Effective contract management on construction projects
Effective contract management is critical for mitigating risks and ensuring compliance in construction projects. Here are some best practices from a legal standpoint:
- Draft clear, comprehensive contracts. Ensure contracts clearly define the project scope, deliverables, timelines, and responsibilities of all parties. Include detailed clauses on payment terms, dispute resolution, and termination conditions.
- Implement robust contract controls. Utilise project management systems to monitor compliance with contractual obligations, track costs, and manage documentation. Regular audits and reviews help ensure adherence to contract terms.
- Manage contractual changes diligently. Document all change requests and assess their legal and financial impact. Obtain necessary approvals and ensure all changes are formally incorporated into the contract.
- Monitor performance against contractual obligations. Continuously track key performance indicators (KPIs) such as cost variance, schedule adherence, and quality metrics. Conduct regular site inspections and audits to ensure compliance with contractual and regulatory requirements.
- Maintain transparent communication. Foster open communication between all parties to promptly address issues and prevent misunderstandings. Document all communications to maintain a clear record.
- Prepare for dispute resolution. Develop a comprehensive dispute resolution plan, including mediation, arbitration, or litigation procedures. Ensure all parties are aware of the dispute resolution mechanisms outlined in the contract.
By adhering to these legal best practices, you can effectively manage contracts and achieve project success while minimising risks.
For more information and assistance, contact Ricardo Pillay, Head of our Construction Team.
Article by Lonwabo Bhambatha and Ricardo Pillay