Just as steel and concrete reinforce the foundation of a well-built structure, a strong construction contract forms the foundation of a successful capital project — and a profitable company. A contract is undoubtedly the most important project document, detailing the scope of work, outlining the terms and responsibilities, and assigning accountability for real and potential financial risks to the appropriate parties.
How effectively the contract is managed sets the stage for how well a project progresses and meets client obligations. Such a legally binding document benefits most from purpose-built contract management software, rather than traditional management methods that in themselves introduce unnecessary contractual risk. How? By transforming contract management from a time-consuming system to a data-rich, performance-enhancing one.
This is vital because a robust solution affords you the ability to have more control and insight into the process.
Centralize all contract documentation in one place
Being able to upload and store all contract-related paperwork in one virtual place makes contract management software a powerful tool for contract administrators tasked with managing stakeholder expectations and legal obligations for multiple capital projects within a portfolio. Likewise, all their touchpoints involved in administering the contract take place within the software as well — from contract creation and modification, to change orders, to subcontractor payments to closeout. And when this purpose-built software is cloud-enabled, it provides anywhere, anytime access to those documents not only for the contract administrator, but for anyone in the field responsible for work package updates or securing invoice payment approvals.
Streamline contract creation and workflows
Contract creation no longer has to be the inefficient process it once was, consuming hour upon hour of resources and work. By leveraging the capabilities of contract management software, contract administrators can now draft this document in a fraction of the time using any of several methods.
Pre-built templates, with the appropriate approved clauses, are one of the best ways to streamline the process, introducing consistency across contracts where a construction portfolio may consist mostly of similar types of projects. Another is to convert an existing document, such as a bid package with the relevant details included, and auto-fill the appropriate sections within the contract. What about the one-off capital projects with unique contractual terms or compliance issues? Drafting a new contract from scratch isn’t the prolonged, labor-intensive exercise that it was when using traditional contract creation methods. Some software solutions even include contract-building capabilities with common form fields to ensure the standard details are captured.
When it’s ready for review, approval and then execution, contract management software handles this final part of the contract workflow, putting the finishing touch on a now more efficient and less delay-prone contract development process.
And it’s not just contract workflows that are automated. Payment and vendor change order workflows benefit from the same automation capabilities as well. Who needs to grant approval for subcontractor payments? Who has approval authority for vendor change orders if they exceed the set threshold? What date is the approval due in order to continue meeting contractual obligations and keep everything moving? A built-in alert system can route notifications to the right people when their reviews and approvals are needed.
Integrate contracts with financial systems
Want insight into the financial health and status of a contract? Link it within the contract management software to enterprise resource planning (ERP) system activities. Projects perform better when their individual systems — and therefore their data — are connected. Sharing that data among different ERP functions enables vendor and subcontractor details to be imported into the appropriate system for punctual, accurate processing.
The advantages of this integration? Reduced errors from unintended keystrokes and no more inefficient duplicate data entry. All that manual effort can be redirected to more impactful tasks instead. And just as important as these quantifiable benefits is having the qualitative benefit of confidence in the validity of all costs, both incurred and scheduled. So procurement knows which purchase orders to process so materials can be delivered when needed, and accounting can pay vendor and subcontractor invoices on time.
Gain visibility into contract progress
Contract management software provides a degree of transparency into real-time contract progress that simply can’t be achieved through traditional management methods. What normally has taken a drawn-out effort to assemble using disconnected systems can now be expedited within one single source of contract truth. So anyone who needs to view, track or interact with the information and data within the software can do so with a few clicks, whether they’re an administrator, contractor, owner, accountant or lawyer. Focused reports and user-friendly dashboards put relevant details front and center to keep these and other stakeholders in the loop on all previously “offline” contract management tasks, such as contracts, payments, change orders and contract-related communications.
One other interesting thing those reports can deliver is informed awareness of the efficacy of past contracts. Did any result in unmet client requirements or a massive hit to the bottom line? What conditions or mistakes led to those results? Which ones performed very well that can serve as a model for other contracts? Gaining these data-driven insights can be an eye-opener into what worked or didn’t work and therefore help fine-tune future contracts.
Explore a contract management software solution
With so much riding on this one critical document, the right software solution can help account for these and other aspects of the contract life cycle. InEight Contract, created by construction professionals for construction professionals, helps you more effectively manage the entire process. A demo can show you how this solution can benefit your contracts, your projects and your business.
