What Is Contract Administration in Construction?
Building contracts are lengthy and complex, often with multi-party involvement, so it’s not a surprise that there’s such a thing as a dedicated contract administrator in the construction field.
Contract administration is a defined role handled by one person: the contract administrator. This job is pivotal to the smooth running of the project and manages the relationship between the employer and the contractor.
This article examines the importance of contract administration and the role of an administrator, including the parameters and where they owe a duty, as well as how to choose the right person for the job.
Understanding the Role of Contract Administrators
The contract administrator’s role is to ensure that the contract stays on track and that the development phases and payment schedule are fulfilled.
Typically, it’s the employer who appoints an administrator. However, the administrator does not act as the employer’s agent.
Contract administrators are often selected because they’re involved in the project in some other role, such as an architect or engineer. However, administrators can also be dedicated specialist consultants.
Naturally, using a dual-purpose professional already involved in the project in another capacity can present time challenges.
Although appointed by the employer, a contract administrator must often make independent decisions, evaluate or assess some aspects of the project, and give certification.
Administrators must act impartially and honestly in these scenarios, and this key difference separates an administrator from the role of an employer’s agent.
An administrator also has an implied duty in law to act impartially. The benefit of this is that the employer can challenge their decisions, and the contract should provide a mechanism to do this. The usual process is via adjudication.
Primary Responsibilities of a Contract Administrator
The construction type and the nature of the contract define the administrator’s role and duties. Typically, the role will vary according to the scope of the works; it’s an incredibly varied and complex job. However, some tasks and responsibilities are common to all roles.
Managing Compliance and Adherence
A key element to the administration of any building contract is keeping the project on track, both in terms of timelines on different phases of construction, and the payment schedule, including issuing payment certificates.
Also relevant is third-party compliance; this is the requirement to abide by specific regulations and legislation throughout the construction sector, including things like building regulations and fire safety rules.
It will involve instructing site inspectors, coordinating their visit and agreeing on and organising testing procedures.
Overseeing Change Orders and Adjustments
One certainty in the construction sector is that something will change; virtually no building project goes entirely as planned.
Change orders are a way of modifying terms to reflect alterations caused by various reasons, such as bad weather delays, late supply delivery, and defective workmanship.
Administrators manage any change to the work’s scope, negotiate with suppliers, contractors and stakeholders, and adjust the contract to reflect this.
Interactions with Project Stakeholders
Construction projects are defined by their high volume of stakeholders; this is one of the most challenging aspects. An administrator may have to manage competing interests as well as personalities.
Facilitating Communication Among Stakeholders
Communication is the glue that makes projects work. A key element of the administrator’s role is keeping all parties aware of the project’s progress and on target with their rights and responsibilities.
Good communication is vital to keep everything on track. However, it also means that potential issues can be highlighted and headed off early. An effective administrator is required to manage problems proactively and deliver swift solutions.
Late compliance is the bane of many construction contracts; it means extra costs, which often lead to disputes and claims.
Solid communication can avoid misunderstandings and keep all stakeholders on the straight and narrow. It’s not a guarantee of a dispute or claim-free project, but a competent administrator can significantly reduce the likelihood of these issues and any subsequent fallout.
Negotiating and Mediating Disputes
Try to find a construction contract without a disagreement or dispute. Clue: You won’t.
Brokering disputes is a key part of the contract administrator’s role and is a skill that should be at the top of the priority list when an employer is looking for someone to appoint.
Disputes cause delays and cost money. A proactive administrator who can work well with all kinds of people will mitigate this risk and be able to head off problems when they arise and before they become too serious.
Significance of Effective Contract Administration
The role of the contract administrator is so significant that you could label them the most important person on the construction site. The right person can add real value and is worth their weight in gold.
A skilled administrator can deliver a contract with minimal delays, extra costs, and disputes; their role can make or break a building project.
Pivotal Role in Project Implementation
A contract administrator retains an overview of the management and progress of the project; this is their role, whilst all the other contractors are busy doing theirs.
Managing the different parties and stakeholders can be a full-time job. A professional contract administrator can bridge the gap between an employer lacking field experience or insufficient construction knowledge to implement the project.
Mitigating Risks and Avoiding Delays
An experienced professional contract administrator can mitigate risks through a mix of smooth handling of the different parties and specialist construction knowledge, which anticipates problems and manages them accordingly.
A skilled and expert administrator will be invaluable at avoiding delays—the bane of construction contracts—and the disagreements and cost penalties that inevitably follow.
Someone with industry-specific knowledge, partnered with excellent communication skills, will spot problems before they become problems. Being able to speak and liaise with all kinds of people will build bridges where those parties are digging holes to fall into.
Being able to troubleshoot, negotiate, and issue adjustments and change orders as things change can also avoid delays and increased costs.
Prioritising Early Appointment of Contract Administrators
The role of a contract administrator starts with the contract and continues until it’s complete in theory.
However, the contract administrator sometimes will be involved in pre-contract services and negotiations to facilitate the contract. A separate arrangement will cover this relationship with the employer, which may be formal or informal.
RICS provides standard service schedules to help employers determine their needs and assist with appointing a professional contract administrator.
Frequently Asked Questions
When Should a Contract Administrator Be Appointed?
A contract administrator should be in place from the start, as their role is vital from the outset. It’s helpful to have identified an appropriate person during the pre-contract negotiations so they are in place and ready to go when the contract is signed. The construction contract should reflect the administrator’s appointment and make provision to challenge the administrator’s decisions if needed.
What Qualifications Should a Contract Administrator Have?
A contract administrator is primarily a construction industry professional, like an architect, surveyor, or engineer. However, there is no prescribed qualification for the role. A professional relationship, whilst more costly, can be a more practical and workable option rather than the employer using a close connection like an employee or contractor. Some construction contracts preclude this.
Can I appoint one of my employees as a contract administrator?
Yes, an employer or contractor can appoint one of their own employees as contract administrator, as long as they do so in accordance with the contract or the agreement of the other party. A contract administrator does not need to be independent but they must act independently. That may be hard in practice. When things get tough the other side is unlikely to trust a contract administrator whose boss is telling them what to do. This will cause disputes.
Contract Administrators Ensure Project Compliance, Communication, and Risk Management
Contract administration is key to the management of any building project. It ensures contractual obligations are met, adjustments to the scope of the works are controlled, and delays and disputes are proactively dealt with. The key is selecting the right person for the role, i.e., an experienced construction administrator with the appropriate experience and personal qualities to handle the project’s defined scope. The contract must delineate and define the role to complete the picture.
It’s vital to appoint a contract administrator at the start of the process, ideally when the building contract is drafted and signed. A delay might mean targets are missed, and there are already problems with compliance.
Helix Law’s expert construction team can help you find the right administrator and draft and support a construction contract for your project. Our professional team provides ongoing support every step of the way and helps with contract disputes and disagreements with administrator decisions. Contact Helix Law today for more information.
