Reducing risks in construction projects - part 3

Katie Cook

ContractRoom

by Katie Cook

Eliminate risks in architectural, engineering and construction projects

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Phase 3  The closing of the contract

Once construction is completed, project managers must confirm all obligations under contracts, policies and agreements have been met.  Inspections may need to be completed to insure the infrastructure created complies with all health and safety laws and regulations and is fit for the purpose for which it is built. Project managers should also assess the entire construction process to decide what has worked well and what has not.  A final budget and project report should be drafted.

A study conducted by Michigan State University called “Assessment and Improvement of Construction Closeout at Michigan State University” found that although a formal post hoc analysis of performance is vital for good project management, it is often a neglected step in improving project performance in general (this report can be found here - http://ow.ly/10FKnT ). Similarly, online publication Quality Digest, reported in an article called “Don’t Skip Close-Out Meetings”, that research conducted by Business Improvement Architects of more than 750 global organizations reveals that even though two-thirds of respondents are responsible for archiving documentation, there are only a few organizations who do so. This article provides good guidance on what questions to ask in close-out meetings to properly capture “Lessons Learnt” from a project and can be read here: http://ow.ly/4mHCB1 .

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In fact, the major risk in relation to this phase of the construction contract is that the data and information about the project fails to be properly recorded so that it can be “learned” from for future use.  Like most things, the biggest risk is that if something goes wrong then history may repeat itself and failures that occurred in one process will continue onto the next.  

A negotiation and contract management system could help reduce this risk by recording behavioural and transactional data throughout the construction contracting process. This can the be used when conducting close-out meetings and analysed for greater insight into the performance of a project.

For example, it can assist in the following ways:

  1. Note which clauses in contracts or documents were troublesome i.e. which ones took a long time to negotiate in the planning phase and which needed to be amended during the execution phase;  
  2. Note which obligations under the contract were completed in time and which were not; and
  3. Record details of price and work completed so this can be leveraged in negotiations for similar work in the future.

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Final Thoughts

There are many ways that negotiation and contract management software can be leveraged to ensure the smooth running of engineering, construction and architectural projects. Some of these have been outlined in this 3 part blog article series.

What are your thoughts on what are the major risks in the construction contract management process? How do you combat these risks?

ContractRoom (www.contractroom.com) is an advanced negotiation and contracting software platform that can be leveraged for reducing risks in construction projects and is the home of #PredictiveAgreement - to learn more about how you too can “negotiate less, agree more” schedule a live demo here: Request Demo

About the author

Katie Cook

Katie Cook

Katie Cook is the Director of Marketing, Communications and Legal Standards at ContractRoom. Originally from the east coast of Australia, she has a background as an Attorney having practiced in both public and private practice in Brisbane and Melbourne. While working as an Attorney Katie completed studies in journalism and is now combining her legal and writing skill sets in her role at ContractRoom.

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