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.
