Operating in the construction industry requires you to meet strict deadlines for projects; however, all so often, while working on those projects you will encounter obstacles that force you to prolong a project’s completion. At first, these obstacles seem like outside forces, those that are out of your control. A perhaps surprising revelation is that it is easier to avoid those obstacles than you thought. Most of the time, those obstacles are due to poor contract management, because of missed clause inclusions and/or poor negotiations. Ultimately, you want to avoid missing deadlines for the reason of not going over your estimated budget.
According to KPMG’s global construction survey for 2015, “Climbing the Curve,” although 64% of construction company owners were “confident that their investments in project controls had paid off,” in actuality, respondents reported more on underperforming projects in the previous financial year:
Over half suffered one underperforming project
For larger organizations, this number rose to 61%
Energy and natural resource sectors came in at 71%
The public sector reported highest at 90%
Furthermore, from KPMG’s survey, over the 3 years preceding:
Fewer than one-third of all respondents came within 10% of planned budgets
A quarter of all construction projects came within 10% of original deadlines
Construction Companies Waste Time and Money with Poor Contracts
So, your construction company was contracted to some project. As is with most construction projects, yours will go over deadline. That is not your fault. However, it is in part due to poorly written contracts. Poorly written contracts are a thing of the past, though. With contract management software, you can negotiate more effectively, create a contract that resembles your goals and initiatives, and finalize projects on time and within budget.
That brings us to the question: “What if my construction project misses its deadline?”
There is a cost to missing deadlines, though it is expected by both clients and your team that it could happen. As we cited above, at least over half of construction projects report on underperforming on construction projects.
By missing a deadline, you might lose the trust of your team as well as clients, which results in lack of opportunity for growth. The bottom line is higher costs, more overtime when trying (yet failing) to meet deadlines, and it creates a high-stress environment. A long-term sustained high stress environment will never result in strong performances from workers nor good employee retention. Instead, high turnover will be the result and your construction company will further lose money, having to waste more time creating contracts with full-time, contract employees and redoing contracts with partnerships that didn’t work out the first time.
Better Manage Your Construction Contracts with a Contract Management System
You are at the point in time where missing deadlines and going over budget are too much. You need something to help your construction company stay afloat. That is where the implementation of contract management software comes in.
With contract management software, you can avoid agreeing to poor estimates, made when overlooking important details that might otherwise cause the abandonment of the project. Instead, use templates to manage contract comparisons for easier clause creation. Additionally, incorporate monitoring and alerts into your contract calendar to stay up to date as well as keep projects on track with your construction jobs.
Hit every stage of your construction job’s contract management lifecycle with unlimited contract profiles that allow you to better base the corporate personalities as well as industry standards into reality. Each profile offers a plethora of valuable information regarding the progress of a contract as well as whether goals are being met or not.
To go a bit more in depth, use contract profiles to track work progress, like whether or not the foundation for a construction project was finished; manage delays or errors, like weather that would set you back due to flooding; and create clauses or acceptions, like accounting for holidays, sick leave or injuries.
Case Study: Breach of Construction Contract
Breaches of construction contracts are due to a multitude of reasons. A few of which are because of reasons such as a supplier failing to provide the materials needed for a construction project; increased costs were too much for the construction company to continue purchasing from a supplier; alterations made to the initial construction or building design; and the leaving out of an essential part to the construction.
In the case of Hendershot Cowart P.C.’s client, ”a precast concrete manufacturer,” weather caused the construction project to fall behind schedule, including a 90-day delay. Lucky for the precast concrete manufacturer, they settled in court for less than a third of the construction’s total exposure. This was an isolated event. Most construction companies won’t be that lucky.
Effectively, strategically and concisely working through contract negotiations, write-up and review will enable your construction company to avoid unneeded expenses, avoid missing deadlines and avoid spending over budget.
Try a FREE DEMO of our contract management software today to see how it will extensively save you time while writing out legitimate, groundbreaking contracts. Pricing includes three separate contract management software options, scalable to your business.
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API (application processes interface) uses to connect to company applications, added a secured Deal-Room/Data-room, bidding system, and allow external users to log in to their dedicated data-room.
Now the company can have (BI) Business Intelligence processes with Reports and AI (artificial Intelligence) integration for document analysis and data extraction processes.
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opensourceCM is a cloud-based SaaS (software-as-a-service) solution. When uploading a text or MS Excel document the application performs OCR, indexing and then recreates each document as an HTML document allowing easy document comparisons (e.g., between MS Word and scanned PDF docs). It also has the capacity to find words, values, phrases, terms of art, or specific legal language within documents that are hyperlinked to the actual highlighted location in each document. This can be accomplished across document data sets that may comprise tens of thousands of documents. Furthermore, opensourceCM provides a contract authoring workflow, calendar and notifications workflow, support SSO (single sign-on), and encrypted secured access. The application offers the ability to simply create Negotiation Deal-Rooms and Users Data-Rooms (internal/External) or Flexible Bidding System with Advance Q&A. We offer an API (Application Processes Interface) Library like office 365, BOX.COM, Salesforce, MS-Dynamics, NetSuite, OKTA, Dropbox, DocuSign to mention just a few.
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