How much is flawed construction contract management costing your construction company? Are you losing $100K annually? $10 million annually or perhaps more and don’t actually know how much? Realistically, if a solution can save even $1,000 annually, but dramatically improve risk management and operational efficiency, it’s something worth investigating, correct? Especially if it can be implemented quickly, is highly intuitive and delivers fast ROI?
The Challenge of Managing Complexity
Managing construction projects is inherently complex, with a host of unanticipated events that can turn even the best laid plans on their head. If you are in the construction business, you clearly understand that intelligently controlling risk and uncertainty is paramount to successfully managing your business. So why, as is the case with so many construction companies, are contract management best practices so poorly addressed.
A missed contract obligation can cost hun dreds of thousands, even millions of dollars. All too often significant incentive opportunities are also missed because of the sheer volume of milestones that must be tracked, with alert notifications that are either not present or don’t reach the responsible party. As people, we are inherently fallible, and despite being through and conscientious, important items routinely slip through the cracks. Each missed opportunity represents and associated cost. Perhaps it’s the cost of being unable to pay employee bonuses or an inability to purchase anmimportant piece of capital equipment, but a cost nonetheless.
How Well Does Your Construction Management Software Manage Contracts?
So I must ask. Do you depend on the management of your contracts from within your construction management solution, a solution that does a great job helping you to manage projects, but a mediocre job of managing contracts? Are you using a less than comprehensive “home-grown” solution which does not provide the minimum functionality that you require, or are you trying to manage contract information using MS Access or MS Excel, which can’t provide the necessary access control, auditing, event notification, scheduling or deep internal contract document search that you require to do an adequate job of maximizing revenues and minimizing project risk. Are you being “penny-wise and pound-foolish” and consistently leaving money on the table, perhaps without realizing it? It’s a fair question.
There are many things that comprehensive Contract Life-cycle Management (CLM) solutions can achieve for construction companies. While significant data can usually be shared between your exiting project/construction management software and a well-behaved CLM solution, requiring an excessive degree of interoperability, while ideal, should not prevent you from benefitting from the core benefits that even a minimally integrated CLM solution can deliver.
Does Your Contract Management Suffer From One or More of These Issues?
Are your contracts scattered everywhere? Is it difficult to definitively know how many active contract obligations you are carrying? Cloud-based CLM solutions provide a central, well controlled contract document repository, accessible from anywhere, to anyone with the proper credentials.
Is it difficult not only to find the actual contract documents you seek when your need them, but also to find specific information within them. Good CLM solutions not only provide the ability to see meta data (term sheet data), essentially a contracts knowledge base related to each contract, but also provide the ability to search for any word, phrase, language or value internally within all documents across your entire document dataset, including inside PDFs.
Are you relying on ball park estimates of your contract exposure when events occur? Can you quickly, and with confidence, know how broad your exposure is across all contracts and other related obligations? Comprehensive Contract Life-cycle Management best practices recognize that exposure cannot be accurately assessed from just term sheet information and from the tedious and error-prone job of manually reviewing each contract individually. Only when exposure can be determined by comprehensively searching deep with contract language, across an entire contract document dataset, can you have a high degree of confidence that your exposure is understood.
So… should you be seriously looking at Contract Life Cycle Management solutions, in addition to the hobbled contract document solution that you may or may not be using? Let’s see. How much did you estimate that flawed contract management was costing you? (Part 1 of 2)
Tags: CM News