What Is the Definition of Contract Administration?

by Steffani Cameron ; Updated November 21, 2018
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To define contract administration in the simplest terms, it's the task of ensuring that any contractor fulfills their job to the terms and stipulations written in the contract. Having oversight to catch deviations and unfulfilled terms as they happen means that project or person is more likely to be successful in executing the contract to correct problems or omissions long after the fact rather than shortly after they transpire. Great contract administration skills are invaluable in companies that employ contractors on a regular basis.

What Is the Contract Procedure?

In creating a contract, a seven-step process kicks off. All seven of these stages fall under the contract management umbrella, and contract administration doesn’t really hit full boil until around step five. A contract manager may be employed to oversee the contract, and their role begins as soon as talk of a contract begins. But with any great contract oversight team, a manager and administrator may work in tandem through all seven stages.

The first step is knowing what the goal of the contract will be. What are the risks and expectations? What are the needs and duration? Why is the contract needed?

The second step is all about authoring the contract. The legal team should be on board to ensure no ambiguities remain because a lack of clarity can leave a contract vulnerable for nonfulfillment or underperformance.

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Step three is when negotiation happens. The second party receives the contract and takes the opportunity to hammer out any issues they may have or eliminate anything they perceive as unrealistic or unfair. To avoid a difficult contract negotiation, it’s wise to author the contract after some communication so you understand the other party's expectations. Once negotiations begin and the give/take exchange happens, it’s called “redlining,” and it can get complicated if the team isn't on top of the changes. Using contract management software can make this, as well as administrative oversight, a much easier process. There are a couple dozen well-recommended management software systems that might make a contract easier, depending on your needs.

Approval comes in step four. For larger companies, there may be an auditing process or a board meeting required to go over the contract and get approval. Management software can simplify this by having real-time approval possible by those with authority to give it.

Step five is all about signing the dotted line. Executing the contract means getting signatures and final agreements. Dating and witnesses may be required. Legally binding electronic signatures are helpful here when parties aren’t in the same city or country. An administrator makes sure everyone is on schedule to complete the execution process before signing deadlines arrive.

After the contract has been accepted and executed, there can be amendments and revisions needed as projects and tasks get underway. Managing these may be part of the contract administrator’s role and can be simplified through contract management programs. Staying abreast of changes and alterations is the sixth stage of the contract process.

The contract administrator is front and center in responsibilities now, as the seventh stage of the contracting process comes in. There should be milestones along the way for the administrator to monitor progress and success on the contracted services. Regular audits mean catching shortfalls or seizing on opportunities that could come up along the way. There should be reminders and alerts set for things like renewals and completion stages, and these should be communicated to all upper-level management that needs to stay informed of contractual progress. The administrator and contract manager must be communicative and proactive to avoid any lapses or end dates passing without action.

What Are Contract Administration Functions?

There’s a lot more to this job than what meets the eye. To be great in contract administration, it means working well with executives and personnel at all levels. Being a great communicator can mean helping to create more effective contracts and ensuring everyone’s needs and wants are met. To this end, they’ll need to be smooth at liaising both internally and externally. This may require the ability to work with parties internationally and will almost certainly require working with the legal and procurement teams.

The contract administrator's negotiating skills will be non-debatable. They’ll use savvy and insight to hammer out pricing, conditions for fulfillment and terms while being the hall monitor that makes sure these are all met as time progresses. They’ll also be confident risk analyzers, being able to ascertain if amendments or revisions might be at odds with their company’s best interests.

Contract administrators must be good at not just resolving conflicts but spotting them before they escalate. This may mean working to create clear language and rules that might be applied to future contracts, or even current ones, for resolving or avoiding issues.

Reporting on progress to management and other important players is required, even if things are going smoothly, as many other aspects of the business may be affected by any success or hiccups in the contract.

Finally, they’ll monitor cash flow to ensure disbursements and other contractual payments are made properly and on schedule and that they're received by the proper parties.

Careers in Contract Administration

Contract administration is a growing field, with the Bureau of Labor Statistics suggesting job opportunities may grow by 10 percent between 2016 and 2026, a growth trajectory higher than in most careers. Given how much is riding on contract success, this is a job that requires higher education, with a minimum being a bachelor’s degree coupled with a great deal of contract-related on-the-job experience or a master’s degree in business administration with related degrees in accounting, economics and mathematics. Law degrees are also often well suited to this career.

Industries that require contract administrators are widespread. Construction is a huge area for contract management and administration, and applicants may benefit from having engineering or architectural education in addition to a business degree. Sports is a great contract administration division, with everyone from food vendors to players having to be under contract. Any kind of manufacturing or engineering company will need a steady hand with contracts. Educational institutions, such as colleges and schools, deal with contracts of all kinds constantly, as do any kind of government enterprise. Human resource professionals deal with contract administration and management regularly as well.

Skills Every Contract Administrator Needs

There may be a legal team involved in creating contracts, but the administrator’s job is to support all levels of the contract process. As a result, they need to have exceptional written and oral language skills. The reality of contracts is that even a misplaced comma can dramatically alter the meaning of a line, which could bring serious blowback with it. That means their reading comprehension skills need to be top notch.

The administrator's oversight will benefit from a painstaking attention to detail – they’re the kind of person who likely notices a restaurant menu's misspellings. They also notice work quality and can easily spot inconsistencies.

The contract administrator needs to have both proven leadership skills but also be able to be a solid team player. These team-playing abilities and management tendencies will serve them well when it comes time to make reports, negotiate between parties and departments and complete the overseeing of contract execution.

If these are skills you possess and you love the idea of a challenging career in a growing field, contract administration may be the career for you.

The Bureau of Labor Statistics includes contract administrators under the umbrella of administrative services managers and states the median income in these administrative roles for 2017 was $94,020.

About the Author

Steffani Cameron is a professional writer who has written for the Washington Post, Culture, Yahoo!, Canadian Traveller, and many other platforms. Some writing projects have included ghost-writing for CEOs and doing strategy white papers. She frequently writes for corporate clients representing Fortune 500 brands on subjects that include marketing, business, and social media trends.

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