The difference between contract management and contract administration is a difference of timing and whether a final contract has been signed by all parties. The processes of forming an agreement and performing under an agreement can be risky and complex. Project managers should have a good understanding of these processes.
A contract is a legally binding agreement between two or more parties. Contract administration focuses on what happens before a contract is signed. The Bureau of Labor Services describes a contract administrator's duties as taking control of the way the contract is prepared, analyzed and negotiated. A contract administrator may issue a request for proposal to potential vendors, inviting them to bid on a contract. Once a vendor is selected, the contract administrator sees the contract to its conclusion, handing it over to the contract manager after the agreement is signed by all parties.
Contract management focuses on what happens after a contract is formed. According to the International Encyclopedia of the Social Sciences, management involves deciding what human, financial and technical resources an organization will devote to various initiatives. Thus, a contract manager decides how the organization will ensure that it does what it agreed to do in an agreement with another party and that the other party also fulfills its obligations.
Although there is a difference between contract management and contract administration, many organizations use the two terms interchangeably. For example, the Environmental Protection Agency's Contract Administration handbook covers activities before and after contract formation and refers to administration and management as if they were one and the same.