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Every organization should have a standardized approach to contract management.
A Contract Management Plan (CMP) provides an overview of how the contract will be governed during its operational phase from an operational, financial, and delivery perspective — and in a format suitable for reporting.
The purpose of a CMP is to conceptualize how the contract mustfunction during the delivery phase in order for contractual requirements to be met and for the contract’s financial, time-related, and quality objectives to be achieved.
A CMP also helps stakeholders think in practical terms to testlogic and feasibility at an early stage, before the contract enters intooperation.
A CMP must be tailored and detailed enough to be usable at the operational level for each contract. The level of detail and the content depend on factors such as the contract’s value, risks, timeframe, and complexity.
As a general rule, a CMP is not a legally binding contract document, but it must be consistent with the contract. Although a CMP is primarily an internal document, it can be included in tender material to inform suppliers about how the customer intends to manage the contract. A CMP may later evolve into a contract appendix.
If there is any conflict between the contract (including its appendices) and the CMP, the contract prevails. Any differences must be handled through the contract’s change procedure and documented accordingly.
A CMP should be known and signed locally by the operationalmanagers responsible for the contract on both the customer and supplier side.It plays a key role in guiding the organization’s contract management processand serves as an important risk management tool to ensure that the responsible contract manager (or whichever role is acting as contract manager, such as a project manager) identifies and addresses all relevant issues throughout the entire contract lifecycle.
The CMP is also a highly important source of knowledge transfer when personnel changes occur, such as the introduction of a new contract manager or project leader.
A CMP can additionally be used to inform senior leadership(e.g., the CEO, procurement leadership, and senior management) about the contract administration process, requirements regarding delivery management, penalties and payments, and any risks associated with the contract. Moreover, aCMP serves as a foundation for reporting — including who must receive reports, in what format, with what content, and at what frequency.
A CMP (Contract Management Plan) typically includes the following components:
1. Contract summary and background, including key documents
2. Purpose and objectives of the contract
3. Key deliverables and KPIs, including outputs, outcomes, and strategic/operational KPIs (e.g., sustainability and compliance)
4. Mandatory requirements and reporting
5. Roles, responsibilities, and stakeholders (RACI), including contract/project management and contract governance
6. Complexity assessment / risk assessment / value assessment to determine appropriate management activities and intensity
7. Delivery and risk management (commercial risks)
8. Contract management meetings
9. Delivery management (practical oversight and escalation procedures)
10. Change management
11. Requirements management
12. Dispute resolution and termination
13. Contract audits / reviews
14. Completion and contract closure
15. Contract transition
16. Final contract review / lessons learned — input to sourcing processes, etc.
17. Summary of key activities and dates (contract summary)
18. Signature
19. Attachments
It is crucial to identify key stakeholders and any potentialobligations they may have, as well as the main commercial and contractual risksand how these will be managed and mitigated.
It is also important to identify the terms and conditions needed to support the agreed goals and strategies — for example, contractual incentives such as penalties or bonuses — and the behavioral requirements expected during contract execution and delivery. Equally important is identifying the formal tools used to manage the relationship between customer and supplier, which will vary from contract to contract depending on the requirements and the depth of the partnership.
Internal stakeholders must understand and agree to the required level of contract management. The responsible contract manager should collect and document all of the above in a CMP as part of the overall contractual and commercial strategy.
An organization can proactively assess a supplier’s capability and willingness to meet contract management requirements if a CMP is included in the tender package and evaluated during the bidding process. Examples include the supplier’s acceptance of meeting frequency and participation, access to supplier personnel, and the delivery of specific information within defined timeframes.
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