Contractors know the value of staying in compliance with their contracts and their customers – it can make or break the relationship. Keeping up with compliance requirements and ensuring that customers have all the information they need can leave those contractors without an organized process scrambling.
Developing a process, standardizing it, and using automation to carry out routine tasks improves efficiency and saves money. But you may wonder, how do you do this?
So, what is contract compliance?
Let’s start by getting clear on what contract compliance means in the construction industry. Contracts require certain documents and information from contractors so that project owners know that they are operating within the terms of the agreement.
There’s an almost endless list of items that could be requested in a project contract, and each contract is different. Contractors have to provide the requested information and documentation to ensure the owner that they are meeting the requirements, not only at the beginning of the project but throughout its life.
Here’s just a shortlist of information that may need to be communicated to a project owner to ensure compliance:
- Credit information
- Background check
- Union agreement
- Lien requirements and notices
- Safety and health information
Ensuring that these documents are received by the owner, meet the contract requirements, and remain up to date with all your clients can be difficult if you aren’t tracking them in an organized fashion.
Here are some suggestions to get started on standardizng and automating your contract compliance process.
1. Create a process
The first step to automating and standardizing your contract compliance process is to create one if you don’t have one already. If you already have a process, document it so everyone knows what it is.
The steps in a contract process may include:
- Contract intake and review
- List items that need to be sent for compliance
- Review list for any items you don’t already have
- Obtain/collect compliance documents
- Sign contract
- Return contract to client
- Review requirements regularly for ongoing compliance
Depending on the specific compliance requirements, more steps may be needed. Make the process as simple as possible but recognize that it needs to be flexible as well.
2. Define roles
Now that you have the process written down, you’ll need to define who is responsible for taking care of each part. Steps can be assigned to departments or specific employees, depending on the size of your company.
For each step in the process, define what needs to be done, who is going to do it, and when it will be completed. It’s important to set deadlines for the completion of tasks, as contracts are often time-driven, and you need to ensure that you’ll meet the deadlines listed.
Be sure to include a way to deal with new documents or new requirements that you haven’t come across before. As situations and conditions change, contract requirements will as well. Assign someone to research the new requirements, as well as assign the task to the appropriate department or employee.
Once the process has been written up and all the steps assigned, distribute the information to everyone involved in contract management. Everyone needs to know who will be performing each role and how long they have to perform it, so they can keep each other accountable.
3. Automate as much as possible
Once you’ve created a standardized process for contract compliance, automation is the next logical step. Instead of wasting time finding and collecting paper documents, use technology to expedite the process. Automation helps streamline processes, which will save your team time and improve efficiency. And the chance for human error is reduced when compliance tasks are automated.
4. Periodically review and audit the system
On a periodic basis, you should review the system and audit the results to ensure that you are maintaining compliance with your customers. Talk to the employees involved in the process and look for gaps or areas that continually get bogged down. You’ll also want to review the current status of compliance over all your contracts to ensure that the system is working effectively.
Once you’ve completed the review and audit, assess the overall system to see if it is working and if it’s effective. If there are changes that need to be made, implement them, and then review the process again after a while. Continual improvement will help ensure that the process remains effective.
5. Remain flexible
COVID has taught us that we have to remain flexible and ready to pivot at any time. Contract requirements can be changed in an instant, and new requirements are added all the time. Meet with your compliance team regularly to ensure that the current processes are meeting the needs of the contracts and make changes, as necessary.
Start the process today!
The first step to standardizing and automating your contract compliance process is to write it down. Then assess it to see if it’s effective. Assign roles and responsibilities so each step is covered. Then, find out how technology can improve your efficiency by automating as much of the process as possible. Software, like Premier Construction Software, can track expiration dates and prompt you to request new documents as needed, and provide online file storage so your whole team has access to compliance documents from anywhere. Reviewing and improving your compliance processes ensures that your company is always running at the peak of efficiency.
Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator. Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.