The U.S. construction industry’s market value stands at nearly $1.3 trillion, according to research by Statista. This figure equals 4.1% of the entire country’s gross domestic product (GDP). You’d expect an industry of this size to be on the cutting edge when it comes to the latest technology and software. But for the contract management process in particular, construction companies have fallen behind. A Software Advice survey discovered that 52% of respondents still rely on pen and paper for their day-to-day processes such as estimating or quantifying materials, while 32% track key data in spreadsheets.
Contract management software has evolved in recent years to transform how the construction industry organizes data and manages costs, increasing accuracy beyond those pesky pads of paper and tedious spreadsheets. Both of these methods are not only time-consuming; they’re also error-prone. Just like you wouldn’t trust an inexperienced construction manager to oversee your project or use outdated equipment at the site, why rely on tools that won’t get the job done day in and out?
It’s time to dust off your hard hat and rebuild your entire contract lifecycle management (CLM) process from start to finish.
Organize your Contract Data
Construction companies may have numerous projects occurring simultaneously. With different teams stretched across different sites, leaders need insight into who’s responsible for each project’s contract management process. This will help mitigate issues that may occur during a project, ensuring all roles are fulfilled between construction companies and contractors during a build.
There are also business-related outcomes that may stall without contract-related insights. Without clearly understanding who’s responsible for each construction project from a sales perspective, construction companies could potentially miss upsell opportunities.
With so many moving parts in a construction project, contracts can easily get lost in the shuffle. A centralized contract repository is a powerful tool to help businesses organize their information digitally. Having data in one location means different stakeholders all have access to the same info and contracts in real time. This capability is especially valuable given that a typical construction agreement can include up to 10 different documents.
This level of organizational efficiency is just what the construction industry needs. This Software Advice survey found that 20% of prospective construction software buyers want to enhance how their companies are organized. This represents the third most popular buying factor behind improved estimating and improved bids, respectively.
If your construction company has similar aspirations, don’t you think it’s time to stop wasting precious resources on outdated contract management processes like pen and paper?
Manage Costs with Better Contract Visibility
Given all of the costs associated with the construction industry, there’s a lot of emphasis placed on companies’ suppliers and subcontractors. Without advanced CLM software, businesses will struggle to evaluate all the costs associated with these partners, identify any contract redundancies, and ensure the accuracy of their contractual rates. By improving contract visibility, businesses can finally uncover these redundancies in the network so they can select suppliers with the best rates, thus lowering overall costs in the process.
Construction companies that use modern contract management systems will be in a league of their own, given that the industry has been slow to implement new technology. A Construction Technology Report Survey discovered that 71% of IT professionals in the construction industry allocate less than 1% of corporate revenue for IT solutions. If software helps businesses improve their bottom line, however, such investments should be prioritized. CLM software fits the bill; it enables construction companies to achieve contract visibility and analyze costs to improve their bottom line.
Construction projects may seem straightforward on the surface, but unforeseen delays can turn slim margins into a money pit. Given this reality, it’s a big ask for a construction company to invest heavily in new technology if the return on investment isn’t a no-brainer from day one. The lack of advanced technology infrastructure hinders businesses’ contract visibility, making it challenging to effectively manage costs.
Contract management software solves all of these problems and then some. Construction companies with CLM platforms will be ahead of the curve and will revive stale operations that have negatively impacted their productivity and profitability for too long.
Construct Your CLM Foundation
A construction project requires meticulous planning to succeed. Everything from the concept, design, procurement, and building stages must be aligned from day one. You wouldn’t overlook one of these steps when constructing an office building, residential apartment complex, or manufacturing facility, right? Why overlook your contract management process by using outdated processes?
Want to see how IntelAgree can help streamline your entire contract management process? Schedule a demo now to check it out!