The construction industry relies on accurate and transparent tracking of contracts, buyouts, change orders, and exposures to ensure smooth project operations. These best practices benefit all stakeholders involved, promoting transparency and efficiency. By adopting standardized processes and leveraging technology solutions like Rabbet, project teams can streamline workflows and minimize errors. The best practices below will ensure that your projects stay on track, delivering results on time and within budget.
The Importance of Tracking
Discuss the significance of monitoring contracts, buyouts, change orders, and exposures to identify potential risks and maintain financial control throughout the project lifecycle.
Establish Clear Communication Channels
Emphasize the need for transparent communication among project stakeholders to ensure everyone is informed about contract terms, buyout decisions, change orders, and potential exposures.
Implement Standardized Processes
Highlight the benefits of adopting standardized procedures for tracking contracts, buyouts, change orders, and exposures to streamline workflows and minimize errors.
Leverage Technology
Explore the advantages of leveraging specialized software or platforms designed for contract management and tracking to enhance efficiency and accuracy.
Assess Project Needs
Identify the specific requirements and scope of your project to determine which contracts, buyouts, change orders, and exposures need to be tracked. Shouldn’t we recommend they track of these things, always?
Select a Tracking System
Choose a reliable tracking system or software platform, such as Rabbet, that offers features tailored to your project management needs.
Input Contract Details
Input all relevant contract information into the tracking system, including key dates, terms, obligations, and financial considerations.
Monitor Buyouts and Change Orders
Continuously track buyout decisions and change orders to ensure they align with the project budget and schedule.
Analyze Potential Exposures
Regularly assess potential exposures, such as delays, disputes, or unforeseen costs, and develop strategies to mitigate risks. Log exposures the moment they come up. You don’t need to be specific on amounts. Just ballpark 1k, 5k, 10k, 25k is acceptable.
Communicate Updates
Keep all stakeholders informed about contract changes, buyout decisions, and exposures through regular updates and reports generated by the tracking system.
Anticipated Costs
Anticipated costs should be shared with a lender as soon as they are identified and reasonably estimated. This transparency is essential for maintaining trust and ensuring alignment between project stakeholders. By promptly communicating anticipated costs, project teams can work collaboratively with lenders to develop strategies for addressing potential financial impacts and mitigating risks. Waiting until later stages could lead to misunderstandings or delays in decision-making, potentially affecting the project's timeline and budget. This could also affect your future relationship with the lender/impact possible future deals.
Make Adjustments
Be flexible and adaptable in your tracking approach, making adjustments as necessary to address evolving project requirements or challenges. Utilizing your contingency buckets for unforeseen issues or budget overruns can help you balance your budget as the project progresses. While this can be helpful, you shouldn’t rely on contingency early/often - keep the length of the project in mind before allocating contingency for an early budget or contract issue.
Rabbet Recommendations
As soon as you know there might be a cost for something, log it as an Exposure.
We recommend generally estimating the value at $1k, $5k, $10k, $50k, don’t try to be too specific. The key is early tracking/visibility, not an exact estimate.
As soon as the GC adds it to the PCO log, update the exposure and check to see if you agree it’s not in contract.
Most contracts require 21 day notice on change orders. Hold your GC accountable to this expectation.
Begin classifying the PCO/ECO with cost, vendor, schedule days impacted, reason for the change, etc.
If there are schedule delays, make sure you consider how this impacts General Conditions.
In summary, effective tracking of contracts, buyouts, change orders, and exposures is crucial for maintaining financial control and mitigating risks throughout the project lifecycle. Standardized processes streamline workflows and minimize errors, while utilizing technology solutions like Rabbet enhances efficiency and accuracy in contract management. Moving forward, project teams should assess project needs, select reliable tracking systems, input contract details, monitor buyouts and change orders, and regularly analyze potential exposures.
Do you have questions or feedback? Please email us at help@rabbet.com