Contracts emerge as a protective net for real estate businesses facing risks from potential claims and litigations. A well-drawn and carefully worded contract improves business profitability and protects their interests as well as organizational assets.
Contracts help you govern the day to day operations with different vendors and touchpoints in real estate business. It prevents any conflict and mitigates risks involved in conducting business. This advantage leaves the business owner to focus on executing the projects with complete peace of mind, without worrying about the litigious nature of the business that would exacerbate in the absence of well-drawn out contracts.
Here are some essential reasons to go with a good construction cost plus contract management,:
1 – Mitigate risks
There are many challenges that come with a real estate development business as below.
- Digitization of operations
- Competitive nature of business
- Increasing complexity in procurement
- Stricter risk and compliance requirement
- Globally diverse sales and licensing models
Plus, there is every effort taken by various teams to accelerate conversions. The sales team may want to close deals quickly. The legal team wants to check that all compliance is carried out correctly. The operations team need to scope out the project thoroughly to ensure proper alignment of resources. These may lead to a conflict between departments. Contract management ensures that such risks go down for overall gains.
2 – Accelerates information discovery
A mailbox is simply not sufficient to find information quickly or share it with the various stakeholders. A good Contract Management Software will help organize information and contracts without anyone losing their sanity over it. Some of the common benefits of powerful search mechanism in contract management software include:
- When you save contracts (either locally or on the cloud), you can easily search for information, thanks to the tagging feature of the software. It becomes easy to predict which search parameters will improve information discovery.
- As compared to mail, sharing of contracts and keeping it organized is more powerful in contract management software. It allows us to refine searches by additional parameters and reorganize results for proper storage in subfolders.
- As compared to filing away hard copies of contracts, digital management provides a lot of advantages. For instance, it is painful and labor-intensive to search for specific information from the piles of files put in the storage cabinet. As opposed to this, digital contract management makes the search quick and easy. Due to the tagging feature, users can search digital contracts based on various parameters and retrieve information way more quickly than physical files.
3 – Improve revenue generation opportunities
The most significant plus point of investing in a construction contract management tool is that it helps to boost revenue generation opportunities. For a real estate developer, contract renewal is more efficiently managed by the software. As a result, they can connect with vendors at the right time to renew contracts.
This period of contract renewal can give rise to potential negotiation opportunities that can lead to financial gains. If you miss this negotiation window and the contract gets auto renewed, you lose out on this profitable opportunity. The team also gets the chance to review contracts and sift out those that are redundant or financially not rewarding.
What features are present in contract management software?
A robust and scalable platform needs to highlight the below features:
· Complete integration with third-party apps and software
· End-to-end contracting automation for all contract types
· 100% risk management
· Total compliance management from a legal standpoint
· Cloud-based model to ensure anytime, anywhere access to users
· Business rules automation to perform routine operations with accuracy and at the right time
· Productive template library management
· Sourcing, procurement, invoicing, and vendor collaboration portal that provides as-needed access to different vendors like architects, engineers, material suppliers, and sub-contractors
· Real-time dashboards, reporting and analytics, and business intelligence
To sign off
Cost plus contract management has the ability to sidestep potential disasters that impact business continuity and profitability for real estate businesses. In an increasingly risk-prone business climate, such contracts can protect your real estate business, ensure total compliance, and reduce liability as much as possible.