Tackling 10 big construction contract management pitfalls

Rhonda Huismann
Tackling 10 big construction contract management pitfalls

What if today’s construction contract management headaches could be a thing of the past?

As many construction companies discovered with the upheavals and supply chain issues that resulted from the COVID-19 pandemic, a lot of risk is buried in contracts. Contract terms that might have been missed or deemed unlikely to be invoked can become big problems. Sometimes it can seem like staying on top of construction contract management is an impossible task.

To pinpoint what makes construction contract management so tough, Crowe consultants embarked on a listening tour with construction leaders across the country. In these focus groups, dozens of industry leaders shared their contract woes – and their wishes for something different.

Our big takeaway? Construction contract management is a risk-ridden and time-consuming task that can distract companies from what they do best – their trade. Even more, gaps in communication, process issues, and human error potentially can lead to costly disputes. Especially when it comes to navigating contract risks, many construction leaders lack the time or tools needed for thorough review.

We pulled 10 common challenges about the contract management process out of our focus groups. Then we designed a solution that addresses each of these pain points: Crowe Contract Manager for construction, a software solution that tackles the uncertainty of contract risks while streamlining the whole process.

Take a look at 10 common challenges construction industry peers reported about construction contract management – and learn how Crowe Contract Manager for construction can address each obstacle.

Ready for better contracts and better projects?

1. Soaring legal costs drain budgets.

The alternative to in-house review is simple: outsourcing. The problem is that external legal reviews often are cost-prohibitive. Most construction industry folks that we spoke with hardly budgeted for external legal review, which means they’re choosing to go it alone, most often for budgetary reasons and slim margins.

The solution? Technology that identifies legal risks can help companies navigate through risk negotiation and revision. Hint: Crowe Contract Manager for construction does all that at a price that won’t hurt profit margins.

2. Managing version control seems like herding cats.

Chasing the latest changes often involves toggling between tabs, scanning multiple monitors, or worse, swapping sticky notes. Many focus group participants mentioned sticky notes and wondered what would happen if they lost an important one. Obviously, information floating around on sticky notes creates a measure of risk that companies want to avoid.

The solution? Crowe Contract Manager for construction offers modern version control – and peace of mind. Any project contributor can easily compare and analyze changes between versions, and no one needs to flip page by page to spot new changes.

Crowe Contract Manager for construction includes a language report function that eliminates the need to manually track changes by creating a summary of all the proposed changes made in a document. Project contributors can review and compare multiple contract documents at once, without the shuffle. This feature allows teams to locate the same term across multiple documents and reconcile any existing conflicts.

3. The right hand doesn’t know what the left hand is doing.

Getting everyone on the same page requires transparent, efficient collaboration, which is hard to achieve with clunky, outdated processes. Emails soliciting feedback often go unanswered or devolve into never-ending threads. These conversations are rarely documented for future reference, and this lack of transparency causes confusion and complicates version control issues.

The solution? Crowe Contract Manager for construction offers a review function that enables internal teams and external advisers to simultaneously review comments and changes. Each collaborator receives notifications and can see the comments in real time, and no one is left off the list because a contract sat too long on another team member’s desk.

4. Feedback loops with third parties can lead to a tangled mess.

If team collaboration is cumbersome, working with third parties likely will be far messier. Proactively addressing the confusion with timely, open communication is vital to cultivating trust with business partners.

The solution? Crowe Contract Manager for construction includes a third-party portal to coordinate communication between internal and external parties. Here, teams can securely collaborate and negotiate with clients, advisers, subcontractors, and vendors. Conversations are documented and easily accessible in the project documents. No more “He said, she said.”

5. Negotiating a fair contract shouldn’t require a law degree.

Many construction companies dedicate significant resources to wading through legal jargon, often relying on staff who are not adequately trained. The result? Organizations are left vulnerable to risks – and even lawsuits. Team morale suffers, too.

The solution? Crowe Contract Manager for construction includes a contract coach that cuts through the legal jargon by explaining legal terms in plain language with quick videos and by offering strategies for revision and negotiation.

6. To err is human, but errors can be expensive.

Mistakes happen. But most misses and misunderstandings caused by human error are avoidable.

The solution? Crowe Contract Manager for construction uses AI-driven input to help reduce human error and minimize risks associated with any slip-ups. People can be freed up to do what they do best, and precision isn’t sacrificed for speed.

7. Finding what you need is like digging for a needle in a haystack.

Many of our participants described out-of-date systems such as electronic filing cabinets, and most complained about the time and effort involved in finding what they need within a contract once they locate the right document. Different team members need different types of information, but they don't have the patience or time to dig back into long contracts, and they aren’t able to filter out what they don’t need to see. Such inefficiencies result in sluggish searches.

The solution? Crowe Contract Manager for construction makes it easy to find critical information quickly via a centralized dashboard. Team members can filter what they see based on project role, and they don’t have to sift through irrelevant data. Using the dashboard´s search function, team members can locate specific information, such as payment schedules, instead of searching through a downloaded report.

8. Only one person has project-critical information.

The construction industry relies on robust networks and relational connections – yet most organizations fail to track and document their experiences with clients and other contractors. Instead, vital information often stays with one person. By failing to document interactions, companies miss the opportunity to capitalize on the wisdom and experience of the entire team.

The solution? The third-party scorecards in Crowe Contract Manager for construction help track and record work experiences, payment and performance metrics, and credit ratings, and they can score each person and company that worked on a project. Capturing and sharing this kind of institutional knowledge across the organization can help the business evaluate clients and contractors and determine who to prioritize in the future.

9. Lack of standardization is creating chaos.

Because each company and team relies on different processes and ways of assessing risk, it can be difficult to create a shared understanding regarding foundational pieces of information such as term definitions and risk measurements. This lack of alignment creates chaos and confusion in the contract review and management process.

The solution? Crowe Contract Manager for construction offers a central source of truth, giving teams visibility into the same information all in one place. For example, each team member can quickly access a project’s risk score, contract risk score, timeline, and budget. Alignment becomes much easier.

10. Leaders are making gut-based decisions.

Without objective, standardized data, leaders have to rely on their own instincts to make high-stakes calls. They could be one bad call away from a mistake that could cost their company millions. In the face of such pressure and uncertainty, it’s no wonder many construction leaders are unable to make confident decisions.

The solution? With robust features like contract coach, third-party scorecards, a risk score dashboard, and auto-risk detection, Crowe Contract Manager for construction removes personal bias from the equation and provides leaders with deep, data-driven insights to make go-, no-go decisions with confidence.

You can manage risk much more effectively.

After our extensive discussions with construction leaders, we learned that these 10 contract management challenges are widespread in the industry. Without costly outside help, it can be difficult to manage all the risks inherent in construction contracts.

Manual processes, little transparency, and lack of expertise can get in the way of understanding the multifaceted risks involved in construction contracts. But with a software solution like Crowe Contract Manager for construction, you can address common contract-related woes and mitigate the risk your construction company takes on.

Tap into practical insights

Learn more about what Crowe Contract Manager for construction can help you achieve. Contact us today.
Rhonda Huismann
Rhonda Huismann
Partner, Construction Technology Leader