The civil construction sector is the largest industry in the world, accounting for 13% of the global GDP. Reaching these results, however, is not simple. The success of large undertakings, with a high degree of complexity, depends on incomparable logistical excellence.
And that's not all: this efficiency needs to be maintained throughout the duration of the contract, which can range from 2 to 4.5 years.
During this entire period, it is necessary to monitor compliance with dozens, if not hundreds of agreements with suppliers, not to mention the management of employees and negotiations for the sale of the units built.
A substantial part of these setbacks could be reversed with a more efficient contract management in the Procurement sector of large construction companies. Identifying this window of opportunity, 67% of executives in the area indicate that improving their companies' internal processes is a management priority, according to a study conducted by World Commerce and Contracting in 2021.
Success in this endeavor is a major competitive advantage for the company. Considering the adjustment period the sector is going through, the consultancy McKinsey projects that disruptors will have faster access to a new slice of the market equivalent to 265 billion dollars.
In today's text, you will understand how Contract Lifecycle Management - CLM software is a powerful ally for your company in improving internal processes and efficient management in the Procurement area.
CLM in the Supplies sector
The purchasing area in civil construction has the herculean task of ensuring that all the inputs necessary to carry out the works are purchased from competent suppliers, delivered and checked in time, in addition to ensuring compliance with the most varied quality controls. To do so, they need to efficiently articulate requests from the planning areas, taking into account issues raised by the Legal and Finance teams.
Carrying out these activities in an agile way involves the efficient management of documents and databases that are important to the business, such as supplier registrations and the contracts to purchase materials themselves.
An efficient way to do so is by adopting Contract Lifecycle Management, a set of contract management techniques that takes into account all stages of these document’s lifecycle.
Added to technology, this approach allows maintaining the quality of procedures, while generating cost reduction, making it a necessary tool to improve work in the Procurement sector.
See below some specific applications of a good CLM software, such as netLex, for the purchasing area of a company in the field of civil construction.
1. Registration and analysis of suppliers
Large construction companies have a considerable number of suppliers.
With some of them, the partnership is more consolidated, and the trust that was built in this bond makes updating the register and analyzing them a relatively simple task. But the costs of failure to hire a good supplier are considerable. Therefore, when the contractor is not yet known or has little projection in the market, it is necessary to pay extra attention.
Some of the functionalities of a CLM platform that help the purchasing sector in this step are:
- Automated questionnaire: ensure that all relevant information is filled in using intuitive and dynamic questionnaires.
- Pre-programmed analysis workflow: automatically send all collected data to the employee responsible for analyzing the registering the supplier;
- Full record with simplified search: the entire registration and analysis process is secured on the platform, with the possibility of a simplified search, dispensing with the manual filling of spreadsheets.
2. Formation of contracts
Once the suppliers are registered and approved, it is necessary to start negotiations and the elaboration of contracts.
Many of the tools used for this activity are marked by limitations that increase negotiation time and, consequently, their costs. This is the case with e-mail communication, which creates confusing and incomplete message chains, or even with a very manual process of drafting a document in software that does not clearly demarcate the versioning or the changes made to the text.
In this scenario, a CLM platform adds simplicity and security, as in the following cases:
- Elaboration of documents based on dynamic questionnaires, reconciling the institutional need for standardization with the business demands for instrument customization;
- Engagement of the supplier in the negotiation of the contract, via platform, with full recording of communications and changes to the text;
- Extraction of information directly from registrations or requests, dispensing with manual filling of data and eliminating a source of risk and inaccuracies;
3. Contract management
In the day-to-day activities of a supply sector, contracts already signed with the supplier need to be quickly fulfilled.
This step may have the objective of verifying the regularity of deliveries, the need for amendments or the existence of certain clauses, such as fines or deadlines. It is also essential to be able to register any occurrences during the contract fulfillment phase, to support the decision of whether or not to keep that supplier in the registration base, for example.
Cases of inefficiency in this follow-up can have all kinds of impacts on operations, including increase in costs and in the time to complete the work.
With the aim of making this task more assertive, a CLM platform brings together functionalities that allow:
- Organization of contracts, grouping them intuitively in the profile of the contracted party;
- Quick and simplified view of the document’s main points, such as deadlines and fines;
- Data extraction to generate intelligence, improving the managerial and strategic vision of agreements;
- Elaboration of addendums via simplified questionnaires, engaging the contracted party for negotiation and signature within the platform;
Everything the construction site needs
To deliver what the construction sites need with a high standard of quality and safety, within the initially planned costs and within the stipulated deadline, it is essential to improve the organization of civil construction companies.
From the preparation of supplier registrations to the effective management of signed contracts, it is the supply sector that will gather everything that the construction site needs. It is increasingly evident that performing this task efficiently depends on the use of appropriate technological tools.
A good CLM software, such as netLex, fulfills this role, and makes available to companies the functionalities necessary to manage their suppliers and administer their contracts, extracting data for planning and strategy.
Do you want to see in practice how netLex works for your company? Talk to our experts!