Contracts can dictate many different aspects of a business, from suppliers and transportation to specifications and security. Being able to properly handle contracts and enforce the requirements of those contracts can make or break a company. For companies that establish their work through contracts and who pass those requirements and standards to subcontractors, there are several contracting layers that must be considered. The primary contractor is always responsible for providing the right information and specifications to their subcontractors. Having a single repository for managing the various types of contracts is important for reviewing and enforcing the contractual agreements, which is why the right type of contract management software is so important to creating the right environment for contract flow.
It is nearly impossible to be a business and to be totally free of contracts. They are required for just about everything. Every industry is tied to some type of contract or another, but none more so than those who are hired by government agencies. These types of contracts are very high maintenance because virtually every aspect is addressed in the contract. It is the primary contractor’s responsibility to make sure that all of their employees and contractors know and understand how those agreements apply to the different fields. Having a means of communicating those contractual requirements and recording people’s acknowledgment that they understand the requirements can be very time consuming if it is not centralized. Audits are the worst time to find gaps in communication and acknowledgments. Having software that can show training requirements, acknowledgement of receipt for information, and required documentation can save a company from negative audit findings for contract management.
Understanding the risks associated with some projects, such as drilling or construction, will always require contracts where those who are doing the job acknowledge that they have received information on and understand the risks of the job. Often times there is contractual training that is tied to riskier projects. Being able to track who has and who has not completed the training is likely part of the contractual agreement, particularly when safety is involved.
Contracts can also extend to employees, particularly in research and development where an employee leaving a company to work for a competitor could have serious consequences. No compete contracts help to ensure that employees will not work for competitors within a set timeframe. This allows the company time to continue development and planning well beyond the knowledge of the former employee after he or she has left. Being able to track an employee’s history and final date of work can be a matter of intellectual security for the company.
When contractual requirements and specifications are not met, there are legal ramifications that can be extremely costly. Good contract management software is truly the easiest way of ensuring that specifications and information is disseminated to all required parties, that all recipients have read and understood the obligations, and for tracking contract start and end dates (something that can be particularly tricky when contracts are extended). Companies that are not prepared to properly manage their contracts should put extra money aside for the legal costs that are likely to ensue.