Contract management software constitutes

software Software consists of computer programs that instruct the Execution (computing), execution of a computer. Software also includes design documents and specifications. The history of software is closely tied to the development of digital comput ...

and associated data management used to support contract management,

contract lifecycle management Contract lifecycle management (CLM) is the proactive, methodical management of a contract from initiation through award, compliance and renewal. Implementing CLM can lead to significant improvements in cost savings and efficiency. Understanding C ...

, and contractor management on projects in the

procurement Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual ...

of goods and services. It may be used together with project management software.

History

Historically, contract management was seen as a "paper-intensive" process. Early steps from the early 2000's reported by the Aberdeen Group required extensive data conversion work to enable documents to be handled electronically. With the adoption of the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

's General Data Protection Regulation (GDPR) in 2016, companies needed to take additional steps in regards to contract management. Each data responsible entity was obliged to sign

data processing Data processing is the collection and manipulation of digital data to produce meaningful information. Data processing is a form of ''information processing'', which is the modification (processing) of information in any manner detectable by an o ...

agreements (DPAs) with the various vendors, who treat personal data on behalf of the data responsible. DPAs need to be regularly controlled, adjusted and renewed, which adds an extra agreement to such vendors or at least an extra DPA addendum to each agreement.

Advantages and key functions

Most sophisticated projects involving contractors now use contract management software instead of relying on the manual management of paper contracts. It has become an essential tool for keeping track of multiple activities with cost implications and can be especially helpful for automating administration, ensuring compliance, monitoring risk, running reports and triggering alerts. In addition to these types of features, contract management software systems provide a centralized repository for employees to quickly access all contracts worldwide in one place. Having contracts stored in multiple locations can delay and interrupt the contracting process. Contract management software is produced by many companies, working on a range of scales and offering varying degrees of customizability. Basic functions should include the ability to store contract documents, track changes to contract

document A document is a writing, written, drawing, drawn, presented, or memorialized representation of thought, often the manifestation of nonfiction, non-fictional, as well as fictional, content. The word originates from the Latin ', which denotes ...

s, search documents for a particular criterion, send key date alerts and to report required aspects of the contract. Other functions include managing a new contract request, capturing related data, following a document through a review and approval process, and collecting digital signatures. Contract management software may also be an aid to

project portfolio management Project portfolio management (PPM) is the centralized management of the processes, methods, and technologies used by project managers and project management offices (PMOs) to analyze and collectively manage current or proposed projects based on n ...

and spend analysis, and may also monitor KPIs. Leading contract management software provides contract visibility, monitoring, and compliance to automate and streamline the contract lifecycle process. A centralized repository provides a critical advantage allowing for all contract documents to be stored within one location. Having contracts stored in multiple locations can delay and interrupt the contracting process.

Contract risk management software (CRMS) for capital projects

Very large enterprises, such as capital expenditure (capex) projects, involve multiple parties and high risk and uncertainty. They are unlike traditional operating contracts in that they are subject to shared deadlines in unique situations. As the complexity of these unique projects increases, the relationships between parties become more important. This requires contract management software, or contract risk management software (CRMS), to become more dynamic and responsive. The terms of these capex contracts necessarily involve assumptions at the start of the process and are likely to change over the lifetime of the project lifecycle. For this reason, CRMS must be capable of recording one single instance of agreed changes to contract terms and incorporating these changes in an auditable and legally robust way. With multiple decision makers involved, CRMS should also make accountability more transparent and enable faster decisions about variation proposals.

Artificial intelligence in contract management software

Contract management software that uses

artificial intelligence Artificial intelligence (AI) is the capability of computer, computational systems to perform tasks typically associated with human intelligence, such as learning, reasoning, problem-solving, perception, and decision-making. It is a field of re ...

(AI) can identify contract types based on pattern recognition. AI contracting software trains its algorithm on a set of contract data to recognize patterns and extract variables such as clauses, dates, and parties. It also offers simple prediction capabilities, by sorting through a large volume of contracts and flagging individual contracts based on specified criteria. Current AI software can also read contracts in multiple formats and languages, extract contract data, and provide

analytics Analytics is the systematic computational analysis of data or statistics. It is used for the discovery, interpretation, and communication of meaningful patterns in data, which also falls under and directly relates to the umbrella term, data sc ...

. It can reduce the risk of human error in contract drafting and review.

References

{{Reflist Application software Business software Contract management software Project management software