Complete Guide To Contract Lifecycle Management PDF

Your complete guide
to Contract Lifecycle
Management
Table of Contents
Your complete guide to Contract

Lifecycle Management (CLM)
01 Contract initiation
02 Contract negotiation
03 Contract execution
04 Contract start-up
05 Contract operation
5.1 Control contract changes
5.2 Track obligations compliance
5.3 Check supplier performance
5.4 Perform periodic reviews
5.4.1 Review user satisfaction

with supplier
5.4.2 Review contract relevance
5.4.3 Review regulatory

environmental changes
5.4.4 Review contract benefits

realisation and value
for money
5.4.5 Review continuous improvement

and innovation
5.4.6 Review supplier benchmark

5.5 Address issues
5.6 Resolve disputes
06 Contract renewal
07 Contract close-out
08 Useful document templates

Your complete guide to Contract
Lifecycle Management (CLM)
Welcome to the Gatekeeper guide

to Contract Management.
Whether you’re an experienced practitioner or completely new to CLM, this guide will
offer you insight, practical advice and free templates to help you manage your contracts
effectively.
After all, the future success of your business depends on realising the value that’s captured
in its contracts. From supplier agreements to employee documents, everywhere you look
are commitments that need to be met for your business to succeed.
Keeping track of all these details can be complex so we’ll break it all down for you and give
you checklists to follow, as well as other actionable tips.
And don’t worry, you’re not expected to complete every task for every stage,
particularly if contract management isn’t your full-time role.
However, when you have specific questions or come across

something new, you should be able to reach for this guide
and find some answers.
So, first things first…
Your complete guide to Contract Lifecycle Management 3

What are the different stages
of the Contract Lifecycle?
A contract typically passes through a number for any specific contract, allocating ownership
of stages during its lifetime: from initiation and of the activities to individuals or groups, and
negotiation to execution and start-up, though the monitoring the performance of those activities as
operational period, to renewal or close-out. the contract progresses through its lifecycle.
The type of contract and the nature of goods The ultimate aim is to minimise surprises, ensure
or services it covers will determine what sort of the contracted goods or services are delivered by
management activities might be needed at each the supplier in accordance with the contract, and
stage. realise the expected business benefits and value
for money.
How a company is organised will also determine
which departments or individuals are responsible The diagram below outlines all the stages of the
for what activities at each stage. contract lifecycle and the activities required at each
of those stages.
Contract Lifecycle Management from a buyer's
perspective is the process of defining and
designing the actual activities needed in each stage

The Stages of the Contract Lifecycle
Initiation
Negotiation Execution
Renewal Start-up
Operation
Close Out
Activities that may be performed Reviews that may be performed
Control Contract Track Obligations Contract

User Satisfaction
Changes Compliance Relevance
Beneﬁts Continuous
Check Vendor Perform Periodic Realisation, Value Improvement,
Performance Reviews for Money Innovation
Regulatory Supplier
Address Issues Resolve Disputes Environment Benchmark
Changes
Now, if you’re not a full-time contract manager, that’s probably going to look like a lot of work to fit around your
day job.
Don’t worry, we realise that you may not have the time to follow the whole process to the letter.
This is why we’ll provide you with an action plan for each of the above stages as well as useful templates, which
you can tailor to your business so they match your structure, personnel and processes.
Once you’ve got a good understanding of the overall process and what’s required, you’ll be better equipped to dip
in and out of the guide as needed.
While many activities can be automated through the application of Contract Management software, even a mostly
manual approach will improve the likelihood of better contract outcomes and more benefits over not doing CLM
at all.

01
Contract Initiation
A procurement event starts with a business need.
That need could be anything from finding larger office
premises to requiring external support for marketing
activities.
The need has to be clearly described and documented

before you go out to market to find a supplier for the goods
or services. This will give you the framework from which you
can evaluate suppliers.
More often than not, a contract will be required between a

buyer and a supplier to govern how the goods or services
are obtained. If your business has dedicated CLM staff then
they should be invited as early as possible to participate in
planning for any new contract, and should help develop the
specification of all stakeholders' requirements.
They can also help by reviewing existing contracts and

suppliers to see if a potential solution already exists within
the roster of vendors.
If your business doesn’t have dedicated CLM staff then it

will be down to non-specialist employees to ensure that
the specification covers all aspects needed for the ongoing
management of the contract.
Often, these employees will be the intended users of

the goods or services as they will have the clearest
understanding of what’s required. However, since they will
likely have limited experience of managing procurement
processes, it’s always advisable to have these documents
reviewed by somebody senior in the business.
Key Tip
This step of the process may also include the use of what’s
known as an RFx, which is a catch-all term describing Candidate suppliers (even if there
“Request for Information”, “Request for Proposal”, “Request is only one) should not be advised
for Quote” or “Request for Bid” (RFI, RFP, RFQ, RFB). It if other suppliers are participating
effectively describes the process by which you, the buyer, go in the procurement event, if they
out to market to find a supplier for the goods or service that are on the shortlist, or if they are
the preferred supplier.
you need.
The supplier's perception
This process will likely result in several different suppliers that there is competition and
submitting their responses and pitching for the contract. that their offer may still be
under consideration provides
negotiation leverage to the buyer.

Your 10 Point Checklist
for Contract Initiation
The high-level activities involved in initiating a

contract include:
01 Prepare procurement specification based on

identified need, develop the sourcing strategy
02 Select and contact candidate suppliers,

determine level of interest, obtain signed
mutual NDA
03 Review specification, add any missing elements

needed for operational contract management
04 Establish procurement timetable, prepare and

review an RFx, assign bid evaluation team
05 Assign a weighting to each requirement, devise

bid evaluation method, prepare bid scoresheet
06 Issue RFx to interested candidate suppliers,

respond to questions, issue any updates to RFx
07 Review received bids, raise and resolve any

issues, attend supplier presentations
08 Evaluate and score each bid, normalise scores

where necessary, summarise and compare scores
09 Identify shortlisted suppliers, advise them of any

final bid concerns, request best and final offer
(BAFO)
10 Evaluate / negotiate BAFOs, identify but DO NOT

NOTIFY the preferred supplier

02
Contract Negotiation
Negotiation of contracts is a specialist skill, generally acquired through training and experience.
Here we lay out what you should be looking to achieve in the negotiation phase of the process.
The desired outcomes of contract

negotiation are:
A fair and balanced contract that will deliver the

desired results
Clear allocation of responsibilities for the

outcomes
Appropriate measures of the success of those

outcomes
Effective remedies that will adequately motivate

the guilty party in the event of unsuccessful
outcomes.
With the preferred supplier(s) identified, a detailed In some cases, time limits may be established to
review of their concerns with the buyer's contract or reach agreement after which negotiations may be
the buyer's concerns with their contracts is needed. discontinued with one supplier and commenced with
At this point the buyer should send their responses the next preferred supplier.
to the relevant suppliers.
After agreement on the terms and conditions has
Thereafter, all negotiations should ideally be been reached, a final test must be conducted to
conducted at face-to-face meetings to attempt to ensure that the negotiated contract accurately
reach a consensus on all disputed terms. If possible, reflects the deal agreed to during evaluation of the
these meetings should include representatives winning supplier's best and final offer.
from both sides who have the necessary approval
authority to agree concessions and to sign off. This Once confirmed, the successful supplier can be
will reduce the chances of delays. formally notified about the awarding of the contract,
and the unsuccessful suppliers can be notified and
offered a debrief of the issues with their bids.
Remember, once you’ve established a need for your business,

every day that you don’t have a supplier in place is a day you’re
not meeting that need or deriving the intended benefits.

for Contract Negotiation
The high-level activities involved in negotiating
terms and conditions of a contract include:
01 Review any contract provided by preferred supplier,

identify issues, specify alternative text
02 Review any supplier concerns with buyer's contract,

prepare responses for supplier's consideration
03 Prepare negotiation strategy covering optimum,

acceptable, fall-back and walk-away positions
04 Advise supplier about issues with their contract or

responses to their concerns about buyer's contract
05 Conduct face-to-face negotiations with supplier,

obtain internal approval for proposed concessions
06 Restart this stage with next preferred supplier if

negotiations cannot be concluded in timely fashion
07 Check that final contract reflects the agreed BAFO,

and meets all manageability requirements
08 Prepare a summary of each side's rights and

obligations, obtain supplier's sign-off on the summary
09 Formally notify the successful supplier of the award

of the contract and advise about the next steps
10 Notify other shortlisted suppliers, offer / conduct

debrief of bids when requested

03
Contract Execution
Execution of a new contract can be a minor administrative event or a big deal,
depending on the nature and value of a contract and where it is to be signed.
It’s usually best practice for a new contract to be approved and signed by
different people. This reduces the chance of unfavourable contracts being
agreed and the risk of any fraudulent activity.
The value of the contract may be a factor in deciding who those people should
be, and in determining the nature of information that should be presented to
them to enable a clear understanding of what they're being asked to approve
or sign.
Despite the growing use of electronic signing technologies, there may be legal
restrictions on the use of such technologies in some countries or under certain
circumstances. The signing requirements of both buyer and supplier should
be ascertained and not assumed, to minimise any delays in concluding the
procurement event.
Getting from Initiation to Execution may have been a long, tedious process,
so it can be worth the effort to record any lessons learned for consideration
during future procurement events.
Similarly, tracking which of the buyer's standard contract terms are most often
challenged by suppliers may allow modifications to improve acceptability, with
the consequent reduction in the time taken to negotiate and conclude future
procurement events.

for Contract Execution
The high-level activities involved in obtaining
contract execution include:
01 Update any business case document with changes

resulting from proposal / contract negotiations
02 Document any outstanding matters agreed to be

resolved following contract execution
03 Prepare a deal summary / contract approval request,

obtain sign-off from all key stakeholders
04 Ascertain number of hardcopy and/or electronic

contracts needed by buyer and supplier
05 Determine buyer staff who can approve and who can

sign the final contract documents
06
Send electronic copies of all applicable documents to
designated approver(s)
07
Send approved contract documents to designated
signer(s) for printing as necessary and signing
08
Send signed contract documents to supplier
electronically and/or physically as necessary
09 Log all changes made to buyer's standard contract

terms to allow tracking of supplier resistance
10 Document any lessons learned from Initiation to

Execution, develop a draft contract management plan

04
Contract Start-up
Operational contract management cannot properly begin, and will not succeed,
without a detailed understanding of a contract. It sounds simple, but you’d be
surprised at how often this stage gets skipped as people rush to get a contract
moving.
Neglecting this stage can result in significant issues down the

line, particularly when it comes to renewal or disputes.
In this foundational stage, key information needs to be discovered or prepared

to provide a clear understanding for all relevant parties. The people that have
negotiated a contract may not be the people working day to day with the
contracted good or service and all must be provided with a clear understanding of
their responsibilities.
This information includes details about the obligations and rights of the buyer
and the supplier, how to track compliance with those obligations, events that get
triggered by date or circumstances, outstanding matters that must be resolved as
soon as possible after execution, any limits on usage of the contract, and so on.
Starting a new contract requires a range of activities to:
Document the key features of the contract;
Promote awareness and facilitate understanding of the contract with key

stakeholders;
Obtain commitment to the roles and responsibilities involved in ongoing

management of the contract;
Prepare various business and technical systems for dealing with contract
transactions and events.
Heeding the documented lessons learned from other contracts is strongly

recommended, as is close attention to the transition-out obligations and activities
of any supplier whose contract is being replaced by the new contract.
You don’t want to end up with overlapping suppliers for any longer than might be
necessary. You also want to give the new contract the best chance of success.

for Contract Start-up
The high-level activities involved in obtaining

contract start-up include:
01 Review any transition-out plans related to an earlier

contract being replaced by this new contract
02 Finalise any draft transition-in plan, including any

outstanding issues needing resolution
03 Complete any draft contract management plan or

prepare and agree the plan with key stakeholders
04 Prepare a plain language contract summary,

highlighting any contract usage constraints
05 Prepare a contract risk register identifying moderate

to highly probable risks and mitigation strategies
06
Prepare a specification stating how and when to
check compliance with each contractual obligation
07
Prepare and issue communications about the new
contract to key stakeholders
08
Register the executed contract and associated
documents in applicable systems and repositories
09 Establish workflow to alert key stakeholders about

approaching contract key dates and events
10 Monitor and participate in any transition-out and

transition-in plan activities

05
Contract Operation
Ok, so your contract’s up and running. Now what?
Whatever you do, don’t “set and forget”. If you go back to the initiation phase, you’ll
remember that the contract came into being because of a business need.
It’s unlikely that the business need is going to be met on day one of the contract, so
you need to continue to monitor its progress throughout its duration to make sure
its value is realised.
Unlike the other stages in a contract's lifecycle, the Operation stage lasts for most
of the contract term and potentially involves a greater number of activities, grouped
as described below.

5.1
Control Contract Changes
There are lots of potential reasons why a contract might need to change within
its duration. Changes in requirements, business conditions, the regulatory
environment, economic trends, and technology can all necessitate a change in a
contract.
Such changes should be achieved on a timely basis by mutual consent, and through
a formal change control process. Preferably, this process will be documented in the
contract and will deal appropriately with both material and trivial changes.
If it’s not documented in the original contract, one of the first changes that might
need to be made is to add clauses around the change process.
Your 10 Point Checklist for

Controlling Contract Changes
The high-level activities involved in handling contract changes include:
01 Discuss with the requester the

reasons for a change, its timing and 06 Submit contract amendment
documents to appropriate signatories
likely consequences
07 Distribute signed copies of
02
Formulate and agree the proposed amendments or other updated
changes, any implementation work documents as necessary when
and / or costs required received
03 Prepare a contract change request

and submit to appropriate internal 08 Advise key stakeholders and /
or users about the nature and
and external approvers implications of the approved change
04 Obtain change approval / rejection

advice and inform supplier /
09 Maintain awareness / oversight of
the change implementation work as
stakeholders as necessary necessary
05 Update all applicable contract

documents and the contract change 10 Ensure that the agreed change is
correctly implemented in practice
register on change approval where applicable

5.2
Track Obligations Compliance
An obligation is a requirement, a bond, a promise; something that must be done.
A contract specifies each party’s separate and joint obligations. Ensuring such obligations and
commitments are adhered to is critical to getting the desired contract outcomes.
Again, this is a part of the process that can get lost, particularly as a contract matures and
stakeholders get new priorities or move on to different roles.
Starting a new contract requires a range

of activities relating to:
Contractual terms and conditions
Events and dates
Laws and regulations
A party's internal directives and policies
Jointly agreed processes
Formal standards
It’s usually best to track these obligations in a formal way to make sure they’re recorded and allocated
correctly. This will also cover deadlines and therefore whether obligations are being met on time or
are overdue.
It’s also key to track who specifically is responsible for ensuring the obligations are met. As mentioned
before this may be required to change as people move roles.

Tracking Obligations Compliance
The high-level activities involved in a compliance assessment include:
01 Advise compliance checkers of the scope and

timing of an approaching assessment
02 Collect and distribute any information necessary for

assessing obligation compliance
03 Review the performance of each obligation that

needs to be checked during the assessment
04 Issue any required notice to supplier about actual

or impending non-compliance
05 Respond to any notice from supplier about buyer’s

actual or impending non-compliance
06
Determine the cause and impact of any actual or
impending non-compliance
07
Agree an approach to deal with any such non-
compliance and prevent its recurrence
08
Update the contract documents as necessary to
improve compliance achievement
09 Revise the applicable obligation compliance

specification as required
10 Advise key stakeholders about the outcomes of the

compliance assessment

5.3
Check Supplier Performance
Regular monitoring of supplier performance is recommended to
ensure that what has been agreed gets delivered.
This checking plus reporting by relationship management staff

can be combined with user satisfaction survey results to provide a
basis for agreeing remedial action with the supplier.
Such action may involve changes to processes, contract terms,

service levels, fees etc.

Checking Supplier Performance
The high-level activities involved in a supplier performance check include:
01 Review supplier’s recent

operational performance, against 06 Advise key stakeholders of the
latest assessment outcome and any
any agreed service levels corrective actions needed
02
Obtain key stakeholder input on the Advise contract owner of contractual
quality of the recent relationship with
the supplier
07 rights regarding significant supplier
underperformance
03 Derive an overall view of supplier

performance from all the 08 Issue any required notice to supplier
in response to a poor performance
information collected assessment
04 Determine how supplier’s latest

performance check compares to
09 Agree any required remediation plan
with supplier, and implement the
earlier assessments plan under change control
05 Discuss causes of any current

underperformance and undesirable 10 Update the contract documents as
necessary to minimize recurrence of
trends over time with supplier such underperformance

5.4
Perform Periodic Reviews
For any contract with a term of 12 months or more, it is worth periodically checking
for any circumstantial changes that could affect the contract’s ability to deliver the
expected benefits.
These changes may necessitate updates to the contract, or to the expectations,

processes or behaviour of the supplier or the buyer.
Here, we lay out some key areas for the reviews to focus on and what you should
be looking for in each case. These review processes have widespread applicability
across most contracts.

5.4.1
Review User Satisfaction
With Supplier
The human element can never be underestimated when it comes to
contractual success.
Business relationships will almost always involve

key personnel from both sides and, put simply, it’s
better if they get on with each other.
Equally, if the key contact on the buyer side is dissatisfied with the
supplier then it can be very difficult to generate the benefits from the
contract.
That said, mistakes will happen so the supplier’s ability to recover

from service deficiencies, and to reduce error levels in general, also
plays a part in satisfaction levels.
Any areas of dissatisfaction, and the consequent opportunities for

improvement, are typically discovered by survey of some key direct
and indirect users of the supplier services.
The survey should be conducted as often as necessary to ensure

that low satisfaction is detected and effectively addressed before
irreparable relationship or business damage is caused.

Reviewing User Satisfaction
With Suppliers
The high-level activities involved in undertaking a user
satisfaction survey include:
01 Establish / review and update the objectives of a

new / repeated survey
02 Agree on the matters to be covered by the survey

and the method for conducting it
03 Determine the target audience for the survey and

identify proposed participants
04 Prepare / review and update the questionnaire for

a new / repeated survey
05 Conduct a trial run of a new survey and finalise the

questionnaire using feedback and findings
06
Issue the final survey to participants, monitor
returns and encourage timely completion
07
Analyse and summarise survey results, derive
overall satisfaction level and highlight key issues
08
Discuss survey results with supplier and agree on
actions needed to improve satisfaction levels
09 Implement any agreed actions under change

control, monitor progress and check outcomes
10 Update the contract, documentation, processes and

so on as necessary

5.4.2
Review Contract Relevance
As discussed in our chapter on contract initiation, in the beginning, there was a business need. The
need would have been based on identifying where the business intended to go, the state of the
market the business operates in, the size of the business and numerous other factors.
Potentially, all these factors have the capacity to change over time and render the contract more or
less relevant than at the outset.
Such changes may affect the relevance of a range of contract elements, limit opportunities for
enhanced innovation or greater efficiency, or result in an undesirable amount of friction with the
supplier.
As a result, changes to the contract and its associated documentation and management processes
may be necessary to establish relevance for current conditions.
A review should be conducted either on a regular basis as specified in the contract management plan
or when indicated by monitoring systems, depending on the particular aspect of interest, which may
include:
01 The ongoing applicability of fundamental

assumptions driving the contract
02 Changes to the buyer’s requirements, 06 The ongoing suitability of the supplier

strategies or countries where the performance measures and penalties
contract is used
07 Any impediments to incorporating
03 Changes to the supplier’s products innovations, efficiencies or cost
or services, pricing options, or other avoidance measures
contract terms
08 Any increase in the level of disputes or
04 The ongoing validity of the contract relationship issues with the supplier
risk profile and associated mitigation
approaches 09 The impacts of major geo-political or
economic dislocations and disturbances
05 Any difficulties in complying with the
supplier’s operational processes 10 Any generally limited contractual
flexibility to deal with change or the rate
of change

for Reviewing Contract
Relevance
The high-level activities involved in undertaking
a contract relevance review include:
01 Assess monitoring systems / contract management

plan to determine nature of review needed
02 Establish review objectives, scope, timing, method,

key stakeholders and information providers
03 Inform all key stakeholders and information

providers about review scope and timing
04 Obtain and analyse information relevant to the

review, summarise key issues to address
05 Identify where changes may be needed in the

contract, related documentation and/or processes
06
Describe each proposed change, prepare draft
contract amendments as needed
07
Agree with relevant stakeholders on the nature and
content of proposed changes
08
Discuss review outcomes and proposed changes
with supplier, agree on actions needed
09 Implement any agreed actions under change

control, monitor progress and check outcomes
10 Update the contract, documentation, processes and

so on as necessary

5.4.3
Review Regulatory
Environment Changes
At any time, somewhere in the world where the buyer has operations, changes to a country’s regulatory
environment may be in planning or in progress.
The scope of change may range from minor amendments to existing legislation to completely new laws
needed to deal with emerging services not anticipated by any existing regulations. Such changes may
increase or decrease to varying degrees the regulatory compliance burden on the buyer or its suppliers, and
may need to be reflected in contractual terms for certain products or services within prescribed time frames.
In exceptional cases, either the buyer or a supplier may decide that it makes better business sense to
terminate an affected contract than try to achieve compliance with the new regulatory environment.
Your 10 Point Checklist for Reviewing

Regulatory Environment Changes
The high-level activities involved in conducting a regulatory environment
changes review include:
01 Assess legal / supplier advice about

the nature, implications and timing 06 Prepare changes to the contract, its
related documentation and processes
of any regulatory changes as necessary
02
Identify all contracts potentially Design any modifications to
affected by the regulatory changes 07 associated internal business practices
and processes
03 Design an approach for revising

contract terms to achieve
compliance with changed regulations 08 Update the contract, its related
documentation and processes as
necessary
04 Update any affected clauses in

master clause libraries used to
construct new contracts
09 Implement any required changes
to business practices and processes,
train affected people
05 Discuss the situation with contract

owners and suppliers, decide on an
approach per contract 10 Continue with section 07 Contract
close-out activities for any contract
that is to be terminated

5.4.4
Review Contract Benefits
Realisation and Value for Money
This is another crucial, and often overlooked part of the contract management process, particularly if
you don’t have dedicated CLM staff to oversee the process.
Don’t wait until the contract nears its completion or renewal date to see whether it’s delivering the
expected benefits. By then it might be too late.
Reviews should be conducted regularly during a long-term contract, and as the contract approaches
its expiry or renewal date. This review may make use of the findings from other periodic reviews of
the contract that touch on matters useful for this review.
By doing these reviews, you give the contract and your business the best chance of success.
What are the common reasons a contract may not be

delivering the benefits expected?
01 Unrealistic buyer expectations / targets
02 Inadequate benefits realisation / value 06 Unresolved issues or disputes between

for money tracking processes buyer and supplier
03 Changes to business needs and / or the 07 Unsatisfactory relationship with the

business / regulatory environments supplier
04 Supplier service underperformance or 08 Ineffective / non-existent contract

capabilities overreach governance or contract management
practices
Non-compliance with obligations by
05
buyer and / or supplier 09 Ineffectual / superficial continuous
improvement or innovation efforts by
supplier
10 Lower usage of supplier’s services than

planned or paid for

for Reviewing Contract
Benefits Realisation
The high-level review activities involved in

conducting a contract benefits realisation /
value for money review include:
01 Agree a review plan scope and timing with key

stakeholders and designated reviewers
02 Review the current business case baseline data,

expectations and assumptions
03 Obtain the current financial data needed for the

assessment
04 Assess the level of benefits realisation versus

expectations
05 Calculate value for money received from the contract
06
Determine root causes for benefits realisation / value
for money lower or higher than expected
07
Agree and implement any plan needed to improve
benefits realisation / value for money
08 Adjust the business case baseline data, expectations

and assumptions as necessary
09 Vary the contract, documentation, processes and so

on as necessary and as agreed with supplier
10 Update the lessons learned register as applicable

5.4.5
Review Continuous
Improvement and Innovation
A contract with a multi-year term should ideally oblige the supplier to undertake
continuous improvement / innovation measures for the benefit of at least the
buyer but hopefully for the supplier as well.
No business or service offering should be standing still over a long period,

particularly with the current pace of technological change.
While continuous improvement means doing

the same things better, typically by a series of
incremental changes, innovation means doing the
same things differently, typically by a step change
using a new approach.
The obligations should be described in terms of measurable deliverables in

accordance with an agreed improvement plan, with appropriate responses for
non-compliance or under-achievement.
Areas of friction or operational difficulty between the buyer and the supplier
can be painful but may also provide some pointers since potential innovations
could be proposed in the context of the situation.
Time needs to be set aside regularly for both teams to think about potential
ideas, review industry conditions, take input from best-practice think tanks and
the supplier’s experience in other engagements, and prepare proposals that
the leadership teams can evaluate.

for Reviewing Continuous
Improvement & Innovation
The high-level activities involved in a continuous
improvement and innovation review include:
01 Obtain supplier’s report on outcomes of the

improvement plan since the last review
02 Assess tangible or qualitative evidence of all claimed

improvements
03 Agree with supplier about the level of value received

from all agreed improvements
04 Evaluate the impact of buyer’s rejection of

improvement ideas on the level of value received
05 Determine root causes when no or low value

received despite adherence to plan
06
Identify any ‘pain points’ that could be dealt with by
the improvement process
07
Brainstorm new ideas for improvements or
innovation with stakeholders, users and supplier
08
Assess the suitability of new ideas for inclusion in the
improvement plan and set priorities
09 Update the improvement plan as needed, with a

focus on the greatest opportunities
10 Update the contract, its associated documentation

and processes as needed

5.4.6
Review Supplier Benchmark
Question – how do you know if your long-term supplier is still competitively priced?
With changes in technology and markets

regularly being disrupted by new entrants, it’s
recommended that you conduct a benchmarking
exercise at least once during the lifetime of long-
term contracts.
The review should check if supplier pricing is market-competitive, aligned with evolving
market conditions and if its customer-facing business processes are consistent across
the market.
The review can end up working in a couple of ways:
01 It might highlight that your existing supplier is no longer offering a competitive

package in comparison with the market. In which case, you can begin discussions
with them for remedial action or explore other options in the market
02 Alternatively, it might highlight that your existing supplier is providing an excellent

service at a competitive price, giving you the confidence to renew or extend the
existing contract.
The benchmarking process itself can be complicated and time-consuming so you may
wish to consider using an external consultancy for the work. They will have the experience
and the methodology to provide a thorough view of the market. However, this will really
only make financial sense for large value contract, or for a combined number of smaller
contracts.
Where benchmarking consultants can also help is with offering advice on how to deal
with a supplier to address any comparative shortcomings and to assist with, or conduct
on the buyer’s behalf, negotiations with the supplier for a better deal. The benchmarker’s
costs are usually shared equally between the buyer and the supplier if the benchmarking
options and frequency are prescribed in the contract, otherwise the buyer will typically pay
all such costs.

for Reviewing Supplier
Benchmarks
The high-level activities involved in a supplier

benchmark review include:
01 Define and agree with supplier on benchmarking

scope, timing and level of supplier participation
02 Establish the competitive pricing parameters to be

used, if not specified in the contract
03 Engage an appropriately qualified and experienced

independent benchmarker
04 Ensure the benchmarker is able to readily gather all

required data from buyer and supplier
05 Review the report with the benchmarker on receipt,

plan supplier negotiation strategy as needed
06
Advise key stakeholders of the benchmarking
outcome and proposed improvements approach
07
Agree with stakeholders and supplier on the
improvement actions, sequencing and timing
08
Update contracts, related documentation and
processes as necessary
09 Implement agreed adjustments and corrective

actions as per the timetable
10 Track achievement of improvements, manage any

deficiencies through formal channels

5.5
Address Issues
Contracts aren’t always plain sailing. There are many potential
causes of friction between buyers and suppliers over the course of a
contract, particularly if it is a long-term one.
An issue is generally a smaller scale problem that should be able to

be addressed in a straightforward manner.
For instance, issues may be related to:
Different interpretations of a contract condition
Non-compliance with respect to the contract
Undesired behaviour
Detrimental effects of some unexpected

external event
Clear procedures for raising and handling such issues should be

established in anticipation of their appearance. The primary objective
is to ensure that issues are recognized and then resolved quickly and
effectively.
If left unresolved, minor issues may damage the relationship while a

major issue may be escalated to a dispute.

Addressing Issues
The high-level activities involved in addressing issues include:
01 Log the details of each potential or actual issue as

soon as it is recognised
02 Formulate and agree on a resolution approach and

any costs required
03 Manage any contract change needed to resolve an

issue by using a change request
04 Advise contract owner of any contractual rights

regarding persistent unresolved issues
05 Issue any required notice to supplier in response to

a persistent unresolved issue
06 Agree any required remediation plan with supplier,

and implement by using a change request
07 Update the contract documents as necessary to

minimize recurrence of such issues
08 Record issue resolution approaches in the issues log
09 Escalate any issues taking longer to resolve than

expected or where reported resolution fails
10 Review the issues log and resolution progress

regularly, highlight any trends for attention

5.6
Resolve Disputes
This is where it gets serious. The contract and the relationship are both at risk.
“ A dispute is a significant difference of opinion or position

between the buyer and the supplier that is clearly distinct
from, and presents greater risk potential than, a simple issue.
If left unresolved, a major dispute may cause an irreparable breakdown in the buyer-supplier
relationship and threaten continuation of the contract. Similarly, a failure to properly manage
minor disputes may damage the relationship and limit the benefits of the contract to each side.
It is important that any potential or actual dispute is recognized at an early stage and addressed
as quickly as possible. An agreed dispute resolution procedure should ideally be included in every
key contract.
Your 10 Point Checklist for Resolving Disputes

The high-level activities involved in resolving disputes include:
01 Log the details of each potential

or actual dispute as soon as it is 06 Activate any agreed dispute
resolution process if negotiations fail
recognised to resolve the dispute
02 Obtain a clear understanding of the

nature of the dispute, its causes and 07 Agree an approach for implementing
the outcome of the dispute resolution
possible consequences process
03 Handle the issuing or receipt of

dispute notices as specified in the 08 Manage any contract change to
resolve a dispute by using a change
contract request
04 Advise contract owner of contractual

rights regarding disputes, and the
09 Update the contract documents as
necessary to minimize recurrence of
agreed resolution process such disputes
05 Attempt to resolve the dispute

informally by negotiation before any 10 Record dispute resolution outcomes
in the disputes register
escalation

06
Contract Renewal
Contract renewals are a massive opportunity to improve the terms of a contract and gain
better value from supplier relationships. It’s such a shame that they get forgotten about so
often.
So first things first, you have to record when renewal dates are and set reminders to make
sure that they aren’t missed. That’s contract management 101.
“ By setting reminders, you as the buyer can then

have a degree of control over the renewal process.
Otherwise, you might be caught unprepared if and
when your supplier contacts you to discuss your
renewal at short notice.
Alternatively, contracts may be set to auto-renew or auto-cancel leaving you with

potentially an unwanted cost or an unexpected gap in your supplier roster.
A contract approaching its expiry date should be considered for renewal if:
There is an ongoing requirement for the goods or services

The supplier's service delivery performance has been acceptable
There have been no insurmountable difficulties in achieving high levels of

compliance with all obligations.

Renewing Contracts
The high-level activities involved in renewing a contract may include:
01 Determine if there is ongoing demand for the goods

and/or services obtained under the contract
02 Check for any changes to the specifications of the

goods and/or services, or the volumes required
03 Review supplier’s obligation compliance and service

delivery performance
04 Identify all areas of concern with the supplier's

general behaviour that need to be addressed
05 Decide if the business is prepared to continue

dealing with the current supplier
06 Assess ongoing relevance and general suitability of

the contract terms
07 Formulate a contract renewal strategy based on the

information collected
08 Issue a renewal notice, whether or not needed, in

accordance with any specified notice period
09 Advise supplier about any requirements changes,

problematic contract terms, or areas of concern
10 Continue with section 02 Contract negotiation

activities to achieve contract renewal

07
Contract Close-Out
The end of the road.
When a decision has been made to not renew a contract approaching its expiry date
or to actively terminate a contract for cause or convenience, a range of activities is
required to properly plan and ensure a smooth transition-out from the contract.
It’s possible that a contract will simply be replaced by another similar one with the
same supplier. However, these activities should still be carried out if possible.

Closing out contracts
The high-level activities involved in closing-out a contract may include:
01 Issue a termination notice, whether

or not needed, before any specified 06 Finalise the details of any payments to
be made to or by the supplier
cut-off date
07 Prepare and sign-off any contract
02
Finalise any disengagement planning, finalisation paperwork, submit any
with involvement of any replacement final payments
supplier as needed
08 Perform any other specific post-
03 Monitor and participate in any

disengagement activities needed to
termination obligations
transition-out from the contract

09 Update the lessons learned register
for the benefit of all future contracts
04 Return or destroy any confidential
10
information as required by the Obtain a copy of any required buyer
owner of such information data held by the supplier, before the
cut-off date
05 Transfer any assets or intellectual

property rights, and return any
loaned items, as required

08
Useful Document Templates
We’ve created some simple, free Excel templates for you to download to help you manage your
contracts more effectively. Our single spreadsheet contains 13 separate templates (listed below).
Download our templates for free at http://bit.ly/FREEXLTemp
Contains the following individual templates:
01 Contract Inventory: record of basic

details for every contract within your
business
02 Confidential Information Register: a list 08 Contract Management Plan: a list of key

of any confidential information disclosed activities to be performed in managing a
by each party to a contract to the other contract and their expected due dates
party, allowing the required return or
destruction of such information at the 09 Contract Obligation Compliance
end of the contract Specification: a description of an
obligation and who owns it, where in the
Contract Change Log: a summary of contract it can be found, how compliance
03
every change made to a contract with the can be checked, how often, actions to be
agreement of both parties taken for noncompliance
04 Contract Disputes Log: a summary of 10 Contract Risk Register: a list of potential

every dispute notified by one party to the risks to a contract, their likelihood and
other party, and how any resolution was impact, and mitigation strategies
achieved
11 Intellectual Property Rights Register: a
05 Contract Events Calendar: a list of list of any of a party's pre-existing IP that
contractually specified or manually will be used by the other party, and any
derived events and their due dates IP developed by the supplier for use by
the buyer that must be transferred
06 Contract Issues Log: a summary of every
issue raised by one party with the other, 12 Loaned Items Register: a list of any
and how any resolution was achieved items that have been loaned by one
party to the other party for the whole or
07 Contract Lessons Learned Register: a part of the term, and which need to be
statement about something that went returned at the end of the contract by
wrong / should have been done / could the borrower
have been done better / shouldn't have
been done with regard to a contract. 13 Outstanding Matters Summary: a list of
Contains multiple keywords that will all matters agreed by both parties to be
assist in the lesson being found by others addressed within a specific period after
contract execution

This guide has been prepared by Gatekeeper to help you
maximise the value you get from your business's contracts.
Gatekeeper provides cutting-edge Contract and Vendor

Management Software for businesses of all sizes.
Manage sign-offs, renewals and workflows securely in

Gatekeeper to drive down your costs and meet compliance
requirements.
For more information visit

www.gatekeeperhq.com
Or contact us for a free demo at

[email protected]

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Your complete guide

Your complete guide to Contract

5.1 Control contract changes

5.2 Track obligations compliance

5.3 Check supplier performance

5.4 Perform periodic reviews

5.4.1 Review user satisfaction

5.4.2 Review contract relevance

5.4.3 Review regulatory

5.4.4 Review contract benefits

5.4.5 Review continuous improvement

5.4.6 Review supplier benchmark

5.5 Address issues

5.6 Resolve disputes

08 Useful document templates

Welcome to the Gatekeeper guide

However, when you have specific questions or come across

So, first things first…

Your complete guide to Contract Lifecycle Management 3

Your complete guide to Contract Lifecycle Management 4

Activities that may be performed Reviews that may be performed

Control Contract Track Obligations Contract

Your complete guide to Contract Lifecycle Management 5

The need has to be clearly described and documented

More often than not, a contract will be required between a

They can also help by reviewing existing contracts and

If your business doesn’t have dedicated CLM staff then it

Often, these employees will be the intended users of

Your complete guide to Contract Lifecycle Management 6

The high-level activities involved in initiating a

01 Prepare procurement specification based on

02 Select and contact candidate suppliers,

03 Review specification, add any missing elements

04 Establish procurement timetable, prepare and

05 Assign a weighting to each requirement, devise

06 Issue RFx to interested candidate suppliers,

07 Review received bids, raise and resolve any

08 Evaluate and score each bid, normalise scores

09 Identify shortlisted suppliers, advise them of any

10 Evaluate / negotiate BAFOs, identify but DO NOT

Your complete guide to Contract Lifecycle Management 7

The desired outcomes of contract

A fair and balanced contract that will deliver the

Clear allocation of responsibilities for the

Appropriate measures of the success of those

Effective remedies that will adequately motivate

Remember, once you’ve established a need for your business,

Your complete guide to Contract Lifecycle Management 8

01 Review any contract provided by preferred supplier,

02 Review any supplier concerns with buyer's contract,

03 Prepare negotiation strategy covering optimum,

04 Advise supplier about issues with their contract or

05 Conduct face-to-face negotiations with supplier,

06 Restart this stage with next preferred supplier if

07 Check that final contract reflects the agreed BAFO,

08 Prepare a summary of each side's rights and

09 Formally notify the successful supplier of the award

10 Notify other shortlisted suppliers, offer / conduct

Your complete guide to Contract Lifecycle Management 9