Understanding How Information Technology Can Help in Contracts Management

Understanding How Information Technology Can Help in Contracts Management

DOI: 10.4018/978-1-7998-5291-9.ch004
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Abstract

Contracts management is a multi-stage process involving all parties related to a contract. It ensures that all stated objectives are met, and timelines adhered to corresponding to project execution and delivery. The fundamental premise of contracts management is to ensure quality, compliance, and cost optimization. There are several forms of contract each with its own unique features and applications. In this chapter, the authors focus on how information technology can be used to aid in supervision of contracts, materials management, survey, and design management. They also discuss the role of smart contracts and the underlying blockchain technology that is used as the basis for making smart contracts work.
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What Is Contract Management?

The significance of contract management is immeasurable. It is a multi-stage process that progresses along the lines of contract schedule. Its foremost purpose is to act enable all parties involved in a contract to act and deliver stated objectives as specified in terms of contract. The chief objective of contract management, however, is to ensure that all stated objectives as detailed in contract are adhered to at all times and, thus, ensure efficiency and resource optimization (Gustavo, Kasun, 2013). The underlying principle behind contract management is to seek quality and cost optimization throughout project execution.

The aims and objectives of contract management can be detailed as follows:

Effectiveness

The primary objective of contractual management is to execute a contract successfully. In general terms, this involves the following:

  • 1.

    Timely delivery of goods and, subsequent, installation and/or consumption in the stated manner as per contract details.

  • 2.

    Proper execution of services as per scheduled timeline.

  • 3.

    Scheduled completion of all related civil works.

Efficiency

In order to carry out all activities efficiently, the following aspects need to be carefully considered and observed throughout the entire life-cycle of project:

  • 1.

    Budget (costs)

  • 2.

    Duration

  • 3.

    Quality monitored across multiple parameters

At all times, it is to be borne in mind that striving for efficiency without due consideration to the human factor may result in plotting unrealistic goals, or even compromise quality and act to the detriment of the project itself.

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Different Types Of Construction Contracts

A few of the more prominent types of contracts used in the construction business are the following:

  • 1.

    Lump Sum / Fixed Price Contracts

  • 2.

    Cost Plus Contracts

  • 3.

    Time and Material Contracts

  • 4.

    Unit Price Contracts

The choice of contract depends on the primary stakeholder’s risk appetite.

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