By Hector Ball, Raffa Technology
It is very easy to get in trouble when dealing with the complexities of contract and subcontract management if your organization is not using the right tools. Information comes from many different people, projects and places. Managers need to have up-to-date information to make the right decisions at the right time. This is especially true for project-based companies dealing with subcontractors in areas such as technology, services and construction, just to name a few.
In order to face the inherent challenges of managing multiple subcontracts, a key issue for managers is visibility to their projects. Visibility is needed to answer several important questions in related areas, including:
- status of the project,
- status of each subcontract,
- current budget vs. actual,
- original budget amounts and change orders,
- status of each change orders,
- amounts paid and payment requests,
- lien waivers,
- certificates of insurance,
- retention invoices, and so on.
If your organization is manually tracking all this data, it is understandable that it may take too long to answer key questions for internal or external project stakeholders.
An effective ERP contract management solution such as Dynamics SL can offer better tools to configure, process and monitor subcontracts in a project from inception to completion.
Key features of any system that will help your team manage subcontracts and subcontractors include:
- Management of insurance certificates, permits, lien waivers through submittals/transmittals.
- Payment management including stopping payment automatically based upon defined parameters and pay-when-paid functionality.
- Approval process for subcontractor payment request.
- Subcontract Change Order approval.
- Automated creation of Invoices and Retention Invoices in Accounts Payable upon payment request approval.
- Ability to track what is pending, what is committed, what has been paid, what is being paid, what is the remaining balance and other important indicators.
The main benefit of managing contracts using a tool with these capabilities is that it provides the contracting organization with a consistent process to handle your relationships with your vendors. It can also help promote internal collaboration between departments or divisions by clearly defining roles and responsibilities, while at the same time avoids data entry duplication.
Contract management solutions should streamline your processes and increase control over critical information to lead your organization and business partners to increased profitability.