Tracking the Right KPIs for Contract Management

Cobblestone Software’s Maria Votlucka reports that in contract management, metrics matter, but not all key performance indicators (KPIs) are created equal. The most effective programs focus on three KPIs for contract management: efficiency, efficacy, and risk. Together, these metrics provide a comprehensive view of how contracts perform, how smoothly they progress, and the level of exposure they create for the business.

Contract efficiency is the operational backbone of any legal team’s workflow. It measures how quickly contracts move from drafting to execution and highlights bottlenecks that slow down the lifecycle. By automating approvals, tracking key milestones, and standardizing templates, legal departments can significantly reduce turnaround times. Efficiency is not just about speed. It’s about freeing time for higher-value strategic work.

Contract efficacy shifts the focus from process to performance. It evaluates how well agreements deliver on intended outcomes, whether through revenue generation or compliance. Monitoring contract value, renewal rates, and adherence to service-level agreements helps identify which contracts are achieving results and which need renegotiation. A data-driven approach to efficacy ensures that every contract contributes directly to the business goals.

Contract risk is about visibility and prevention. High-risk contracts—those with non-standard clauses, poor documentation, or expired terms—can lead to compliance breaches or financial losses. Modern contract management software enables teams to automate risk detection, flag problematic clauses, and set proactive alerts, dramatically reducing the chance of missed obligations or renewals.

Tracking KPIs for contract management is made easier when using a platform with real-time dashboards and AI-powered analytics. Nevertheless, it is essential to recognize that KPI strategies must evolve in tandem with business needs. Regular reviews ensure that metrics remain aligned with shifting priorities and regulations. By embedding KPI tracking into daily operations, legal ops teams can transform contracts from administrative burdens into strategic business assets.