Minimizing Liability Risk through Digital Contract Management

Correct Project Cost Estimation through Digital Contract Management

The dream of any design firm is to successfully grow by having a large portfolio of clients. This means that principals are mostly bringing business to headquarters and the production team is busy managing the different projects. However, design firms often overlook the complete scope of the quote-to-cash cycle, also known as contract management.

Understanding the Contract Management Process

A useful exercise for design firms is to determine how much time does their staff spend in the following list of tasks related to contract management:

  • New Contract Requests
  • Data Capture
  • Contract Authoring & Creation
  • Collaboration & Negotiations
  • Reviews & Approvals
  • Signatures & Execution
  • Post-Execution Tracking & Management
  • Contract Reporting & Analysis
  • Renewals

Once the total number of hours is determined, one important fact will come to light: staff spends an enormous amount of time doing paperwork. Unfortunately, most companies make little use of modern technologies to keep track of all stages of the contract management process, which in turn unnecessarily increases the costs of the project.

Correctly Assessing the Total Cost of a Project

The biggest unrecognized cost of having a paper-based contract management process is the potential liability cost of deviations from a firm’s standard, pre-approved contract language. Particularly in medium and large design firms, there is a lag between the extraordinary promises that a senior architect makes to potential clients to close a sale and the recognitions of those promises in the revised contracts.

By centrally controlling the integrity of a firm’s approved contractual language, a design firm can reduce the risk of unauthorized language use in contracts. There are several contract management programs that enable a firm to clearly keep track of deviations from approved contract language standards and deviations from approved thresholds for items such as sale discounts and spending limits.


By using contract management software, a design firm will not only have a better understanding of the contract management lifecycle and how much manpower is being allocated to them, but also be fully aware of the full liability exposure that a project entails for the firm.

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