Contract Management After Award: From Award Letter to Contract Closure

Why does contract management start before signing?

The award committee’s job ends when the supplier is chosen, but the money is spent and the risks emerge afterwards. That is why the World Bank defines contract management as the execution of the contract after award, including, where relevant, the defects liability or operation and maintenance period. ^[1]

The World Bank lists the common causes of poor contract management: failure to plan, poor specifications, an inappropriate contract type, inadequate resourcing, lack of implementation readiness, and weak supervision and monitoring. ^[1] Most of these are settled before or at signing, not after the problem appears.

The first step is to appoint a contract manager for every contract, with suitable qualifications and experience and clear authority and delegations. For small contracts, one person may manage a portfolio; for large ones, an engineer or project manager is usually contracted. ^[1]

What happens between the award letter and signing?

This short period is governed by the applicable law, and the detail differs by country:

• Saudi Arabia: the Government Tenders and Procurement Law issued by Royal Decree No. M/128 in 2019 requires a final guarantee of 5% of the contract value, submitted within 15 working days of notification of award and extendable by a similar period, with exemptions including contracts worth SAR 100,000 or less. ^[4]
• UAE (federal government): Federal Law No. 11 of 2023 provides that signing follows notice of award and submission of a bank guarantee if required, with the procedure set by the Executive Regulations. If the supplier fails to sign within the set period without an acceptable excuse, the award may be cancelled after notice. ^[6]

In other Gulf countries, and in local entities with their own regimes, refer to the procurement law and instructions that apply to you.

World Bank guidance advises verifying performance and advance payment guarantees with the issuing institution if in any doubt, and checking insurance policies: the issuer, amount, coverage, period, insured parties, exclusions, and any conditions that could void the policy. ^[1]

What goes into the contract management plan?

The World Bank recommends starting the contract management plan early, ideally completing it by contract signature, and making it proportionate to the contract’s scope, value, risk and duration; it lists 23 items for the plan. ^[1] The most important can be grouped as follows:

The plan is not a confidential internal document. The World Bank recommends sharing it with the supplier and discussing it, particularly the allocation of risk and responsibility. ^[1]

The kick-off: how should the first phase start?

The first weeks are when the relationship is built and obstacles surface. Start-up actions listed by the World Bank include putting in place a team that knows the contract and systems, helping the supplier with visas, work permits and customs clearance, monitoring the conditions for the contract to take effect, and paying the advance on time. ^[1]

Points worth fixing at the kick-off meeting:

• A realistic schedule with a clear critical path, used by both parties rather than two different versions. ^[1]
• Official correspondence channels, and who has authority to issue instructions.
• How receipt and inspection work, and who signs the acceptance record.
• Dates for progress reports and review meetings.

How do you monitor performance without it becoming a dispute?

CIPS suggests setting up a performance management framework at the outset, covering service levels, KPIs, reporting, escalation, invoicing, remedies for failure, rewards for improvement and reviews. ^[2] The World Bank adds that preliminary KPIs are set during planning and refined as information becomes available. ^[1]

Monitoring covers three areas:

• Time: track progress against the schedule, intervene early and record decisions on delay. ^[1]
• Cost: compare actual spend with budget, and scrutinise every change request and its justification. ^[1]
• Quality: a quality system agreed before work starts, and root-cause action on defects. ^[1]

Do not forget the buyer’s own obligations. The World Bank treats timely payment as a claim-prevention measure and notes that late payment can entitle the supplier to claim financing charges or suspend work. ^[1] CIPS points out that late payment can itself be a breach of contract. ^[2]

Variations: how do you keep them under control?

Change is a normal part of contracts, but undocumented change is the source of most disputes. Good practice recommended by the World Bank includes a formal, documented change process from the start; standard forms for requesting, estimating and approving changes; clear delegated authority; assessing the impact on quality, time, cost and risk; and issuing no change without documentation except in an emergency or where the contract allows. ^[1]

The limits on change are set by law:

• Saudi Arabia: the 2019 law allows contract value to be increased by up to 10% or reduced by up to 20%. ^[4] A new law was published on 4 September 2026 and takes effect 120 days later, on 2 January 2027; for contracts signed after that date, check the change limits in the new law and its implementing regulations. ^[5]
• UAE (federal government): Federal Law No. 11 of 2023 requires compliance with the limits and procedures in the Executive Regulations, approval under the delegation matrix, and acceptable reasons for any amendment. ^[6]

What do you do when a supplier defaults?

Contractual remedies are a graduated set of tools, not a single option. The World Bank lists a notice to correct the default, withholding payment, calling the performance security, delay damages and, as the ultimate remedy, termination. Before terminating, confirm the breach is a stated ground, follow the contract’s procedures and keep a complete record of notices, correspondence and performance. ^[1]

Caps differ between regimes. Under the 2019 Saudi law, delay penalties may not exceed 6% of the contract value for supply contracts and 20% for other contracts, and the entity may terminate if the contractor delays or breaches its obligations and does not remedy this within 15 days of written notice. ^[4] Under the new law, which applies from 2 January 2027, the delay cap for non-supply contracts falls to 15%, while supply contracts stay at 6%. ^[5]

Hypothetical example: an equipment supplier is late delivering. The contract manager sends a written notice stating the clause breached and the cure period, records the delay in the progress report, and applies the penalty to the next payment as the contract provides. When a bigger decision is needed later, the file is ready, with dates and correspondence.

How do you close the contract properly?

Closure is more than releasing the final payment. The Victorian Government’s guidance recommends checking that the supplier met the contract’s standards, preparing a final report and obtaining one from the supplier, handing over data or intellectual property, arranging remaining payments, keeping records, and planning the transition if the supplier is changing. ^[3]

Under the Saudi law, the final guarantee is retained until the contractor fulfils its obligations and final delivery is made under the contract, and the contractor’s performance is assessed on completion using the performance assessment form. ^[4]

Then comes the review: record lessons learned throughout the contract, compare outcomes with the plan, ask users about the service, and document and share recommendations within the organisation. ^[3] CIPS also calls for periodic reassessment: does the agreement still meet business needs, and what are the end-of-life costs such as decommissioning and disposal? ^[2]

Conclusion

Contract management after award starts with a written plan and a contract manager with real authority, continues with documented monitoring of time, cost and quality, and controls change and remedies under the contract and the law in force in your country. An organisation that closes each contract with an evaluation and written lessons goes into the next tender with a better specification and a better contract.