Contract management is important for all businesses. However, it is quite crucial in the construction industry as issues related to managing projects, time delays, and cost overruns lead to many disputes. These disputes often lead to construction claims. Moreover, the complex nature of construction projects underlines the need for contact management.
What are construction contracts?
Construction contracts are legal documents that set forth the parties’ obligations to each other. They define both parties’ roles and responsibilities and procedures for managing construction work. These documents also determine how risks will be shared or divided on the project in case unexpected events occur. It is very important to get these documents right as they define the legal and financial obligations of both parties.
How does a construction contract work?
Many construction companies have contract templates. Depending on the type of project, these templates can be tweaked. Most construction contracts have the following sections:
●Scope of work
●General and Special Conditions
●Timeline
●Specifications
●Cost Estimate
●Drawings of the project
●Payment terms
●Contract laws
All contracts should:
●Be in writing
●Be understood and clear between both parties
●Have financial terms clear
What is construction contract management?
Once the contracts are negotiated, drafted, and signed by all relevant parties, it is important to ensure that each party keeps up to its contractual obligations. It is here construction contract management plays an important role. Hiring a highly qualified and specialized team for efficient contract management has the following benefits:
●Compliance from all parties with terms and conditions: A contract management team ensures there is compliance with the terms and conditions of the agreement, including commercial and payment terms. Contract management ensures the owner’s project requirements are met in terms of quality, cost, and time.
●Central point of communication: For all parties, the contract management company becomes the principal point of communication. They help give parties a thorough understanding of the contract signed. They manage the flow of information and ensure the work is completed on schedule and on budget.
●Reduces chances of preventing dispute: Construction disputes and claims can be expensive for both parties. Preventing disputes is one of the main goals of contract management. The contract management team examines site conditions and if there’s any deviation from the signed contract, it records the changes in scope, quantity, drawings or approvals, that cause delays and lead to construction claims.
●Helps to resolve disputes: Construction contract management not only ensures that construction work goes smoothly, but it also offers a mechanism to resolve disputes between parties should any dispute arise. Construction contract management also provides for a clear resolution of all matters regarding the project.
●Managing relations between parties: Often people assume that construction contract management is only about the administration of the contract. But it is more than that. Construction contract management helps all the parties to maintain good relations and solve concerns amicably. This promotes better relationships.
Looking for contract management services in construction?
Contract Square provides construction contract management services for various projects in the construction sector. Their comprehensive service includes contract management, project management, insurance management, claims management, and dispute resolution. They have done successful arbitrations to the tune of over Rs 12 billion and currently handle contract claims to the tune of Rs 24 billion.
