The mining and resources sector has for some time enjoyed very favourable economic conditions. It is now more than ever, in these times of economic uncertainty that resources companies must extract the maximum value from existing and newly negotiated agreements.

In category sourcing, end-to-end contract management processes are critical in ensuring a consistency of approach and maximum contract compliance. Being able to continuously improve your sourcing processes depends on effectively tracking and measuring what you do now. Contract Management System support of these contract management processes provides pre-emptive alerts of commercially critical trigger points and milestones, and automation of processes, allowing contract managers to focus on relationships, instead of wading through spreadsheets.

Open Windows is currently implementing contracts-ENTERPRISE integrated with SAP in large resources companies and showing payback of investment in months.

Open Windows contracts-ENTERPRISE gives these customers end-to-end contract development and sourcing capability and validation and population of SAP master file and supplier data. The system also brings actual order and payment data back to your single point of contract truth from SAP, meaning you will finally have all the information you need at your fingertips.

Open Windows contracts-ENTERPRISE automates contract creation and negotiation, including electronic publishing and submission of tenders & quotations and evaluation of submissions, and carries all of the knowledge you build in the RFx process, through to the delivery phase to assist review and continuous improvement.

Operational compliance and governance of contracts means real time reporting is available on risks and contract commitments, slashing the time it takes to generate management reports.

Contracts today form the backbone of all business transactions and relationships. Even if poorly documented, agreements enforceable by law dictate the terms on which most business will be performed.

Contract Management is a term used to describe the processes we use and activities that we undertake in order to ensure that contracts are delivered the way they were intended.

If businesses find themselves non-compliant with contracted commitments the consequences can be catastrophic. Contract Management is about practical prevention of contract management problems, reducing the need to rely on the legal protection built into agreements.

Typically contracts require managing, because if they are not managed correctly, then contracts tend not to go according to plan; being they take longer than anticipated, or they cost more than they should, they are delivered incorrectly, or they end in litigation, and/or termination with various, usually negative consequences for all parties involved.

Poorly constructed or overly generic agreements that ineffectively specify buyer requirements and service levels leave an interpretive door open and require closer management through the delivery phase. Suppliers unable to accurately price these kinds of agreements, usually in the best of faith find themselves claiming variations when a buyer’s true requirements are unearthed during execution. Principals and superintendents must be realistic and fair in their determination and approval of variations in the best interest of all parties.

Contracts require people to work together in order to achieve mutually beneficial outcomes. Nobody sets out with the goal to fail, or not deliver, and like a garden, a little bit of nurturing will go a long way to achieving positive outcomes.

Contract Management Software is software that is used in supporting contract managers and contract management in general, and may be end-to-end or only support one piece of the contract lifecycle; tendering for example.

These days real contract management software supports the whole contract lifecycle end-to-end, from sourcing, through tender management, negotiation & award through governance and compliance of contract delivery, to review and renewal, automating  processes and facilitating real time contract intelligence.

I am asked quite often about Sarbanes-Oxley and how it relates to contract management, or how contract management helps organisations comply with the Act.

The Sarbanes-Oxley Act 2002 imposed new corporate governance and financial disclosure obligations on US public companies, the likes of which had not been seen in over 70 years. The aim of which was to strengthen corporate accounting controls and reform standards of public financial auditing and reporting in the wake of such financial disasters as Enron, WorldCom, and others.

Other reforms and accords such as Clerp 9 2004, governing Australian corporate law, and Basel II, Banking and Finance internationally, also govern and provide standards to help promote more effective risk mitigation and timely financial and risk disclosure.

Sarbanes-Oxley section 302 mandates that officers signing financial reports must be responsible for establishing and maintaining internal control structures and procedures for financial reporting.

Real contract management systems such as Open Windows Contracts provide effective transparency and visibility into financial commitments that organizations are often unable to achieve using financial and accounting systems. Public companies require control procedures to be established and continuously improved, over financial commitment handling and operational activity. Contract management systems with business process automation can ensure a corporate-wide consistency of risk identification and mitigation procedures that is easily and regularly auditable by signing officers responsible for Financial Reports.

Real contract management systems allow for greater controls to be put in place around:

• highly sensitive sourcing and contract development processes,
• contract award, negotiation and agreement creation,
• relationship compliance and governance,
• commitment management, risk identification and reporting.

The  formalization and standardization of such tasks helps organizations comply with their obligations under agreements and Acts such as Sarbanes-Oxley, dramatically lowering the cost of compliance, and the risk of litigation and officer penalties because of oversight or fraud.

Sarbanes-Oxley Section 409 relates to ‘Real Time Issuer Disclosures’ and required “urgent” public disclosure information on material changes in their financial condition or operations. Material information concerning the company and its consolidated subsidiaries must be made known to responsible officers by others within each entity. This means that disclosure controls and procedures must be put in place.

One of the key advantages of implementing a systems approach to contract management using software such as Open Windows Contracts, will be your ability to determine and make available information of a commercially critical nature before it impacts your business, and to allow disclosure in accordance with the Act.

Material changes in financial and operational conditions are required to be urgently disclosed to the public. These events can be identified earlier with systems in place for tracking and managing contracts, which are the instruments that provide the framework for all of your business transactions, and the part of your business most often neglected.