Imagine a scenario where a construction project is on to a great start but without the firm grip of proper Contract Lifecycle Management (CLM). At first glance, everything seems aligned with established timelines, approved budgets, and on boarded contractors. However, as the project reaches critical milestones, the crucial contractual details that should have been diligently managed start slipping through the cracks.
Change orders and amendments pile up, leading to confusion and delays in the construction process. Communication breakdown between stakeholders becomes more frequent, leading to misunderstandings that in turn erodes the spirit of collaboration.
According to construction cost expert Bhavik Savaliya, construction projects could spare themselves from these unwanted scenarios, from delayed timelines to ballooning costs and contentious disputes, if only a strong customized CLM is implemented. He further emphasizes that construction projects that embrace and implement a smooth CLM can experience high-level efficiency and smoother project implementation.
Savaliya's professional expertise
Bhavik Savaliya is a seasoned construction professional with extensive cost control and budget management expertise. He holds a Bachelor of Engineering from Shri Ramdeobaba College of Engineering and Management and a Master's in Construction Management from Texas A&M University. With over seven years of experience in commercial construction, he has successfully managed a wide range of projects, from basic ground-up warm shell build outs to complex mission critical infrastructure, that gained him proficiency in bid processes, procurement, vendor relations, risk management, and various other aspects of construction management.
Passionate about 3D model-based estimating, preconstruction, value engineering, and construction cost database management, Savaliya has developed a cutting-edge Contract Lifecycle Management (CLM) platform catered to General Contractors and Specialty subcontractors. This innovative system meticulously tracks vendor performance and assesses obligations based on key performance indicators (KPIs).
Savaliya mentions, "Given how the construction business is multi-nodal, with a vast, multi-layered web of suppliers, contractors, and sub-contractors, a significant gap exists for a CLM tool that will address the triple constraints of project management–scope, time, and cost overruns."
The Significance of Customized CLM in Construction
Contracts are a crucial component of any organization or business. Data suggests that about 80% of business transactions are guided by agreed contracts. However, according to Savaliya, customized CLM transcends generic contract management solutions as it tailors its approach to address the unique challenges faced in the construction industry. This personalized method ensures that every aspect of the contract aligns seamlessly with specific project requirements, timelines, and budgetary constraints.
For the construction industry, with an estimated value of $16,614 billion in 2025 at a CAGR of 7%, a customized CLM is crucial to simplify a complex web of contracts that define responsibilities, timelines, and costs.
The Benefits of Customized CLM for the Construction Industry
- Improved Risk Mitigation: Customized CLM aligns all contract terms, obligations, and milestones with the unique project requirements. It ensures that all parties understand their responsibilities and deliverables from the onset, reducing the likelihood of disputes and delays, thereby mitigating risks that could jeopardize the project's success. As assigned personnel conduct risk assessments and scenario planning during the contract negotiation, construction firms can develop contingency plans and risk-mitigation strategies in advance. This proactive approach empowers them to address potential issues promptly, ensuring minimal project disruptions and protecting against unforeseen financial losses. "With a clear view of financial obligations and payment milestones, construction firms can stay on track and prevent unforeseen cost overruns," Savaliya adds.
- Streamlined Compliance: The construction industry is heavily regulated, with numerous legal and regulatory requirements that demand meticulous compliance management throughout the project's lifecycle. Customized CLM ensures that contracts are drafted and managed following industry-specific laws and regulations. Savaliya mentions, "Construction firms that stay compliant with applicable standards minimize the risk of legal entanglements, penalties, fines, or legal battles and remain focused on finishing the project deliverables."
- Project Efficiency: According to Savaliya, tailor-made CLM optimizes project efficiency by addressing critical challenges that impede progress, such as delays. Traditional contract management processes involving numerous iterations, approvals, and negotiations cause time-consuming delays. "Executing contracts in the commercial construction industry is a hectic and time-consuming process that involves template/draft edits, internal approvals, external negotiations, and final e-signature routing," Savaliya adds. Delays in contract approvals can have a domino effect, causing setbacks in other aspects of the project. However, with customized CLM, the contract approval process is streamlined, cutting down on unnecessary back-and-forth. It fosters smoother project execution by crafting clear and well-defined contract terms and obligations tailored to the project's specific needs. Construction professionals can make timely decisions based on clear contract terms and responsibilities, enabling them to stay on schedule and maintain project momentum. This clarity and alignment among stakeholders reduce misunderstandings and potential disputes, ensuring projects progress without unnecessary interruptions.
- Effective resource allocation: Savaliya, as a construction cost expert, observes that customized CLM plays a key role in efficient resource allocation. The optimal use of resources, including manpower, materials, and equipment, is vital to maximizing productivity and adhering to project schedules. A foresight on contractual obligations and project milestones allows construction firms to align resources with specific project phases, prevents resource bottlenecks, and enables smooth workflow, streamlining project execution and enhancing overall efficiency.
The Future of Customized CLM in Construction
Savaliya envisions an increased adoption of customized CLM in the construction sector, especially as technology advances. The construction industry will continuously embrace innovative CLM tools such as his CLM platform to streamline contract management processes further. While challenges may arise, the construction cost expert's insights suggest that these obstacles present opportunities for growth and improvement. And with him at the forefront of this adaptation, the industry ensures a workflow with no abrupt changes and losses and paves the way for more successful construction projects.
