How do you plan and execute contract reviews and renewals to ensure continuous improvement and alignment?

1 Why review and renew contracts?

Contract reviews and renewals are essential for maintaining and improving your contractual relationships. They allow you to assess the performance and satisfaction of both parties, identify and resolve any issues or risks, and negotiate any changes or extensions that may be needed. By reviewing and renewing your contracts regularly, you can avoid disputes, penalties, or missed opportunities, and foster trust and collaboration with your contract partners.

2 When to review and renew contracts?

The timing and frequency of contract reviews and renewals depend on several factors, such as the type, duration, and complexity of the contract, the level of risk and uncertainty involved, and the expectations and preferences of both parties. However, it is recommended to review contracts at least once a year, or more often if there are significant changes in the business environment, the contract scope, or the performance of either party. Additionally, it is important to renew contracts before they expire, or as soon as possible after they expire, to avoid any gaps or disruptions in service delivery or payment. To ensure a smooth and efficient process, plan your contract reviews and renewals well in advance and communicate them clearly and timely to your contract partners.

3 How to review and renew contracts?

The process of contract reviews and renewals may vary depending on the nature and terms of the contract, but some common steps include preparing for the review or renewal by gathering and analyzing relevant data and information, such as contract performance metrics, feedback from stakeholders, market trends, and best practices. During the review or renewal meeting, both parties should discuss the achievements, challenges, and opportunities of the contract, as well as any proposed changes or extensions. Afterward, document the outcomes and agreements of the review or renewal, and update the contract accordingly, following the appropriate approval and signature procedures. Finally, implement and monitor the revised or renewed contract, and ensure that both parties comply with their obligations and expectations.

4 What to consider in contract reviews and renewals?

Contract reviews and renewals are not just administrative tasks, but strategic opportunities to optimize your contract value and relationship. Therefore, when conducting a review or renewal, you should assess the alignment of the contract with your current and future business goals, needs, and priorities. Additionally, consider the performance of the contract, the satisfaction of both parties, the potential or existing risks or issues, and the internal or external factors that may require or enable changes or extensions. By doing so, you can ensure that the contract is delivering on its objectives, outcomes, and benefits, while also mitigating or resolving any risks or issues.

5 How to improve your contract governance framework?

Contract reviews and renewals are part of a continuous cycle of contract management and governance, so it’s important to evaluate and improve your contract governance framework regularly. To do this, you should establish and update clear and consistent policies, processes, and tools for contract management, and communicate them to your contract partners and stakeholders. Assign and train competent and accountable contract managers, and provide them with adequate resources and support. Monitor and measure your contract performance and compliance, and report and escalate any issues or deviations. Engage and collaborate with your contract partners and stakeholders, and seek their feedback and input. Additionally, learn and apply best practices and lessons learned from your contract experience and industry standards.