Contract Management in Construction: Building a Stronger Review Process
Construction contracts pave the way for shovels to break ground and projects to begin. Beyond a practical formality, contracting in construction protects a company’s best interests, preserves customer relationships, identifies potential risks, and provides a mutually agreeable path for conflict resolution if necessary.
While it’s possible to rely on instinct and hope for the best, technology exists to facilitate smooth and seamless contract management in construction. A robust, automated contract review solution can standardize agreements, analyze risk, and provide suggestions for best practice negotiations—providing attorney-quality redlining within minutes. Here’s what businesses need to know about contract management in construction, and how contract review in particular can accelerate the process.
Stages of Contract Management in Construction
Contracting can be a lengthy process, particularly in construction where multiple stakeholders are involved. Contracts can be reviewed and signed in under two weeks, or a process involving bids and multiple rounds of negotiations can delay a project for up to 12 weeks. There are no universally agreed upon standards; instead, but, rather, a process that boils down to the efficiency within a particular organization and the project manager’s desire to excel using the latest technology.
A typical construction contract passes through multiple stages:
- Requests: First, project managers must identify which contracts are needed.
- Authoring: Next, the contracts are drafted, often using templates and clause libraries.
- Review: Junior and senior associates look over the draft to see if it’s up to standards.
- Negotiation: The approved draft is sent to other parties for back-and-forth review.
- Approval: Mutually agreeable, legally binding contracts are then signed by both parties.
- Execution: Both parties work toward the agreements contained in the contract.
- Management: Stakeholders assess progress by contract terms to uphold contract value.
- Revisions: If terms cannot be met as stated, revisions to the contract(s) may be needed.
- Auditing: Auditing can determine organizational compliance or identify additional risks.
- Renewal: Based on auditing results, re-review often takes place before renewal .
A typical construction project requires 10 or more documents that define responsibilities and potential risks. Examples of construction contracts may include the general contractor agreement (which defines time, materials, and pricing), the scope of work (which spells out who does what), the construction schedule (which could be subject to change based on certain conditions), and general conditions (which describes how potential disputes are settled).
A Strong Contract Review Process: The Key To Project Success
A strong contract review process is imperative to contract management in construction. Quality control, roles and responsibilities, and risk mitigation are just a few key areas that can greatly benefit from it. Furthermore, construction is a field where any number of setbacks can unfold. A worker can get injured on the job, for example, a supplier may fail to deliver on time, an environmental analysis can produce unfavorable results, or a major financier can back out of the agreement.
Contingencies must be in place to help parties temper expectations and confidently move forward despite these setbacks. Having backups and available recourse to protect business interests can help eliminate bottlenecks and ensure a stress-free project. But issues arise when contract review processes are inefficient—leading to unanticipated expenses, delays, and erosion of confidence.
Today, forward-thinking construction firms use automated contract review solutions with built-in artificial intelligence (AI) to manage and streamline their contracting process. By doing so, they can focus human labor where it’s most efficient and allow technology to do what it does best: organizing information, expediting workflows, and reducing workloads.
Accelerate Contract Review and Negotiation with LexCheck
LexCheck’s contract review and negotiation platform ensures a stronger, accelerated process for construction projects. After creating an AI digital playbook from multiple contract samples, the system enforces pre-approved language, standard terms, and negotiation best practices in every draft it reviews. Each contract draft is reviewed within five minutes—either fully redlined or marked up to indicate potential risk levels while also containing contextual suggestions and links to further aid in reviews. Contract overseers can then implement changes at the click of a button and automate portions of their review work by setting custom “if/then” rules.
With construction technology reshaping the entire industry, companies can’t afford to ignore it any longer. Automated contract review and negotiation solutions are paving the way for innovation, and there’s no better time than now to improve efficiency during this critical phase of contract management in construction.
LexCheck transforms tedious, manual contract review into automated workflows to help legal departments work smarter. Schedule a demo to see the exciting technology in action, or contact email@example.com to learn more about our product and services.
Gary Sangha | Founder & CEO
Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.