Contract administration is the management of a contract between a client and a contractor, in which the client appoints a contract administrator to oversee, communicate, negotiate, and execute the entire contract process. It entails making decisions and receiving timely information to ensure that project work is completed following contractual documents.
The Purpose of a Contract Administration
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Contract administration aids in determining whether the project is progressing under the contracts for procurements, supervision, site record, valuation and payment assessments, submission of claims for additional payment, the extension of time, and rectification, among other things. Moreover, it provides a final opportunity to detect any design inaccuracies, inconsistencies, or uncertainty. The contract administration process in construction involves monitoring and control of possible project risks as well as ensuring that the project is completed on time, within budget and quality control. Furthermore, it is critical in establishing a positive business relationship as poor contract administration can lead to construction disputes.
Contract Administration Stages
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The contract administration process in construction encompasses all activities from the beginning to the end. It starts with the project planning or design stage and then moves on to tendering competition, and final accounting. It usually leads to project acceptance, either after a project competition with satisfactory results or contract termination due to poor performance by any of the contract's parties.
The Role of Contract Administrators through Different Stages
Design Stage
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During the design phase, the contract administrator is responsible for keeping costs and schedules under control while working with the client on pre-determined terms. The design brief is presented, along with pertinent information such as land use, local authority compliance requirements, proposed budget, and development period.Not only are contract documents prepared after final drawings but risk allocation is also focused on identifying what risks are passed on to the contractor and taken on by the client. Construction period liquidated ascertain damages, defect liability retention sum and payment are all-important construction risk factors to consider during this phase. All parties involved must be informed of the contract administrator's responsibilities.
Construction Stage
During the construction phase, the contract administrator is responsible for not only monitoring and controlling cost and time, but also ensuring that work meets all paperwork requirements, specifications, and the statement of work for quality assurance and control. When it comes to monitoring methods, contract administrators can perform direct and indirect observations.Direct observation means that the contract administrator must be physically present at the job site during the execution of the contract to observe how the work is progressing and compare the actual observations to the construction specifications or drawings to the schedule.However, when direct observation is insufficient for progress measurement, extensive reports from many observers, regular process meetings, formal testing, technical reviews, performance indicators, and audits should be used.The construction phase also involves change management. Progress claims, delays, variations, time extensions, and other legal issues are all important considerations. Excusable delays are delays that are beyond the contractor's control and do not involve any default parts. As a result, in this case, the contract administrator must estimate the length of the delay beyond the project's competition date to grant a reasonable time extension.EOT will not be granted if there is a work delay and the contract is not performed well. The contractor may be fine if the process is delivered late. It's possible that the situation will necessitate liquidated and determinable damages for late completion, disbursement resolutions, or, in the worst-case scenario, contract termination. Due to the contractor's poor performance in construction work, the client has the right to terminate the contract entirely or partially.Dispute management and resolution are also important in this phase. It includes an agreement on how to resolve responsibilities-related conflicts between the parties.Because requests for changes are common during normal contract execution, the contract administrator should first establish an agreed procedure to review and escalate issues as needed, attempting to keep disputes to a minimum and avoid litigation that destroys the parties' business relationship. The contract administrator is also responsible for ensuring that clients' financial interests are protected. On the other hand, the client is responsible for the timely payment of completed work under the contract's terms and conditions.
Who Can Be a Qualified CCA?
Construction Contract Administrators-CCAs, with extensive knowledge and skillsets gained through education and experience, are desirable. While a qualified CCA does not have to be a licenced design professional, certification from a reputable and trusted professional organisation verifies that someone possesses these critical, refined skills. However, those with reputable experience in construction will agree that the most qualified CCA will be an Architect of Record –AOR since it's the entity most closely associated with the construction documents.
The Benefits of Contract Administration
It ensures that both parties are aware of their respective responsibilities. They understand what each party is responsible for, as well as the deadlines for deliverables and the method of delivery.It makes communication easier for both parties. Both parties express what they want from the contract and agree on fair terms during the contract administration process.It ensures that contracts comply with government regulations. Contract administration ensures that business contracts are transparent and documented in accordance with industry standards.It safeguards both entities. If the other party fails to deliver as promised, the business or contracted partner can seek damages.It strengthens bonds between companies and their contracted partners. Contract administration can strengthen relationships by ensuring contracts are transparent and fair to all parties.
