Contract Chaos an Organization

Aeren lpo
2 min readApr 8, 2019

Contracts are the foundation stone of any organization. The back bone of a company’s operations depends mainly on how efficiently it handles its contracts. Poor management of contracts can lead to a risky situation where any ambiguity or non-compliance may lead to failure in achievement of intended results and in some cases imposition of penalties on a company.

There can be several reasons as to how a chaos can be created if the contracts are not managed efficiently. These are:

1. Poor Authoring of terms and conditions: If the terms and conditions underlining the performance of a contract are vague or ambiguous, it can lead to a situation where the scope of work actually intended by the parties may not be properly executed and may not provide desired results.

2. Bad Negotiations: Once the draft of contract is prepared, each party to the contract reviews the terms and conditions and modifies them according to their suitability. In such situations sometimes the lack of legal knowledge among the parties may lead them to agree to such terms which are contrary to their interests.

3. Overrun of time and cost: Inefficient management of contracts not only affects their proper execution but also disturbs the prescribed timelines and budget allocated for the performance of such contracts.

4. Penalties for non-compliance: If the contracts are not properly managed then there can be chances of penalties being imposed for non compliance of the provisions of the contract. Such ignorance can be proved costly to the company.

Contract Lifecycle management as a panacea

The one stop solution for the all (but not limited to) the above said problems is adoption and implementation of Contract Lifecycle Management Services (CLM) for handling and managing the contracts. CLM is a tool which not only works as a repository of contracts but also provides multilevel assistance in efficiently handling the contracts from their inception till expiry.

This tool if often owned and used by companies themselves or services of some external institution are hired for the purpose. LPOs play a crucial role in contract management by not only providing service of outsourced contract manager but also provide these services in a very cost effective manner.