Effective Contract Administration

Effective management within contracting companies in construction projects has become increasingly more demanding. It can be characterized by great competition, uncertain economic environments, as well as tackling more influential and well-informed employers. For this reason, contractors face intense pressure when it comes to contract administration in order to implement the procedures required to effectively manage the negotiation, the execution, and the adjustments of the construction contract to guarantee a successful project and to satisfy or even exceed the employer’s expectations. This is done by a contract administrator (CA); whose work is to ensure the contractor’s compliance with the provisions provided in the contract. Essentially, precise contract administration is significant to the effective and efficient functioning of any given construction contract. In this regard, the effective administration of a contract must be prioritised before signing it as opposed to appointing a CA later in the project where the contractor could have already failed to comply with some of its obligations.

The importance of involving an experienced CA during the pre-award phase of a project should not be underestimated. Reviewing the contract and identifying the unexpected risks involved should be the contractor’s first line of defence. Extensive review verifies that the contract is well-drafted and enables the contractor to negotiate favourable terms and avoid signing onerous contracts.

During the execution of the project, the CA then begins to pro-actively ensure that management is compliant with its contractual obligations. In addition to being knowledgeable of the contract, the CA should also be actively involved in and informed of the daily site activities. This awareness is essential as to communicate with the project team the appropriate steps required to be taken when the contractor is requested to perform work that is not specified in the contract or when it is discovered that there are events or conditions at site that differ from what was pre-agreed. In these cases, keeping organised contemporaneous records throughout the project builds a strong and evidence-backed history which is essential to substantiate claims and de-escalate disputes.

Effective documentation should also be coupled with the consistent practice of promptly notifying the employer of delays or changed conditions where the contractor believes that he is entitled to an extension of time or monetary compensation. This is to satisfy contract requirements and to evade situations where the employer incurs a loss that could have been otherwise avoided or minimised had the contractor notified the employer punctually allowing him to make a timely decision. Maintaining a positive commercial relationship with the employer is one of the key factors to a successful project, and effective contract administration is a process that achieves this. It gives way to quick, inexpensive, and easy procedures such as informal discussion and negotiation to resolve differences between the parties before they crystallise into disputes.

                                                                                                                                                MMA Law