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ProFM: Contract Management

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  • Post last modified:July 21, 2020

Contract Management is one of the 19 functional FM knowledge areas that are categorized into four key knowledge domains.

Definition: Contract management involves the processes and procedures that organizations may implement to manage the negotiation, execution, performance, modification, and termination of contracts with various parties including vendors, contractors, and customers.

A contract is a legally binding agreement that obligates the seller to provide a specified product, service, or result and obligates the buyer to pay for it. It consists of an offer, an acceptance, and an exchange of money or something of value.

Facility managers will initiate and administer many contracts throughout their careers. Any time the organization requires basic supplies, the facility manager may be involved, if only to set the overarching contract with the vendor and monitor product cost, performance, and delivery time satisfaction.

A facility manager’s job while contracting for services (outsourcing) requires more effort in managing the organization’s relationship with the service supplier and staying abreast of service performance. For internal facility managers, depending on their department’s size, managing and optimizing outside specialists’ expertise may be a daily endeavor. For facility managers who work for property management or maintenance firms, their role’s main focus is on supervising facility management services supplied to residential or commercial businesses.

Key Concepts:

  • Definitions of contract and contract management.
  • Types of contracting.
  • Contract pricing and rate methods.
  • Components of a contract.
  • Contract initiation process.
  • Contract negotiation skills.
  • Contract administration.
  • Cost control.
  • Change control.
  • Contract discrepancies.
  • Revision of contracts.
  • Terminating contracts.
  • Using computer-aided facilities management (CAFM) for contract management.

Contract Management Proficiency Indicators (Task Statements)

  • Demonstrates knowledge of different contract types (e.g., fixed-price, cost-reimbursable, time and materials).
  • Demonstrates knowledge of basic contract terminology, including common terms and conditions.
  • Identifies and interfaces with internal and external accountable resources (e.g., external vendors, internal or external IT systems owners).
  • Performs contract negotiations on price, terms, and conditions.
  • Coordinates legal review of pending contracts.
  • Ensures compliance with company standards and contract terms and agreements.
  • Governs and oversees contracts to ensure compliance and full value of the service or product being provided.
  • Assesses technical requirements needed to ensure delivery and quality of services/products.
  • Manages and coordinates contractor performance to ensure effective delivery of contracts.
  • Creates change orders for project scope changes.
  • Performs contract termination and closeout as needed.


Image by Gerd Altmann from Pixabay

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