How many people on your project have actually read the contract?
We all want our projects to make money, and we all know that there are plenty of ways we would make more money if everyone on site had a better understanding of the contract. For example:
Scope - if a site engineer knows contract scope well, they’ll know to flag a variation when the client asks them to do that extra job.
Processes - if site teams know the specific wording around time bars, they’ll notify the client in time and avoid rejected claims.
Profit drivers - if a PM knows the full cost and revenue implications of adding a new piece of equipment, they’ll know when and when not to accept a request to increase production.
All too often people make simple mistakes that lead to missed opportunities or increased costs. Variations don’t get flagged, time bars get missed and decisions get made based on gut instinct.
We’ve all met people who really knew the contract and helped make the project more money - imagine if everyone on site had that level of contract savviness. This should be the standard. Each individual issue may not seem huge in the context of the project budget, but they all add up.
At the end of the day, 5-10% of the total contract value can be made or lost based on the site teams ability to administer the contract properly. This can be close to the entire profit margin of the project.
Even on projects where things are going well and we’re choosing not to make a lot of claims, we still need to be keeping better records to cover ourselves against the risk of potential future disputes.
So why doesn’t everyone on site have a crystal clear understanding of the contract?
Since contract administration has such a significant impact on project profitability, it should be treated as seriously as other job functions.
The company’s profit margin can’t be left up to a half hour handover and a highlighter.
Companies should systematise contract knowledge and processes, focusing on user-friendly design to ensure people engage and retain learning. The system needs to perform three key functions:
Hevi is a software platform designed specifically to help improve contract savviness on site:
Scope summaries - Allow commercial managers / PMs to summarise the contract into readable key points. Make it easily accessible for everyone on the team.
Workflows - Turn contract processes into interactive flowcharts that help people understand what to do. Allow managers to see a snapshot of exactly where everything is up to and who it is sitting with.
Daily contract diaries - Prompt users to complete a quick checklist every day to get people thinking and talking about the contract. Provide an easy way to flag potential issues and record what happened.