Construction contracts are legal documents that the signing parties use to define their roles and responsibilities and procedures to be followed for the construction project. A poorly-drafted construction contract can lead to claims and disputes which may end in the court of law. Litigation is not just expensive but also time consuming. It can bring the project to a halt leading to financial consequences for all the parties involved. Therefore, it is important that when the contract is being drawn, best contract lifecycle management practices are followed. Here we share with you some of the best contract lifecycle management practices for construction firms:
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- Standardise contract creation
The consequences of poorly drafted contracts can be severe as we have discussed above. Unlike standard contracts, construction contracts are quite complex as they define the basis of the contract including both parties’ roles, responsibilities, and detailed description of the work or service such as Construction materials to be used, engineering drawings, specifications and procedures. All this can complicate the contract creation process. Construction companies can streamline their contract creation process by building a central repository of standardised templates for individual scenarios. Further we can integrate these individual templates with contract lifecycle management systems so that they can pull out specific templates whenever need be.
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- Track various versions
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In the construction industry, the contracts undergo several changes. Once the contracts are created, they are sent for approval from multiple stakeholders, be it owners, architects, and even finance teams. Missing approvals can lead to confusion and delay. Not just that, they can also lead to claims and disputes. Therefore, all versions of documents must be stored carefully. This can help avoid ambiguity at the time of claim settlement.
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- Measure the progress of contact management
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As the contracts are being executed, it’s important to identify performance metrics that help measure the progress of contracts. In the construction sector, continuous monitoring of the project is essential to ensure that the project is within the scope of the contract.
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- Establish good contract communication
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Construction projects are complex in nature and on top of it there are multiple stakeholders starting from owners to contractors, from architects to workers. With so many people working on the same project, effective communication between the parties signing the contract becomes very important. Ineffective communication can result in incorrect drafts. It’s critical to establish guidelines on communication frequency and approved team collaboration channels. These details need to be integrated into the contract lifecycle so that stakeholders are in the loop in case of revisions in contract documents or when risks are identified.
Looking for contract management solutions?
If you want to implement these and many more best practices into your contract lifecycle management, get in touch with our contract experts at Contract Square Pvt Ltd. We can help your construction company in the administration and execution of contracts. While you concentrate on the execution of the project, we will identify and document any changes in scope, quantity, engineering drawings and approvals, that may lead to construction claims.
To know how we can help your construction company, call us at 9903023893 or mail us at enquiries@contractsquare.co
