Easily accessing the right information at the right time is crucial for proactively managing and steering contract management for your properties. Here are some examples of tracking metrics that provide a clear overview and serve as a foundation for analysis and control, for both tenants and landlords.
Effective reporting and follow-up of contract management based on real-time data makes it possible to identify risks, cost deviations, and future needs at an early stage. With regular and strategic reports, management, the finance department, and controllers are better equipped to anticipate challenges and make well-informed decisions. This can lead to significant cost savings and efficiency improvements.
Below are some examples of areas that give you good control over the contracts linked to your properties and that can be monitored using Pythagoras:
1. Contract overview – provides a comprehensive view of all current contracts within the property portfolio, contract periods including start and end dates, costs, and responsible parties. It helps management and the finance department identify the duration of different contractual commitments. With a clear contract overview, you can work more strategically and make better-informed decisions. It contributes to improved planning, monitoring, and foresight, for example when contracts need to be renewed or renegotiated. It also reduces the risk of unexpected costs if important dates and changes in terms are missed.
2. Cost analysis – shows total contract costs per property, broken down by different areas, tenants, or categories such as services, maintenance, security, or cleaning. This provides a clear picture of how rental costs and rental income are distributed. It also makes it easier to compare costs between different properties, identify areas for cost savings, and ensure that the budget is maintained.
3. Property utilisation – for monitoring the use and occupancy rates of different properties or premises, linked to various contracts, operations, and maintenance. By continuously tracking how different areas are used in relation to the contracts, you can make better decisions to optimise property utilisation based on the actual use of different spaces. Having the right information enables better space optimisation and cost allocation, as well as identifying any vacancies. This is particularly relevant for manufacturing companies with many different types of operational areas, properties, spaces, and contracts to manage.
In addition, you can efficiently work with and continuously follow up on:
Budget and forecast
Facilitates reconciliation of budgeted costs against actual outcomes. The information can be used to make various calculations based on hypothetical index adjustments and prices for different areas in the short or long term. Other parameters that can be included in the calculation are, for example, adjustment dates (costs and/or revenues), additional charges, discounts, etc. The report is useful for monitoring whether costs remain within budget. When budget deviations are identified early, it is possible to act more proactively, which strengthens financial control over the property’s costs and revenues.
Risk management and tracking
Risk management is an important preventive part of contract management to maintain good preparedness and to assess which risks need to be accounted for in the contract portfolio. An example of a risk report, commonly used in contract management, is a so-called Liability report. This report is used to calculate the “minimum contract liability”, i.e. the remaining amount that must be paid upon termination of a specific contract. Among other things, it serves as a basis for further processing and reporting in accordance with IFRS 16. It can also provide guidance on whether it is worthwhile to terminate a contract early. It is also possible to track other potential costs associated with the contract.
Reducing a company’s exposure to contract risks is often of particular interest for businesses with large spaces, such as industrial properties, where significant costs are tied up.
In Pythagoras, space optimization and cost allocation are facilitated by the visual interface, linked to drawings and digital twins.
Which reports do you use to manage, control, and follow up on contract management in your company? In Pythagoras’ comprehensive solution, contracts are seamlessly integrated with all related property information. This strengthens opportunities for management and governance. Read more about Pythagoras for industrial companies. here
