The success of every project in the construction industry depends on strong business partnerships. These partnerships are frequently managed by contracts, which serve as the foundation for collaboration between contractors, vendors, architecture firms, and subcontractors. Key documents outline the terms under which the partnership will operate in addition to defining roles and responsibilities. Just as a construction project involves coordination among various teams, drafting a construction contract requires collaboration of multiple teams that bring their unique expertise to the process.
What is the purpose of contract management in construction?
In the construction industry, contracts between the parties serve as the blueprint for a project's success. It involves outlining necessary information, including the scope of work, timelines, materials, and decision-making authority, providing a clear path for all parties involved.
"Developing a contract is like constructing a building"
Just like you must coordinate with several stakeholders (about their responsibilities on the project) to start construction, you must coordinate with several people (each of whom has different roles in drafting the contract) to develop a construction contract.
To streamline and automate the process of managing these contracts, ensuring that all parties can easily collaborate, track changes, and stay aligned throughout the project is critical. Robust and modern construction contract management software can facilitate the initial contract negotiation and the ongoing change requests, obligations, and amendments.
The building blocks of a construction contract include:
- Identification of the parties: A construction contract must identify the full names, addresses, and signatures of the individuals or organizations involved in the agreement.
- Scope of work: A detailed explanation of the project requirements and each party's obligations.
- Contract documents: Including specifications, drawings, and other relevant documents that compose your contract.
- Work schedule: A scheduled timeline that specifies key project milestones and deadlines.
- Description of materials and equipment: An outline of the required resources for the project, including a list of specific materials and equipment needed.
- Change orders: A procedure for handling modifications to the initial contract, ensuring that any changes are managed smoothly.
- Project cost and payment schedule: Clearly defined financial terms that cover the total project cost, payment terms, and payment schedule.
- Decision-making authority: Understanding who has the power to make decisions on the project to avoid confusion.
Related Article: Common Construction Contract Management Issues in the U.S.
What’s the most efficient way to house and manage all these contracts?
Much like you need the architecture firm’s blueprints as a plan to guide the team and show how the building will be constructed, a contract management system on Microsoft 365 SharePoint can help keep your contracts organized.
Since contracts are stored, tracked, and managed in one central repository, it ensures that all parties internally know exactly where to find the necessary documents and how to manage them. The contract management system helps track the different versions of the contract, ensures that the right people are involved in the workflows automatically, streamlines the approvals, and minimizes the risks associated with manual contract management.
Related Article: Avoid these Common Contract Management Pitfalls to Reduce Risk
What are the key benefits of using construction contract management software?
- One convenient, central repository within the contract management software offers your project managers, estimators, accounts payable and accounts receivable department, and other staff one platform to reference all of your contracts.
- Manage, search, and access contracts and supporting documents with enhanced search functionality and improved contract document parent-child relationships. Each project manager, estimator, and office staff member often juggle multiple projects at one time, meaning their desks are covered in drawings, contracts and other paperwork. ConvergePoint’s Contract Management Software, which adds robust features to the basic functionality of Microsoft SharePoint, enables them to quickly find the specific contract details of each project.
Related Article: Why Is Using SharePoint for Contract Management the Best Choice?
- Approve contract dollar amount requests that have been automatically prioritized, with ConvergePoint’s Contract Management Software’s advanced document approval workflows. Real-time reporting enables you to get enhanced, ad hoc reports based on key criteria. Both features are great tools to have as more construction companies move towards lean construction practices.
- Improved compliance and risk management within construction contract management software ensures that all critical contract clauses, approvals, and compliance measures are properly implemented and monitored throughout the entire contract lifecycle. By implementing compliance checkpoints into the contract creation and approval processes, ConvergePoint’s Contract Management Software ensure that each contract follows the industry regulations, legal requirements, and internal company policies.
- Automated workflows - With ConvergePoint's contract management software for construction automates workflow, guide contracts through the necessary review and approval processes. This tracks all changes and approvals, providing an auditable trail that simplifies compliance and reduces delays.
Which construction contract management software is best?
When it comes to choosing the best construction contract management software, ConvergePoint stands out as a top choice. It offers an intuitive platform designed to streamline the entire contract lifecycle, from creation and review to approval, built on Microsoft SharePoint. ConvergePoint's Contract Management Software has robust features that are specifically tailored for the complexities of the construction industry, including tracking subcontractor agreements, managing compliance, and automating approval workflows.
Want to learn more about how a structured contract management system can boost your company’s productivity and streamline the contract lifecycle?
ConvergePoint can offer guidance on industry best practices and how our contract management can benefit your organization. Request a demo now!