A New Era for Construction: Working with the Realities of Contract Management
The construction sector is on a roll, but there are still plenty of traps savvy commercial directors need to avoid when managing contracts, as Wes Simmons, Managing Director of Eque2 highlights:
The worst way to manage a contract is to allow it to run its own course because, in an exciting, resurgent era for construction, initial ideas about how things will work out aren’t necessarily realistic.
Dozens of changeable factors mean a contract that isn’t proactively managed can go very wrong at any point, right from the very start. Astute commercial managers need to be prepared for what may lie ahead in the industry.
Even once a contract is signed, there is plenty that can go wrong, including suicide bids, inefficient contracts, badly-tracked retentions, customer relationships and outdated contract management software.
Risk management and construction management software can help you plan for what might seem unforeseeable. If the worst happens, it can help you to recover quickly by having suitable contingency and insurances in place.
Top tips for successful contract management:
1. Build on firm foundations
Only 45 percent of construction projects are completed within budget. Good data held in an efficient software system can help you tender effectively, manage procurement by tracking prices, and source reliable suppliers and subcontractors by monitoring best practice.
2. Build positive customer relationships
Construction projects typically evolve as customers change their minds. Construction management software can help keep your contract variations up to date and help in negotiations.
3. Keep up to date
Over a long project, it can be easy to let data slip away. Retentions are a classic case. It can be difficult to keep track of their status and that can be costly. Once again, good construction management software can take the strain.
4. Be aware
In a recent case, contractors changed their payment terms so the subcontractor would get two percent less if they were paid now, or they could get the full amount in 120 days. This is still within the fair payment rules. If you do need to resort to litigation, it’s crucial to have robust data at your fingertips to support your case.