Source : Legal Expert Services

Alternative name(s)

‍‍‍Contract management is also known as Contract Administration [1].‍‍‍


Contract is an agreement signed on a legal document between two parties, under which one party agrees to deliver goods or services in return for a consideration (monetary payment). The process of documenting the requirement, agreeing on terms and conditions, as well as documenting and agreeing on any changes based on contract types used and follow up on the execution and implementation to the later on terms and conditions agreed on is known as Contract Management (PMBOK, 2008). Therefore, the variation in projects requirement demand, results to the composition of different type of contract to satisfy their unique needs. A typical example is the use of ‍fixed price (lump sum) contract on project that gives specific information on its scope. This type of contract is constrained on cost, as the price for the project is fixed on the contract document, hence placing higher risk on the contractor, if the contractor is unable to satisfy the terms and condition of the contract within the agreed time. Nevertheless, in this type of contract, the client negotiates for scope change with increase in price of the total project. There are other types of contract, examples are Target cost contract, Cost Reimbursable (Cost Plus Contracts) contract, and Time & Materials (Unit Price Contracts) contract.

Agile values

Customer collaboration over contract negotiation (Agile Manifesto): - relates on the ability to satisfying the customers’ needs first, rather than damage the good relationship built with time, due to demand for financial gain as embedded on the contract. The team ensure that customers request for change is prioritized first before negotiating for increment on contract payment.
Responding to change over following a plan (Agile Manifesto): - is related to contract management topics like project scope, change control, and acceptance.‍‍‍ Different contract types are ‍‍‍introduced‍‍‍ to manage their projects. A typical example is the implementation of target-cost contracts, at the start of the project, where details of requirements are stated by the customer. These changes on the subsequent iterations are catered for, through the introduction of a new contract type like ‍‍‍progressive contracts. ‍‍‍The contract change helps mitigate the conflict that could have been raised on payments due to responses to these changes made on the developers plans. This concept ensures a win-win on both parties.
Respect, XP value. This XP value can be easily related to contract management, because of the fact that the two (or more) parties signing the contract are obliged to have open and honest relationship between each other, based on mutual respect and comprehension. Showing respect to each other makes team members and the client feel valuable and important.

Agile principles
‍‍Business people and developers must work daily troghout the project (Agile Manifesto). ‍‍‍The close relationship between business people and the project team assures clarity of work process and requirements, which should be outlined explicitly in the contract between them. This is one of the basic characteristics of the work process that the people who are responsible for the contract management should include in the contract in order to operate in an agile way.
Very simple rules generate coherent emerging order (CAS). This Cas principle suggests that there should be a rule for example present in the contrat, which forbids adding more user stories to an iteration backlog. This will facilitate the work and the relations between the customer and the cotnractor in terms of not putting more pressure on the contractor and not overloading the team members with additional work.‍‍‍
Welcome changing requirements, even late in development (Agile Manifesto). This principle refers to the agile management's main features- that changes are treated not as a threat to the project, but as a normal part of the working process. ‍‍‍The contract with the client welcomes changes of the requirements specification, even though they may appear late in the process at it is easy to implement them because of the fact that the project is conducted in small iterations. Apparently this would require a‍‍ contract with the customer, which is more flexible in terms of not being fixed price, because constant requirements changes would cost more to the project team.

Agile practices

Coding standards, XP practice. According to this practice all codes should be written according to pre-set rules, where communication plays an important role. This agile practice can be related to contract management in terms of setting those rules in the contract and referring to them constantly.
Simple design, XP practice. In the agile way of managing projects, contracts should be deprived from high complexity in terms of having a clear description of the final product and clearly defined processes, divided into smaller stages.
‍‍‍Short Iterations XP practice. Traditional contracts may fail because of the fact that they cannot ‍‍‍deal‍‍ effectively with change- change in requirements specification or change in design. However in Agile, the practice of dividing the work into short iterations becomes really helpful in terms of coping with different changes occuring. In this case a Cost‍‍-plus contract (also known as cost reimbursement contract) would the best decision. ‍


In Agile Management people and processes are dependent on the customer's contribution on each iteration and on their constant collaboration and feedback. In terms of contract management, when preparing the contract, the project team needs to ensure themselves against the customer not being available enough and not interacting and reponding ti quieries on time, before the end of the iteration.
In traditional contract management, when the customer is not so involved in the process ‍‍‍‍ it is usually him who tries to ensure that he is protected against contractor's failure.
‍‍‍Also in Agile, the type of contract is a bit different of the traditional one in terms being more collaborative and realizing that change will represent a crucial part of the project and it won't be considered as a harm or menace to achieving project outcomes. The main difference bet‍ween the agile projets contract and the traditional projects contract is the approach to operational processes and delivery and the fact that the first type suppoer collaborative decision-making (Arbogast et al, 2012).‍‍

Links from this KA to other KAs

The KAs which are related to contract management are Project Scope Management and Requirements Management. The reason for this is because the requirements and the desired scope will have to be stated in the contract in order to ensure that they are met.
Contract Management can also be linked to Change Management, because of the fact that the main purpose of this process is agreeing on any changes based on contract and follow up on the execution and implementation of those changes.


Arbogast, T., Larman, C., Vodde, B. (2012) Practices for Scaling Lean & Agile Development: Large, Multisite & Offshore Product Development with Large-Scale Scrum. Agilecontracts. [Online] Available at:
http://www.agilecontracts.org/agile_contracts_primer.pdf (Assessed: 27 March 2013)
[1] National Association of Legal Assistants, 2008. Advanced Paralegal Certification. [Online] Available at: http://www.nala.org/apc-contract.aspx
[Accessed 11 April 2012]
PMBOK (2008) Project Human Resource Management. A Guide to the Project Management Body Of Knowledge, 4th ed. Chapter 9, pp: 170-190

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‍‍Contract Management (Arabic Version)‍‍‍