{"id":587,"date":"2013-02-13T09:16:38","date_gmt":"2013-02-13T09:16:38","guid":{"rendered":"https:\/\/stagingwww.zycus.com\/5-steps-to-manage-contracts-efficiently-step-3"},"modified":"2025-12-26T11:46:41","modified_gmt":"2025-12-26T11:46:41","slug":"5-steps-to-manage-contracts-efficiently-step-3","status":"publish","type":"post","link":"https:\/\/dev.zycus.com\/freshz\/blog\/procurement-technology\/5-steps-to-manage-contracts-efficiently-step-3","title":{"rendered":"5 Steps to Manage Contracts Efficiently \u2013Step 3"},"content":{"rendered":"

Step 1<\/a> in managing contracts efficiently dealt with automating contract creation which helps standardize the contracting process and in step 2<\/a> we discussed the significance of collaboration while authoring and negotiating contracts.<\/p>\n

Moving onto step 3 –\u00a0CREATE CONTRACT REPOSITORIES<\/strong><\/p>\n

Consider this instance; Company ABC with a transport contract of $100,000 dependent upon the fuel prices. ABC links transport contract with provision of escalator\/de-escalator clauses. This clause becomes effective for the $15 fluctuation. The clause states that the change in contract price is equal to 30% of original contract rate * (change in oil price \/ reference price). The price of oil on the index falls from a reference price of $135 in July 2008 to $56 in May 2009. The change in the contract rate for the given change in oil prices would be equal to 0.30* 100,000* ((135-56)\/135) = $17,555<\/p>\n

Contracts like this would be existing in different currency formats and with different terms & conditions. These need to be monitored and especially for the ones which are volatile.<\/p>\n

Thus measures should be taken to avoid risks arising due to forgotten or misplaced contracts, missing contract\u00a0expiration\u00a0or unintended renewals that can cost the business a hefty amount.<\/p>\n

Some measures that can be adapted for better contract management are;<\/p>\n