How many people on your project have actually read the contract?

The situation

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.

The problem

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?

1. Contracts are complex. They are 100+ page legal documents written for lawyers, not site teams. In their raw form they are difficult to follow, particularly if they’re printed out and you don’t have the ability to hit ctrl+F.
2. Site teams have other priorities. Safety is the number one priority on site, generally followed by production. Commercials are a long way down the list. In operations, there are always urgent tasks that need attention 24/7, so who has time to spend an afternoon reading through a contract?
3. People aren’t equipped with the right tools. SHEC, production, maintenance, training etc. all have purpose built systems to help people understand what needs to be done. Contracts, on the other hand, are generally stored on a shared drive and left for Project Managers to administer through email and excel. At best, people create cheat sheets based on their own interpretation. Can you imagine if this is how we managed people’s understanding of safety processes?

The solution

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:

• Distill the contract into digestible information - transform the 100 page document into bite-sized, visual communication written in plain english. Create a central source of truth for this summarised information to avoid misinterpretations.
• Provide information when and where people need it - embed the instructions into day-to-day processes. E.g. when someone flags a variation, they shouldn't have to remember what to do next by when, the system should show them the process to follow.
• Keep the contract front of mind - ensure people are thinking about the contract every day. Fast and frequent prompts create a culture of awareness, just like the “Take-5” system for safety.

How Hevi can help

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.

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