Robin Sharma has been and will always be one of my favorite authors. In his book, the Mastery Manual he emphasize that the success in life and in business (among others) highly depends on the relationships established. These relationships can be between business men, start-ups, medium and large companies, governments and Non-governmental organizations.

We live in a world were national boundaries cannot at all restrict people from connecting. Hence it is undisputed that when it comes to do business the parties/partners involved usually enter into some form of a contract. These contracts may be oral or written, express or implied depending on various factors such as the sensitivity of the business, intention of the parties and of course, the law.

Now, this brief article is merely a simple introduction on CONTRACT MANAGEMENT, a concept fairly new in the Tanzania business arena but I feel it to be important.

What is Contract Management?

Before I provide a definition of contract management let me first define other two key concepts which are relationship and contract. Simply put, a relationship is the way two or more people (natural and legal persons) are connected. These two or more people may connect for various reasons and business being one of them. The Law of Contract Act of Tanzania defines a contract as an agreement enforceable by law. A contract can otherwise be said to mean a legal relationship established by two or more parties.

Contract management is the process of systematically and efficiently managing the creation, execution, administration and finalizing of a contract with the aim of maximizing operational performance while minimizing risks. Or it can simply be a way to manage the legal relationships formed by people with an aim of escaping disputes while making each party happy.

Contract management is more than mere drafting of contract. It can be likened to a project which has various stages or phases. If done properly, contract management may involve the stages such as; engagement phase, negotiations phase, drafting phase, execution phase and contract administration phase.

Is Contract management important to you?

If I was in a hurry I could just answer the above question with an emphatic YES! But since I want that YES to make more sense to you, the following are some of the advantages;

• It encourages swift communication between the parties to the contract and hence minimizes future risk of contract related disputes.

• It is easier to keep track of all contractual performance issues especially if the contract/business involves projects of large capital.

• It encourages the achievement of value for money.

• It encourages swift record keeping and professional accountability of each party.

Who is involved in the process of contract management?

Most people would answer the above question with reference to lawyers. This may be due to the fact that they are the ones mostly involved in the drafting of contracts. But honestly this line of thinking is wrong. The major aim of contract management is to prevent or reduce risk. And in simple definition risk is the “probability of an unwanted outcome happening”. Therefore any person who can prevent such risks from happening may be involved in contract management. Be it lawyers, auditors, human resources specialists, sales and marketing personnel and the like depending on the nature of the undertaking may participate in the process to ensure the attainment of the organization’s goal on the specific contract. In most developed countries, companies dedicate whole departments only for contract management and they involve people from various professional backgrounds.

Can Tanzanian companies/businessmen use contract management to their advantage?

YES! Contract management is important. You might not need a whole department for it but I still advise that everyone doing business involving deals such as construction, banking, supply and deliver and all sorts of businesses which need to be put into contracts should adopt a mechanism for contract management. This will yield much profit especially in terms of minimizing risks, establishing better professional relationships and creating more value for money.

Now I recognize that there are some companies or rather entities that will feel this move to be a major change. Some of them do not even think written contracts are important. But change is good. As Robin Sharma puts it, “All change is hard at first, messy in the middle and gorgeous at the end.”

Disclaimer:

This is a general opinion aimed at creating a general understanding and it should not be taken to be specific legal advice.