Management contract..

Agreement between investors or owners of a project, and a management company hired for coordinating and overseeing a contract”.
A business or an organization will hire a management company to perform specific tasks. Your organization might hire a management company to look after its marketing and under the contract, the management company would perform marketing on your company’s behalf and receive a fee for doing so.
 The compensation for the management might be decided based on performance or it can be a set sum decided between you are the management company.

1. MANAGEMENT CONTRACT SUBMITTED BY :- ANIRUDH SINGH THAKUR ARPIT KHANDELWAL JAYVARDHAN SINGH PANWAR

2. WHAT IS A MANAGEMENT CONTRACT Agreement between investors or owners of a project, and a management company hired for coordinating and overseeing a contract ”. A business or an organization will hire a management company to perform specific tasks . Your organization might hire a management company to look after its marketing and under the contract, the management company would perform marketing on your company’s behalf and receive a fee for doing so.  The compensation for the management might be decided based on performance or it can be a set sum decided between you are the management company.

3. CONTROL UNDER MANAGEMENT CONTRACT Under the management contract, the operational control of the enterprise or the specific department would be in the hands of the management company. Therefore, the management company you would choose, would be able to make all the operational decisions regarding the function you specified, i.e. marketing. Your contract might limit the excess of the control, but in most instances, the contract includes all operational functions of that specific enterprise or department.

4. COMPONENTS OF MANAGEMENT CONTRACT 1.The conditions of the contract   – The lengthiest and most detailed part of the management contract is naturally the conditions of it. The contract must clearly identify the parties involved and the functions that are being transferred to the management company. This includes the outline of the rules and  responsibilities both parties have and the extent which either party can influence the operational functions once the contract starts . To avoid confusion and conflict later on, the conditions must be clarified and the functions and operational responsibilities outlined in detail.

5. 2.The duration of the agreement  – The section specifies the duration for how long the management company will be in charge of the enterprise or department. The duration could range from a few months to years, and you might have set specific conditions for the duration . For example, if certain performance metrics are not met, the contract can be terminated sooner and so on . 3. The method of computing the management fees   – The management contract should also discuss the compensation method. As mentioned above, the method for computing the management fee can range from a set percentage, a set sum or a specified sum related to performance. An example fee could be a % of total revenue and/or a % of gross profit.

6. FUNCTIONS OF MANAGEMENT CONTRACT The range of functions is wide and varied. The typical functions entail the following: Technical operations such as production of products Management of human resources, including training of personnel Financial management of the organization such as accounting Marketing services, including promotions A company can essentially identify the functions it hands over to the management company depending on its needs.

7. EXAMPLES OF MANAGEMENT CONTRACT

8. ADVANTAGES Having to do your own bookkeeping might take too much of your time away from things like marketing or product development. By hiring a management company to look after the accounting part of the business, you are  able to save time and your resources . The organization receives expertise and experience . Consider the example of a start-up. You might not be efficient in business finances, but instead know everything about marketing and product development. When you are hiring a management company to take control of your accounting, you are seeking out services from a professional . Management contract can also  provide more continuity to an organization . The contract company might have individual managers change during the contract, but the standards set at the start of the deal will continue to remain in place. What this means is that you don’t need to worry about change in performance or style, as you have spelled out the conditions in the agreement.

9. DISADVANTAGES The organization is essentially  surrendering information about its products, finances and other such matters to another entity . While the contract naturally deals with these issues and requires full confidentiality, the information is still not only confined to your organization. you need to keep in mind overall issues regarding  conflict of interest . If you are using a large management company, you need to be aware of the possibility the company also deals with your competitors. You want to ensure the management company resolves such possible conflicts of interest with your business’ interests in mind. While it should be obvious from the definition of a management contract, it is worth reminding how the agreement  transfers the operational control of your business to the management company . Therefore, depending on the clauses in your contract, you won’t have a say in many of the things the function will do.

10. CONCLUSION The Management Contract system can help large-scale organizations look after their businesses better or provide more resources for smaller companies. The Management Contract is definitely worth exploring if certain functions of your business seem time-consuming or difficult to deal with.