5 Keys Areas of Focus for Superior Construction Contract Administrators

Performing the role of a contracts administrator is a critical one in the construction process. A minor failure by a person in this role can result in substantial cost penalties for the head contractor… or worse. In this article we look at five (5) key areas in which contracts administrators must be absolutely thorough to avoid costly mistakes.Key Area #1: Confirm the contract terms and contentsConstruction contract administration is all about precisely managing the rights and obligations of each party to a contract. This task is, of course, impossible if the contracts administrator does not have all the terms of the contract.Therefore, the very first step that a contracts administrator must take is to obtain a complete copy of the building contract (or preferably the executed hard copy original contract from which they will make their own working copy). This includes all the general conditions, any special conditions, the specifications (including technical and preliminaries), drawings, reports, construction programs, and more. It cannot be stressed enough – obtaining all of the documents to the contract is critical to ensure proper contract administration on all construction projects.Key Area #2: Create a “project commencement” checklistAll construction contracts detail the obligations of each of the owner and builder (or contractor and subcontractor) prior to the commencement of work on the site. These obligations are critical obligations that, if not complied with, will prevent the builder from obtaining access to the site.For example, these obligations may include:• provision of all necessary insurances• provision of all work methodology, safety and other work method statements/plans• requirement to induct all staff who will operate on site• submission of all security bonds as per the contract… and moreFailure to create a ‘project commencement’ checklist may result in an obligation under the construction contract being overlooked and the builder being prevented from accessing the site to commence work. This is problematic where there is no entitlement to an extension of time under the contract. In essence, a simple failure at the commencement of the project could put the builder well behind schedule before any physical construction has actually commenced.Key Area #3: Create a “critical notices” checklistIt is not uncommon for modern day construction contracts to be littered with time bar clauses that prevent builders from making claims against the owner (for any variations, delay claims or extensions of time) unless they provide contractually required notices within a set period of time.For example, if extra work (or a change in the scope of work) is requested by the owner, most construction contracts will require the builder to notify any claims it may have against the owner for extra money or time within say 7, 14 or 21 days of the event first occurring. If the builder fails to submit that notice within the agreed time frame, the builder will usually lose their entitlement to such claims.As you can well imagine, a builder losing a right to extra money or time is a significant event. Failure by a contracts administrator to properly track and manage such obligations of the builder can be extremely costly for a builder. A checklist of how to manage all such claims is, therefore, critical.Key Area #4: Always confirm all instructions in writingThe most common failure in contract administration comes from parties who fail to obtain or confirm all instructions in writing.Most contracts administrators will have numerous ‘war stories’ of when an owner gave them a verbal instruction, the builder completed the works related to that instruction and the owner then simply said, “I didn’t authorise that!” or “That’s not what I meant. I wanted…”.When you confirm verbal instructions in writing you get to control the detail of that instruction and can draft it more favourably to you. In this regard, I’m not suggesting you do anything unethical by writing something that wasn’t agreed but I am suggesting that you use that opportunity to be extra clear about what has been asked so that it will be easier for you to submit a claim for that extra work when it comes time.Key Area #5: Be clear on the definition of ‘Practical Completion’It is far more common in today’s more sophisticated construction contracts to see complex and detailed requirements to achieve practical completion (ie, ‘practical completion’ is a point in time in a construction project where the structure built has been sufficiently completed to allow its occupation and use, notwithstanding any minor defects). Therefore, as a contracts administrator working for a builder (or the owner), it is fundamentally important that the requirements for achieving practical completion be understood at the outset of the project.Some requirements for practical completion include the preparation of operations and maintenance manuals, certificates for various aspects of work (eg, waterproofing, fire rating, electrical, hydraulic, mechanical, lift installation, etc), warranties from suppliers and subcontractors, and more. A failure to be aware of these requirements at the beginning of the project will mean that critical steps are missed along the way and may not be recoverable at the end of the project.For example, failure to engage a subcontractor in such a way that requires them to provide a subcontractor warranty for their work directly to the owner will not be something that can be demanded from the subcontractor after the subcontractor has entered into the subcontract, and especially if they have already finished their subcontract work. There will be no reason for the subcontractor to do so and this will put the builder in grave danger of being unable to achieve practical completion.Final commentsThe role of a contracts administrator on a construction project is a crucial one. An experienced contracts administrator will address each of the above five areas thoroughly to ensure their project is a success.

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