on the contract, updating the contract, keeping track of renewal or termination dates, making changes if required, and whatnot!

In simple words, contract management is the process of managing, implementing, and evaluating a contract in order to achieve more effectiveness and profitability for the business. Contract management is crucial for all businesses as one cannot afford to lose huge costs simply because they forgot when to renew a contract.

Starting from the start, we all must know that contracts and business growth go hand-in-hand. This means no business can grow without an increase in agreements, i.e. no firm can avoid a contract and the work that comes with it. if contracts are so important, then managing it would be important too. Short answer: Yes! Contract management is pivotal for any business.

The functions of contract management

As soon as the agreement is signed, the contract management team starts their job. It is no secret that contract management is a hectic, let alone, tiresome job. As cumbersome as it sounds, contract management is very important for a firm. the functions include:

  1. Ensuring that the parties are meeting the obligations of the contract.
  2. Making sure that parties have everything to meet their obligations.
  3. Keeping track of contracts
  4. Interpreting and communicating the terms and conditions
  5. Modifying the contracts from time to time.
  6. Ensuring that deadlines are met.
  7. Conducting contract reviews timely.
  8. Taking necessary steps in case of contract breach.

the stages of contract management

Contract management is a step-by-step process and has to be performed methodically. These stages are:

  1. Plan: Figure out the objectives and motive of the contract and plan out operations accordingly.
  2. Implement: Use contract management software to handle all the managerial work of the contract.
  3. Resolve issues: Contact and consult the administrators in case issues arise with the agreement.
  4. Delivery: Hand over the contract to the parties and ensure all details are intact.
  5. Fulfillment: Fulfilling the contract by both parties and ensuring that the contract is operating smoothly.
  6. Renew: Meet the deadlines, and renew, terminate, or renegotiate according to the parties involved.
  7. Post-contract: Make sure that all obligations are met and all bills are paid prior to the contract.

what is Contract Administration?

Until now, we’ve been discussing how contract administration is not the same as contract management. Now we’ll learn why and how.

But first, what contract administration actually is?

Before a contract becomes ‘official,’ i.e. the work done before an agreement is signed is contract administration. It involves planning and execution of the agreement. Professionals who are responsible for contract administration focus on understanding all the components of the agreement and figuring out a way to make both parties function to meet their obligations. Basically, contract administration means finding the performance of the parties and computing the terms and conditions of the agreement.

Contract administrators start from drafting a contract to finally closing it. Once the contract is signed the contract administrator’s work is over.

Contract administration is not as simple as it seems. Figuring out the terms of the contract based on the performance of the businesses involved seems like a heck of a job.

The functions of contract administration

The work of a contract administration division starts as soon as the parties decide to enter into an agreement and until the agreement is finalized and signed. Contract administration is a vital task. the functions are:

  1. Sending out contract proposals to potential clients.
  2. Implementing the contract.
  3. Working on smooth communication to form a contract between the client and the company.
  4. Figuring out the terms of the contract.
  5. Working with the parties to finalize the contract.
  6. Bidding requests and evaluations.
  7. Helping in contract negotiation.
  8. Supervising the whole process.
  9. Resolving issues
  10. Payment calculations.

tips for contract administration

As mentioned, a contract administration department figures out the performance of the businesses and drafts the terms of contracts accordingly. This job is important and thus, needs to be done perfectly. Best practices for contract administration are:

  1. Illustrate the extent and deliverables: Before we start, the initial step is to figure out the expectations including the extent of the business. Establish clear deliverables and be transparent with terms on what the contract is offering and what it’s not.
  2. Prepare a proper timeline: It may sound senseless, but a timeline of an administrator’s plan should be laid out clearly including the deadlines, project dates (start and end), and project updates.
  3. Manage the finances: Everyone involved in the contract should know how much money is involved, the economic terms of the contract, the intervals between each payment, any additional expenses, and the value of the contract.
  4. Plan your moves: Before starting, lay out an outline of the plan on how to perform the task. This plan should include how to execute the contract, the parties involved and people working on the agreement, the success rate and achievement through the contract, and how expectations will be met.
  5. Manage risks: Everything comes with a drawback, even an agreement that’s making money will have its risks. Anticipate these risks beforehand, so that the firm can prepare when better comes to worse.

The key difference between contract management and contract administration

We already know what contract management and contract administration are and what their functions are.

The key difference in the role of both jobs lies in the timeline.

Contract administration is performed before the agreement is signed. On the other hand contract management is a process after the contract is signed.

During the phase where the administrator’s work is done but the manager’s work hasn’t been started, the teams make sure that all obligations are met. Not only thing, the contract management team prepares by organizing all documents and ensuring to meet proper expectations.

the points of intersection

Although the role of both a contract manager and a contract administrator is different, yet important. But there are some points during the contracting process, where both meet. In simple words, the job process of both roles is not as different as night and day! Here’s when both the jobs overlap:

  1. Both departments need to communicate effectively in order to maintain smooth contract management and administration.
  2. Both divisions need to certify that the contract with the other party is being followed with ease.
  3. There are open lines of communication not only for smooth contracting but also for the company to grow.
  4. When a particular contract needs to be renewed, the manager sends it to the administrator for the renegotiation phase.

pin-pointers for firms

Now and then, everyone needs a helping hand. Whether it’s a huge business or just a startup, there’s no shame in admitting that we all are humans and we sometimes need a bit of third-party advice. Here are a few tips to help you or your firm to achieve smooth operation.

  1. Split up the contracting work: Many businesses have a single team to handle both contract management as well as contract administration. It’s better to have different departments working on each. As a result, there will be a lesser and more effective workload on the teams as well and the outcome will be better.
  2. Use Contract Lifecycle Management Software: This software uses artificial intelligence to perform managerial and administrative work. Undoubtedly, the work of a contract manager and administrator is tiring as it not only takes a lot of time but is also cost-consuming. CLM software performs these jobs with much less hassle and much more effectiveness.
  3. Understand their importance and difference: Make sure all members of the firm are aware that contract management and contract administration are not the same things, let alone, they are totally different from each other, and yet both are equally important. One cannot be performed without the other.
  4. Be open to communication: In order to achieve trouble-free contracting, open the lines of communication between both divisions. The more they contact, the fewer chances of mistakes will be there.


Although contract management and contract administration are interchangeable they differ significantly. Apart from their work roles, the main difference is the timeline. One is performed before the finalizing and signing of the agreement while the other is performed after the agreement is signed. In an effort to achieve smooth contracting as well as operational activity, one must educate their firm about the difference, the importance, and the role of the two sectors. In spite of the difference, the functions of both teams sometimes overlap, and other times for trouble-free workflow, both teams need to have an open line of communication. It’s like contract management and contract administration are different sides of the same coin.

The contract administration team starts working as soon as the company decides to enter into an agreement and stops working after closing the deal. However, their work isn’t done completely. They resolve issues, renew, terminate, or renegotiate the contract, and help the management team.

While the administration team closes the contract, the management feet start their jobs. From keeping track of every detail to ensuring all the obligations and expectations are met, the contract management team helps in the fulfillment of the contract.

Also Read:

How to Reduce Contract Management Risks for Safety

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