Contracts lay the foundation for modern-day business partnerships. Working relationships can exist in many contexts, but as soon as a true commitment is made from one party to another, generally, a contractual agreement is formed.
Contracts ultimately aim to protect the business interests of multiple parties. Legally binding, these agreements hold parties accountable to each other via terms and conditions laid out in the document.
In this blog, we’re talking about contract compliance and contractor compliance, two hugely important concepts in successful construction or renovation projects. myCOI is a leading certificate of insurance services provider with the expertise needed to keep companies compliant. Read on to learn more or skip to the bottom to reach out to us today.
What Is Contract Compliance?
Let’s get right to it. A contract is an agreement between two parties that creates a duty to one another. Contract compliance means adhering to the terms and conditions outlined in one, and fulfilling obligations as per the contractual agreement. Basic principles of contract compliance include clarity, fairness, and transparency.
The importance of contract compliance on project success cannot be understated. It helps mitigate risks, avoid potential claims and legal disputes, and ensure timely and on-budget project completion, to name a few. Additionally, contracts and contractual compliance help foster strong working relationships, making expectations of one another clear and creating a mechanism for holding one another accountable.
How to Ensure Compliance With Contracts
To ensure compliance in the construction industry, we recommend creating a contract compliance checklist. It should outline all critical terms, conditions, and stipulations within a contract, including deadlines, quality assurance standards, deliverables, and relevant regulatory or industry-imposed requirements. This checklist can serve as a cornerstone for both parties to follow to ensure that nothing slips through the cracks while executing a project.
Consider using a contractor compliance template to streamline this process. Templates can bring a standardized format for documenting requirements that make it easier to monitor compliance across projects.
Another best practice is to set clear compliance requirements within the contract so that there is no confusion about what is expected of each party. This means specifying detailed expectations regarding performance, quality, safety standards, and legal obligations so that contractors know what is being asked of them. You could also include clauses related to compliance, such as penalties for non-compliance, to encourage adherence.
How Can You Evaluate Contractor Compliance?
Staying on top of contractor compliance requires regular monitoring and reporting. This continuous oversight allows you to notice potential breaches as they arise and before they become a big problem. Periodic site visits, reviewing progress reports, and maintaining open communication channels with contractors are a few great ways to evaluate compliance in an ongoing way.
Conducting compliance audits is also an effective method for assessing compliance. This essentially means reviewing a contractor’s work against their contractual requirements. These can be scheduled at regular intervals or done at random to encourage ongoing adherence.
Finally, utilizing subcontractor compliance management tools can be a great way to get help with evaluating contractor compliance. They provide a centralized platform for managing various aspects of compliance, making it easier to track contractor performance across projects and contributors. Learn more about what is regulatory compliance in construction.
How to Ensure Contract Performance
Now that we’ve discussed how to evaluate contract performance and adherence let’s circle back to ensuring compliance. Firstly, establishing performance milestones and/or KPIs is essential for keeping projects on track. By setting clear milestones (that align with important phases or deliverables) and KPIs (metrics that match performance standards outlined in a project), teams can more easily track progress and hold contractors accountable for meeting a project’s goals.
Regular project meetings and updates are also beneficial for maintaining contract performance. Check-ins can allow teams an opportunity to review progress and address issues or identify areas for improvement as they arise. Consistent updates help keep all stakeholders and contributors on the same page, promoting transparency and accountability across a project. Finally, addressing non-compliance issues as soon as they come up is crucial to minimize potential costs and delays.
myCOI Helps Teams Reduce Risks and Ensure Compliance
Ready to become a master of contracts and ensure compliance for your hires every time? Our team of experts is here to help your team learn about your compliance needs and establish a system for tracking them over time. No hassle, no worries, no costly claims. Call us today to learn more.