A version of this article originally appeared on The Official ContractWorks Blog. 

Once the ink is dry on a contract, you still need to actively manage the transaction in order to make sure that it goes off without a hitch. That's what a contract administration plan is for: a formal document that describes how both parties will remain in compliance with the terms of the contract throughout the length of the agreement.

We’ve created this guide to help you determine exactly what items to include in your CAP and how to discuss them at a contract kick-off meeting. Specifically, the guide reviews:

  • What you should review in your CAP
  • How to set up a contract kick-off meeting 
  • Steps to take following the kick-off meeting

In order to maximize the chances of a successful contract and reduce friction and disagreements, your contract administration plan should be as definitive and detailed as possible. Following the five guidelines that are mentioned below, and expanded upon in the full guide, will help make your next contract administration plan an excellent one. 

Define the Scope and Deliverables 

Clearly defining the project's scope and deliverables at the outset is important for two reasons:

1. It helps you avoid scope creep, in which requirements gradually and insidiously expand during the project, putting the contract's success at risk. 

2. It lets both parties know exactly what to expect at the end of the project. 

In addition to defining the deliverables, you should include clear standards for the acceptance of each deliverable, in order to minimize the chances of disputes.

Include a Detailed Timeline  

Every contract has a given time period during which it is in effect. Your contract administration plan should include start and end dates for the project, as well as the deadlines for each of the deliverables. In addition, you should include the frequency with which the contractor will send periodic updates about progress on the project and on each deliverable. 

Sort Out Finances

At this stage, you should already know the pricing structure for the contract: how much the contractor will be paid, in what format and at what intervals. This should be formalized in the contract administration plan, along with a mechanism for additional expenses in the event the contractor requires more funds. 

Plan the Work

The contract administration plan should include detailed work plans that assign employees and funds to each part of the project. If you need to make use of third-party personnel such as temp workers or outsourcing firms, you need to mention it at this stage so that you can make plans well in advance. You should also include descriptions of how you will measure performance throughout the project so that corrective action can be taken if necessary. 

Anticipate the Risks

Even the best-laid plans can go wrong through no fault of your own: natural disaster can strike, employees can quit and economic and financial conditions can change rapidly. As such, contract administration plans should identify some of the most likely risks to befall the project, and include provisions for what to do in the event they occur. The work plan that you create should include some leeway and flexibility in terms of time and budget so that you can recover from these events without endangering the success of the project.

Winning the bid and signing the contract are important first steps, but drafting a contract administration plan ensures that you have a strategy for the success of the contract. In order to have greater control, visibility, and security and to streamline your processes throughout the contract lifecycle, consider using a dedicated contract management software solution. 

We encourage you to use this resource as a point of reference when setting up your contract administration plan. 

To download your complete version of A Guide for Preparing a Contract Administration Plan, click here.