How to Track Changes Better in Contract Management
You’ve probably been there before.
With a looming deadline, you finally get that long-waited email from a manager who was going to look over the latest draft of your contract and make some revisions. As you open Word document named “Government Bid v10 DDedit9 revisedFinal Final_Final.doc” you’re wondering what version you’re really working and whether or not everybody that needed to review the doc actually did. You’re hit with a visual overload of strikeouts in each and every color of the rainbow, each of for the seven contributors to the contract at hand. Still, you race to process all changes and once you’re about to send out the “final version” of the contract, you get an email from your manager’s boss with a series of must-include clauses in a document that includes “v4” in its name. Sigh.
It’s possible to track changes in contract management without you going insane. Here are five best practices to make it a reality.
1. Leave Confidential Information Out of the Document
It may sound like a good idea to include all information regarding a contract in a single unit, however, that practice may become a time bomb. Take for example, when Unix seller SCO Group unwilling revealed that it was prepping a lawsuit against Bank of America when it didn’t properly used the invisible electronic ink feature of Word.
It’s essential to have the right context when revising the latest draft of a contract, but it’s equally important to be able to protect confidential information. For example, you can use a contract management system to keep a layer of separation between for-your-eyes-only comments and contract drafts.
2. Develop a Check-In & Check-Out Policy
A great way to prevent “Final_Final_Final_ReallyFinalThisTime.doc” syndrome is to limit access to a document for a period of time. It may rub some people, particularly top-level executives, the wrong way but it can give a much-needed breathing room for everybody involved in a multi-authored contract.
Ceteris paribus or “all or other things being equal or held constant” is critical to let an author finish her revision faster. Ideally, you can use a digital tool that blocks access to a document when somebody “checks out” that document and that enables access once the revised draft is checked back into the system.
Even, just a strictly-enforced verbal policy of “please wait until X finished his draft” can increase the efficiency of your contract team.
3. Increase Visibility of Processes
One thing is to expect that somebody takes a look at the draft of the contract and another to assign to that somebody a specific task within a well-defined contract lifecycle.
A contract management system allows you to customize the steps in your contract lifecycle, allocate team members to projects, and assign tasks from your contract lifecycle to those team members. Leave the guesswork out of your contract processes and clearly establish the what/who/when/where of each one of those processes.
4. Centralize Templates and Clauses
Manual processes that have to be replicated on a rolling basis are prone to human error. An example is the Excel whiz and model developer that developed a complicated value-at-risk model for a synthetic credit portfolio that “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another.” (See also: Why Excel is Not Enough for Contract Management)
Instead of forcing every employee to keep his own Franken-spreadsheet or repository of contract spreadsheets and clauses, a better idea is to centralize your company’s library of pre-approved contract templates and clauses. This way you can ensure that everybody is operating with the most up-to-date templates and clauses.
5. Keep Contract Language Within Acceptable Range
Learn from the data entry error that took place during the 2012 London Olympics. By incorrectly inputting that the remaining available tickets for an event were 20,000 instead of the actual 10,000, a clerk created a loss and a PR nightmare.
There are two easy ways that this data entry blunder could have prevented.
First, the process could have been automated. Why did a staff member had to manually input the remaining number of ticket into a spreadsheet rather than the system automatically calculating that number? This is a clear example of why contract management benefits from automation.
Second, a contract management system is able to indicate you when language deviates from a pre-approved range. Imagine the usefulness of being able to know who made the change, when the change took place, what is the difference between the used and pre-approved language, and why the change was made. Such documentation can be automatically sent to the right person to determine whether or not the change is valid.
Tracking changes is an essential part of contract management. Without an efficient process, an enterprise can burn through available hours for any project. By leaving confidential information outside of a document, using a check-in/check-out policy for revisions, increasing visibility of the overall change process, centralizing access to contract templates and clauses, and keeping contract language within pre-approved ranges, you’re taking important steps in making your track management better.
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