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The Benefits of Skillful Contract Administration

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How to Optimize your Construction Project

If you’re planning a construction project, you may feel overwhelmed by all of the clauses of the construction contract. Yes, they are complicated. But you don’t have to manage them alone.

Contract Administration is one of the key construction project management tools, aimed at facilitating the proper execution of a contract’s terms. Ensuring the team consists of skilled Contract Administrators to handle all the moving pieces of a contract will give you peace of mind and optimize your project.

What does a Contract Administrator (CA) do?

A construction contract administrator (CA) is a professional tasked with managing the contract between the client and the builder. The role may be assigned to the project’s architect, engineer, or another individual representing the owner, but in this article we will address the CA as an independent third party representing the Owner. With complex projects, or with Design-Build (DB), Construction Management at Risk (CMR), or Integrated Project Delivery (IPD) construction project delivery methods, the client’s representative, construction manager, or another consultant are more likely to assume the functions of a CA.
The CA’s main objective is to ensure that construction progresses in general conformance with the legal documents, and all parties adhere to their contractual obligations. The CA’s specific functions may vary, but the common ones listed below can do a lot to make a project more efficient:
  • preparing progress reports
  • determining if payments to the contractor are due
  • reviewing design team’s responsiveness on submittals
  • monitoring substitution requests
  • monitoring Requests for Information (RFIs)
The CA typically starts performing their duties after the construction contract is formally executed. In some instances, however, the same individual is also responsible for putting it together. Contract administration activities continue throughout the operations phase, and end after the project is handed over to the owner.

Compliance with contractual obligations

Contractual obligations are tasks that a party must perform to fulfill their duties under a contract. These responsibilities are enforceable; failure to discharge them may be considered a breach of contract and may result in a dispute or legal action.

Because general contractors delegate many of their contractual obligations to various subcontractors, it’s natural to lose sight of the contract’s complexities. A CA is expected to gain thorough knowledge of the construction contract and ensure that all parties understand and abide by their obligations. Ultimately, the CA’s involvement helps avert claims, litigation, and the ensuing schedule delays.

Preparing progress reports

Progress reports summarize the construction activities taking place over a certain period of time, usually a month or a quarter. These reports are based on a variety of sources, such as progress meeting minutes and reports from the operations team. Most progress reports comprise the following:
  • progress updates for various scopes of work
  • a summary of delays and their causes
  • quality issues
  • health and safety issues
  • schedule of values analysis
  • design, or any other issues requiring action
  • specific instructions from the client
Progress reports allow the contractor, engineer, architect, and client to act promptly on issues as they arise, and keep their finger on the pulse of the project. With construction activities underway, the CA prepares progress reports at established time intervals and distributes them among the project team.

Certifying payments

On complex projects, the contractor is reimbursed in installments as the project progresses – hence the term “progress payments”.
There are several means of arranging the payment schedule. Often, payments follow the completion of a stipulated portion of work, or that of a significant milestone. To receive funds from the client, the contractor must submit a payment request along with evidence that the required work is complete.
Depending on the contract, it may be the CA’s job to verify that the billed work has been performed and certify the payment. Allowing a non-biased, third party assessment of the work as a precondition for payment safeguards the interests of both the contractor and the client.

Reviewing submittals

In construction, submittals allow the design team to verify the compliance of building components proposed for installation with the approved plans and specifications. Submittals include shop drawings, production specifications, technical data, and product samples, which the contractor and their subcontractors submit for assessment.

Depending on the contract terms, the CA is generally tasked with monitoring the progess of submittal review, rather than reviewing and approving them, which is more of an architectural function. The project architect will direct the submittal to the relevant reviewing party. For example, an exterior siding sample may be addressed to the architect, while a structural connection shop drawing may end up on the engineer’s desk for review.

Submittals help the architect enforce the project’s design requirements, and CAs ensure that the submittal procedures are followed correctly by those involved and are reviewed on a timely basis.

Reviewing substitution requests

Substitution requests are a means for suppliers, vendors and subcontractors to propose alternatives to items specified in the construction documents.

All substitution requests must be directed to a relevant reviewing professional and receive sufficient scrutiny before they are approved or rejected. An inadvertent approval of a substitution may result in deficiencies, safety issues, and deviations from the design intent. Conversely, by rejecting a proposed alternative without due consideration the project may relinquish an opportunity to adopt a more economical solution.

It’s often the CA’s job to ensure that substitution requests are sent through the established, formal channels that will give the proposed substitution the analysis it deserves.

Managing RFIs

RFIs are a key communication channel between the contractor, the design team, and the client.

RFIs are a way for the contractor to alert the team of design issues, deficiencies, and ambiguities in the design documents or the contract. They are the contractor’s formal means of seeking clarification or additional information. Relevant RFIs and timely responses can help keep the project on time, on budget, and within the client’s design intent. A CA can ensure that RFI procedures are established, written into the contract, and adhered to during construction by monitoring their progress carefully.
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