5 essential steps for maritime companies to strengthen contract management

Effective contract management is the quiet force that keeps maritime projects on course. Many companies in the maritime sector often overlook how well-structured contract management can significantly improve project outcomes. By ensuring compliance, managing risks, and meeting all obligations, companies can protect both their financial and operational interests. Here’s a closer look at how maritime companies can enhance contract management practices to improve project delivery, highlighting the crucial role of contract managers in securing project success.

Ensuring compliance: managing contractual obligations

One of the biggest challenges in maritime contract management is keeping track of all the obligations within complex contracts. These contracts often span hundreds of pages and contain numerous clauses that outline obligations using terms like “shall” and “must.” Each represents a task that must be fulfilled, and missing even one can lead to disputes, financial losses, or worse arbitration.

Proactive risk management: staying ahead of issues

Risk management during contract execution is another area where maritime companies often falter. Projects can face numerous unexpected risks, many arising from unclear or poorly understood contractual obligations. A solid risk management strategy that identifies risks early can prevent them from turning into bigger problems.

The process begins with thorough risk assessments during the negotiation phase. Collaborate with legal and operational teams to understand the potential impact of each clause. Then, create a risk matrix to prioritize which risks need mitigation. Some risks are unavoidable, but knowing which are acceptable and which must be addressed can keep your project on track.

Engaging external advisors like The Synergy Partner can further strengthen your approach. An independent perspective can reveal risks that internal teams might miss, ensuring the contract aligns with your company’s risk appetite and strategic goals. Maritime companies that handled this professionally have already mitigated risks worth tens of millions.

The interplay of contract and project management

Project management and contract management are two sides of the same coin. While project managers handle execution, ensuring tasks are completed on time and within budget, contract managers ensure that every aspect aligns with the terms of the contract. The two functions must work in harmony to avoid legal and financial missteps.

However, assigning contract management to project managers stretches their capacity and increases the chances of error. This is particularly true in the maritime sector, where contracts are often highly technical and involve multiple stakeholders. The solution is to allocate dedicated contract management resources for every project, allowing project managers to focus on execution while contract managers handle the legal and financial frameworks.

Why specialized contract managers matter

In many maritime companies, contract management is handed off to in-house legal teams. While lawyers play a vital role in drafting and negotiating contracts, they are not usually involved in day-to-day contract administration. This leaves a gap in managing the contract’s lifecycle, as legal teams may lack the operational insight needed to oversee contracts effectively.

Contract managers bridge this gap. With interdisciplinary skills that combine legal, financial, and operational knowledge, they manage contracts more effectively than legal teams alone. Appointing a contract manager early ensures that obligations are monitored from the start, amendments are handled smoothly, and disputes are resolved promptly.

5 Steps to improve maritime contract management

To improve contract management, maritime companies should take the following actions:

Ensure full compliance
Track all obligations from the outset with contract management software and regular status checks.

Develop a risk mitigation plan
Identify risks during negotiation and create a structured approach to managing them.

Assign dedicated contract managers
Separate contract and project management to ensure both get the attention they need.

Engage independent experts
Bring in external advisors like The Synergy Partner for a thorough risk and contract assessment, as fresh, external eyes can identify risks that may be overlooked internally due to established routines.

Integrate cross-functional oversight
Ensure contract managers have a well-rounded skill set to cover all aspects of contract execution.

The importance of expertise

Contract management plays a pivotal role in successful maritime projects. By managing risks, ensuring compliance, and involving specialized contract managers, companies can avoid disputes, reduce costs, and achieve smoother project execution. Engaging experts like The Synergy Partner provides an added layer of protection, ensuring that contracts are handled with the technical and legal expertise they deserve. Now is the time to take control of your contract management processes and set your projects up for success.

Why Maritime Contract Management is the hidden key to successful project management

Since the mid-20th century, project management has evolved into a well-established discipline, recognized as a critical component for the successful completion of any project. In fact, within most organizations today, the importance of project management is rarely questioned. However, when it comes to contract management, the same level of recognition is not always present. This raises a vital question: is contract management just as essential, and what sets it apart from project management?

While project management focuses on the planning, organization, and execution of projects to meet specific objectives, contract management ensures that the foundational agreements governing those projects are properly developed, maintained, and executed. Yet, many companies leave contract management to the project manager, despite the specialized skills required. In the maritime industry, where project complexity is commonly high, overlooking the importance of dedicated contract management can lead to unnecessary risks and missed opportunities.

In this article, we’ll uncover the crucial distinctions between project and contract management, diving deep into the specialized skills that make both roles indispensable. We’ll also challenge the common reliance on legal counsel alone, showing why this approach can leave your project exposed to unnecessary risks. You’ll learn how expert contract management safeguards your projects, controls costs, and drives success, especially in complex industries like maritime. The insights will reveal why every project manager needs a contract manager by their side to ensure nothing falls through the cracks—and how this partnership could be the game-changer your projects have been missing.

The core difference between project management and contract management

At first glance, project management and contract management may seem interconnected, as both play key roles in the success of a project. However, their focus and responsibilities are distinctly different.

Project management primarily revolves around the coordination and execution of tasks that ensure a project is completed on time, within budget, and meets quality standards. Project managers are responsible for planning, organizing, and managing resources to achieve specific objectives. They oversee timelines, manage budgets, and handle team dynamics to keep the project on track.

Contract management, on the other hand, is centered on the agreements that govern the project’s execution. It involves drafting, negotiating, and overseeing contracts to ensure that all parties fulfill their obligations and that the terms of the agreement are adhered to. While project management deals with the "how" of executing a project, contract management is concerned with the "what" and "why" as defined by the contract itself. The contract lays out the rules of engagement, setting the framework for the entire project. Ensuring compliance with these rules is the contract manager's responsibility, making it a critical role in mitigating risks and managing relationships.

In essence, while project managers focus on execution, contract managers focus on compliance and protection of legal and financial interests. Both functions are indispensable, but contract management often goes overlooked, particularly in our industry, where the stakes are high and contract intricacies are many.

Overlapping skills but different roles

While project and contract management share some overlapping skills (such as organization, stakeholder management, and a focus on project objectives) their core competencies differ greatly.

Project managers focus on the overall execution of the project, blending technical managerial and leadership abilities. Their role is to coordinate teams, manage timelines, and ensure the project stays within scope and budget. They are responsible for delivering the project on time while addressing challenges as they arise.

Contract managers, by contrast, concentrate on legal and commercial aspects. Their role involves drafting, negotiating, and managing contracts to ensure both parties meet their obligations and access risks. They work with legal, procurement, and financial teams to protect the organization's interests and manage disputes.

Often, companies expect project managers to handle contracts, but this can be risky. Managing contracts requires specialized legal knowledge of commercial and technical exposure that project managers typically do not have. While there’s collaboration between the roles, contract management needs dedicated expertise to safeguard the project's success, especially in the complex maritime industry.

The importance of contract management in projects

Contract management is crucial for project success, serving as a safeguard against risks, financial issues, and non-compliance. While project managers focus on executing tasks, contract managers ensure the agreements guiding the project are properly followed.

One key role of contract management is risk reduction. By ensuring all parties fulfill their obligations, contract managers help prevent disputes, delays, and cost overruns—particularly important in complex industries like maritime.

They also manage costs by enforcing payment terms and ensuring compliance with regulations, which helps avoid legal issues. Additionally, contract managers improve relationships between stakeholders by managing communication and resolving disputes quickly, ensuring minimal project disruption.

In short, contract management is more than just oversight—it protects the project’s legal,  financial integrity and limiting exposure helping ensure successful delivery.

The limits of legal counsel in contract management

While consulting a lawyer during the pre-contract phase is standard practice, relying solely on legal expertise throughout the entire project lifecycle can present challenges. Lawyers are indispensable for drafting and negotiating the legal terms of contracts, ensuring that agreements are sound and compliant with applicable laws. However, contract management goes far beyond the legalities.

Once a contract is in place, managing its implementation requires ongoing oversight of commercial, operational, and relational aspects—areas where lawyers are not always equipped to provide comprehensive support. Lawyers excel in mitigating legal risks, but they are not typically responsible for handling the day-to-day contract administration, such as tracking performance milestones, managing relationships between stakeholders, or ensuring that the project remains aligned with financial objectives.

Contract managers, on the other hand, bring an interdisciplinary skill set that covers these areas, complementing legal counsel’s input. They oversee the contract from start to finish, ensuring that all parties meet their obligations, risks are controlled, and the contract delivers maximum value. By managing the commercial and operational aspects alongside the legal requirements, contract managers ensure a balanced approach that leads to smoother execution and greater project success.

Relying only on lawyers for contract management overlooks these broader needs. A dedicated contract manager bridges this gap, providing the expertise required to manage every aspect of the contract, not just the legal ones.

Why every project manager needs a contract manager

A project manager's role is demanding, requiring focus on timelines, budgets, and team coordination. Adding the responsibility of managing complex contracts stretches their capabilities and increases the risk of critical mistakes. This is where the value of a dedicated contract manager becomes evident.

Contract managers bring specialized knowledge in legal and commercial matters that project managers often lack. They ensure contracts are negotiated effectively, obligations are met, and risks are minimized throughout the project’s lifecycle. Their oversight protects the project from unforeseen legal disputes, cost escalations, and non-compliance with regulations—issues that can derail a project if left unmanaged.

In the maritime sector, where contracts can be highly technical and involve multiple stakeholders, the expertise of a contract manager is not just helpful but essential. They provide the critical legal and financial oversight that allows projects to stay on course, ensuring that both the project and the organization are protected from risks that would otherwise go unnoticed.

This is where The Synergy Partner comes in. With extensive experience in both maritime projects and contract management, The Synergy Partner brings the specialized skills and legal and technical expertise required to navigate even the most complex contract situations. By partnering with The Synergy Partner, you’ll have a trusted advisor who understands the nuances of the maritime industry and can protect your project from start to finish.

Anchoring compliance: effective strategies for maritime contract management

Do you truly comply with your requirements?

Have you ever considered whether your maritime company is truly in control when it comes to contract management? Do you have complete oversight over all the requirements stipulated in your maritime contracts? Before answering with a confident 'Yes,' let's take a closer look at what a typical maritime contract entails.

Upon examination, you'll likely notice that the term 'shall' appears almost on every page, often multiple times. This term signifies obligations that must be met during the execution of the contract. Given that a maritime contract can easily span 100 pages, containing anywhere from 500 to 1000 requirements, can you honestly say you are fully compliant with each stipulation? This article aims to help the maritime industry affirmatively answer that question with confidence.

Understanding maritime contract management

Maritime contract management involves drafting contracts, administering changes, and continuously verifying whether the execution status aligns with the contract terms. This applies to both customer contracts and those concerning subcontractors and suppliers. Despite its relatively new and underappreciated role in the maritime sector, its importance cannot be overstated.

The important role of contract managers

A contract manager ensures all contractual obligations are met, from initial negotiations through final execution. This includes monitoring compliance, managing amendments, and addressing any discrepancies promptly. Given the intricate nature of maritime operations, this role is crucial in mitigating risks and ensuring project success.

Delving into maritime contracts: the overlooked burden of obligation

Maritime contracts are often handled by the sales department in collaboration with the legal department or an external lawyer. While the terms and conditions are typically well-analyzed, the sheer number of obligations is frequently underestimated. To illustrate, in a 100-page maritime contract, the words 'shall' and 'must' can appear between 500 and 1000 times, each indicating a specific requirement to be fulfilled. Failing to comply with even one of these obligations can lead to disputes or, worse, maritime arbitration.

The perils of non-compliance

Non-compliance with contract requirements can have severe repercussions. Disputes can arise, leading to costly arbitration or litigation, which can damage business relationships and financial standing. Therefore, understanding and managing these obligations proactively is paramount to avoiding such pitfalls.

Risk management as a strategic imperative

Risk assessment is a common practice in the maritime sector, yet projects often fail due to misjudged risks. This can be attributed to two primary reasons: risks are frequently underestimated, and there is often no clear framework to determine which risks are acceptable.

Developing a risk mitigation strategy

Incorporating risk management into your business strategy involves establishing which risks are acceptable, how they should be mitigated, and which should be avoided altogether. This strategic approach provides a framework for assessors and contributes to making contractual risks more manageable, thereby ensuring the continuity and success of maritime projects.

Engaging an independent advisor

To gain a clear picture of potential risks, it is advisable to consult with an independent advisor. Firms like The Synergy Partner offer expertise in risk assessment and management especially during contract negotiations, helping maritime companies navigate complex contractual landscapes effectively.

Implementing maritime contract management and project control

Once a good contract is signed, it should be actively utilized from day one. A well-drafted contract outlines all elements contributing to a successful maritime project. However, contracts are often only revisited when issues arise, leading to disputes and opposing stances. This can be avoided through proactive maritime contract management.

Day-to-day management

Effective contract management involves tracking the status of each requirement, ensuring they are met within the stipulated timelines, and reporting on their status at agreed intervals. Keeping this process up-to-date is crucial. Additionally, securing robust maritime project control is essential as it complements contract management, ensuring comprehensive oversight and compliance.

Seeking expertise and experience

Given the complexity of this process, enlisting the help of experienced professionals is vital. Independent partners like The Synergy Partner, with extensive expertise in project control and contract management, can provide invaluable support in navigating these challenges.

The crucial role of maritime contract management: ensuring control and success

This article emphasizes the proactive application of maritime contract management and project control for a simple reason: there is a lot at stake. Many maritime projects fail due to inadequate attention to contract management. Realistic and well-structured agreements contribute significantly to the success and profitability of maritime projects.

Building transparency and trust

Effective contract management fosters transparency and mutual trust between clients and contractors, granting full control over projects. By starting with maritime contract management today, you can pave the way for more successful and less risky operations.

Let’s start

Maritime contract management is a practical necessity for mitigating risks and ensuring project success. By proactively managing contracts, engaging in thorough risk assessments, and utilizing experienced advisors, maritime companies can navigate the complexities of their contractual obligations with greater confidence and control. Start implementing comprehensive maritime contract management strategies today to secure the future success of your maritime projects. We are here to assist you every step of the way.