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Seven Deadly Sins of Contract Management Installation

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Seven Deadly Sins of Contract Management Installation

Contracts are the essential beating heart of any construction business. They define relationships with owners, legal and finance partners, and subsubcontractor service providers. Contracts define deliverables and schedules; are necessary to keep cash flowing in a timely manner; and define performance for the ever-increasing task of government approvals. Finally, contracts carefully and specifically assign and manage risk.
But with all that paper, it may seem that getting onto the jobsite becomes a secondary activity. A contract management system (CMS) can help expedite those chores, get you out of the office, and maybe even encourage a good night’s sleep by reducing the worry factor.
To maintain a good night’s sleep through the CMS implementation process, however, means avoiding roadblocks and barriers that can derail your CMS. Here is a checklist of seven things to avoid during the implementation process.
SIN #1: SCOPE CREEP
Scope creep is like a loose thread on a sweater—you pull it, even slightly, and the entire sweater unravels. With scope creep, you change one small component of your implementation and your budget and your timeline are blown. Instead, increase familiarity with the software functionality to allow managers to address problems not previously considered. To avoid scope creep, answer these questions before beginning your implementation:

  1. Can you put your hands on copies of every contract without searching for hours through stacks of plans, quotes, and other agreements?
  2. Do you have a handle on all your dates, such as when your contracts expire, or when they’re up for renewal?
  3. Do you know when each of your government permitting filings is due?
  4. Do you know if you have contingent construction, legal, or financial deliverables?

SIN #2 MISINTERPRETING THE CMS PURPOSE
A CMS is not a document management system. The main beneficiaries of a CMS are not meant to be attorneys or file clerks (although both get lots of value), but instead are the people who actually manage and deliver the contractual services. Not understanding the purpose of a CMS can cause system-wide confusion. A CMS extracts, summarizes, analyzes, and distributes critical information in those contracts, usually interpreting its legal language into information that managers need to operate.
SIN #3: EXPECTING VENDOR TO IMPLEMENT THE SOFTWARE ALONE
You can’t take your stack of contracts to your implementer and say “do it.” Industries, organizations, and departments vary widely in how they administer and monitor their contracts, so there’s no one-size-fits-all implementation process. Instead of relinquishing responsibility for the implementation’s success on the CMS vendor, installation needs to be a partnership where the business expresses its needs and the vendor translates those needs into a successful solution.
SIN #4: PUTTING AN UNQUALIFIED PERSON IN CHARGE
The selection, installation, and maintenance of a CMS is anything but easy. It requires the dedication of a qualified CMS software provider, plus a willingness from company management to ensure everything goes smoothly. Your most knowledgeable functional leaders are busy doing their day jobs and may be less than enthusiastic about participating in a detail-heavy design process. If they don’t participate, the system will not be optimal, and there is a high probability they will not want to use the system even when it is completed.
SIN #5: RE-ENGINEERING CMS PROCESSES DURING IMPLEMENTATION
It seems so logical. It seems like such a good time to get the whole process straightened out once and for all. Don’t do it! Implementation is not the time to develop or “test out” new business processes. Either change your current practices first or implement the software first, but don’t attempt to do both at the same time.
SIN #6: LOSING SIGHT OF EMPLOYEE-LEVEL IMPACT
Think through the best way to implement your process without adding work to your existing employees. More work creates resistance to change. Don’t make employees responsible for maintaining data that they don’t understand or that they don’t need to use in their day-to-day job. Employees always find ways around doing work they don’t personally use or need.
SIN #7: OVERLOOKING THE DIFFICULTY OF THE ADOPTION PROCESS
So you have completed the difficult implementation. Management is happy with the pilot. But now comes the hardest part—getting your organization to incorporate the new software into their everyday roles and responsibilities. Although contracts tend to be a small part of many people’s responsibilities, it’s important to regularly communicate to your team to ensure company culture and employee morale stay strong.
Have as many people as possible participate from the beginning phases of implementation to the end. Communicate and set expectations about challenges and likely roadblocks that may crop up during implementation, and make sure you have buy-in from upper management, so they can effectively lead their teams in adoption. Make adoption of your CMS a company-wide objective, critical to the overall success of your organization.
By investing the time necessary upfront to fully understand your business processes, defining system requirements, and setting priorities, you will reap the benefits of a much more organized, efficient, and controlled contracting process. Moreover, by properly implementing your contract management system, your company will maximize business value and set the foundation for a system and company process that can grow and change with you. ■
About the Author:  Richard Eckerstrom is the founder and CEO of Ecteon. Celebrating 30 years in business, Ecteon is a contract management software company, featuring Contraxx, a premier CML solution for companies with complex contracting requirements. For more information, visit www.ecteon.com.
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Modern Contractor Solutions – July 2016
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