Although contracts often end up forgotten once they're signed, there's untapped potential for businesses to harness by being proactive in their evaluation. Properly assessing contract performance can strengthen connections with vendors and customers, speed up project milestones, and prevent costly pitfalls. In the following article, we'll delve into diverse methods for evaluating contract outcomes and the perks they offer. Let's kick things off!
What’s Contract Lifecycle Management?
First things first – Managing contracts isn't just about renewing deals and setting up project rules. It's about making sure your business plays by the rules and slashes any financial or legal risks. Contract lifecycle management (CLM) software doesn't just help cut risks and keep things in line, it also ramps up efficiency and trims costs.
Unraveling Contract Outcomes
Before we dive into the meat of contract analysis, let's start by shedding light on what exactly we mean by contract outcomes. When we say "outcome," we're referring to achieving the goals laid out in the agreement. This covers tasks that are done and milestones that are met. If the final results match what was agreed upon, then that contract's a win.
Unpacking Contract Benefits
The benefits of a job well done go way beyond just raking in the bucks. They cover a whole bunch of good stuff that an organization can gain from rock-solid business dealings with other outfits. A heap of benefits can come from a contract, like boosting how well things run, cutting down on risks, amping up your rep, making customers happier, and a bunch of other cool results. When it's time to figure out if a contract's worth it, it's key to spot and measure these advantages.
Nuts and Bolts of Evaluating Contract Performance
Evaluating how contracts perform needs a solid plan to make sure it's effective and efficient. To really get the lowdown on contract results and benefits, follow these steps:
Remind yourself of goals.
First up, go back to those goals you set when the agreement started. These will be your yardstick for seeing how things turned out, like how good the product is or if services were on time.
Gather up the right info.
Dig up the info you need to track how the contract's been goin'. This means stuff like reports on how things are going, money stats, and anything else that's useful.
Pick the right KPIs.
Choosing the best key performance indicators (KPIs) to measure contract performance isn't a snap decision. Every project, industry, and demand needs specific numbers that work together to show how the contract's actually doing.
Tailor and keep track of KPIs.
For each deal to really shine, the key performance indicators need to be just right for it. So, get all the people involved to figure out what goals matter and what KPIs need watchin'. And keep checking those KPIs all the time to catch any contract slip-ups.
Measure results against contract terms.
Compare how things turned out to what the contract laid down. Check if everything's done like it was supposed to be and if all the milestones are hit in time. And if anything's not exactly like the contract said, take note.
Don't forget the hidden rewards.
Look at more than just the obvious wins. Think about the sneaky, hard-to-see stuff that comes with managing contracts. See how the contract's changed relationships, boosted the brand, and made everyone at work feel better about what they're doing.
Weigh the risks.
Think about the bad stuff that could've happened if you hadn't gone with the contract. It might mean following rules or dodging supply chain chaos.
Listen to what others say.
Get feedback from everyone involved – customers, vendors, and your team. They might see stuff that numbers can't show.
Count the money.
Look at how the contract's affected the company's money situation. Do some math to figure out if it's been worth it.
Balance short-term wins and long-term effects.
Evaluating a contract isn't just about the here and now. You have to think about how it's gonna play out in the long run. Sometimes a quick win might cause long-term trouble.
Mix numbers and feelings.
Figuring out if a contract's doing good needs both facts and feelings. Stuff like how happy folks are and what they're saying gives you the big picture. But don't forget the cold, hard numbers too.
Imagine different scenarios.
As a finishing touch to contract evaluation, try out different "what if" situations. Think about how things would've gone if the contract wasn't there or if things were different. This shows off just how big the contract's benefits are.
Closing Thoughts
Evaluating contract performance isn't a one-time thing. It's an ongoing journey that helps businesses get even better at handling contracts and using the outcomes and benefits to make better choices in the future.
Author Bio:
Qurat-ul-Ain Ghazali, aka Annie, is the growth manager at Contractbook and looks after all the organic channels. She has been with tech startups and scaleups for a couple of years with a B2B focus. You can find her socializing, traveling, indulging in extreme sports, and enjoying the local desserts when she is not working.
