Contract Administration 101: The Basics

Author: Bart Kolosowski
Published: September 19, 2023
Category - Construction Contracts Contract Administration 101: The Basics

What is Contract Administration?

Contract administration in the construction industry is an intricate and multifaceted role that bridges the gap between the employer and the contractor. It originates from the comprehensive coordination of various tasks, including organising contracts, monitoring the execution of construction work, and ensuring that all contractual terms are adhered to by both parties involved. The Contract Administrator (CA) is instrumental in managing these duties and ensures the project progresses as per the outlined contract. In the forthcoming sections, we’ll delve deeper into the legal basis for the CA’s role, the differentiation between Contract Administration and Employer’s Agent, and highlight the integral responsibilities of a Contract Administrator.

 

The Legal Basis of Contract Administrator’s Role

The function of a Contract Administrator (CA) became a defined role within the Joint Contracts Tribunal (JCT) construction contracts in 1987. This reference point signifies a crucial development in the construction industry due to the formal recognition of the CA’s position and responsibilities within the contractual framework. While other contracts may define the role differently, for the purpose of this article, we will focus on the standard JCT Minor Works (MW), Intermediate (IC), and Standard Building Contracts (SBC). These contracts set the legal groundwork for the CA’s role, providing clear guidelines and expectations that steer the course of a construction project.

 

Contract Administrator or Employer’s Agent

Though often conflated, the Contract Administrator (CA) role within the construction industry should not be confused with that of an Employer’s Agent (EA) that operates in Design & Build contracts, among others. The main distinguishing factor is the objectivity requirement in certain situations incumbent upon the CA. It’s worth noting that these two roles, while they may appear similar, have different obligations, responsibilities, and even authorities within different contractual frameworks. In our subsequent articles, we will elaborate further on the distinctive nuances between the CA and EA roles, but for now, it is important to understand that the Contract Administrator has a unique role distinct from an Employer’s Agent.

 

The Role of a Contract Administrator

 

When does the role start?

The role of a Contract Administrator officially begins once the building contract has been executed. This signifies the formal commencement of the CA’s responsibilities under the scope of the contract. However, it’s important to note that any work performed prior to this event is carried out under a separate agreement between the prospective Contract Administrator and the Employer. This may include preliminary tasks such as contract preparation or negotiation, which are not formally part of the CA’s role under the building contract.

 

Basic responsibilities

The role of a Contract Administrator (CA) in the construction industry is multi-faceted and encapsulates a range of responsibilities. At a high level, the major obligations of a CA involve managing and overseeing the contract between the employer and the contractor, ensuring that the work is conducted as per the agreed terms and conditions and that progress is tracked and reported accurately. They are also responsible for resolving any disputes or issues that may arise during the course of the project. The areas of responsibilities may be summarised as:

  • Review and understand contract documents
  • Administer contract impartially
  • Set up proper record-keeping procedures
  • Conduct periodic site inspections
  • Chair project meetings
  • Provide regular updates to the employer
  • Monitor contractor’s work program and progress
  • Issue necessary instructions and variations
  • Process valuations and authorise payments
  • Consider and grant extensions of time
  • Certify practical completion
  • Determine the final adjusted contract sum
  • Archive project records properly
  • Advise employer on contract obligations
  • Maintain communication between parties
  • Ensure relevant insurances and bonds are in place
  • Confirm required consents and licenses obtained

However, it’s important to note that this is just a broad overview of the role. In future articles, we will delve deeper into the details of these responsibilities, providing a clearer picture of all the role entails.

 

Requirement for impartiality

One of the key responsibilities of a Contract Administrator (CA) that is often misunderstood is the requirement for impartiality. Both employers and contractors often view the CA as being merely a representative of the employer. However, this view overlooks the contractual requirement for the CA to remain impartial, when dealing with contractual events. This obligation of impartiality is not a vague principle but arises directly from the explicit terms of the contract. The CA must balance the employer’s interests with adherence to contract terms and principles of fairness and equity. This balance can sometimes be a challenging tightrope to walk, but a skilled CA is adept at navigating these complex situations.

 

The Appointment of a Contract Administrator

Qualifications and Skills Needed for the Job

The importance of a Contract Administrator’s role in delivery of construction projects cannot be overstated. For a project to succeed, they must possess an in-depth understanding of the contract terms, the responsibilities of each stakeholder, and the process laid down in the contractual terms. Therefore, their skills and qualifications are of utmost importance as they significantly contribute to the project’s success.

The individual or company assuming this position should possess a robust knowledge of construction, a keen eye for detail and excellent communication and negotiation skills.

On top of these, the personal qualities that will help deliver these duties include impartiality, integrity, and resilience. Proficiency in project management and problem-solving are also beneficial. This mix of qualifications and skills enables a Contract Administrator to successfully manage the complexities of construction contracts and ensure the smooth execution of projects.

 

How Does Contract Administrator Relate to Design Duties?

A Contract Administrator (CA) is not responsible for design, but plays a vital role in overseeing design-related aspects in a construction project. Their job is to ensure the contractor’s design submissions align with the contract terms and any changes are properly reviewed and approved according to the contract. They are different from the design team but equally important.

The CA is the link between the client and contractor teams. They ensure that parties with design responsibilities, including the client’s design team and contractor, comply with the contract terms and don’t delay the project. The CA themselves must also be prompt in issuing requests and instructions to prevent hold-ups.

As the only role with the power to change project requirements, the CA must keep a close eye on design discussions to prevent accidental changes. A thorough understanding of design, process, and construction methods is beneficial for a CA. It’s not just about paperwork; a CA who understands the content can contribute more effectively to a project.

 

An Individual or a Company?

The role of a Contract Administrator (CA) can be filled by either a person or a firm, depending on a project’s size and complexity. While an individual could be fit for smaller projects, a team from a company is more apt for larger projects due to the extensive responsibilities involved.

Issues may arise when choosing an individual, such as limited capacity and potential unavailability, as well as potential issues with the personal responsibility of the individual rather than a firm. Regardless, the chosen CA must have the necessary qualifications and experience and a firm grasp of the specific construction contract.

 

Can the Employer’s member of staff be the CA?

Sometimes, the Contract Administrator (CA) might be an employee of the company under the building contract, for instance, when the organisation has an internal design, property, or estate department. In these cases, it’s crucial to consider the following points:

+ The level of independence they can maintain while performing their CA duties

+ Avoidance of any conflicts related to their employment terms

+ The necessity of insurance to cover any personal liability that may occur.

 

The Appointment

The process of appointing a Contract Administrator (CA) is crucial and involves several important aspects. First and foremost, there should be a written agreement between the employer and the CA, clearly defining the terms and conditions of the contract. This legal document provides a frame of reference for the scope of work, responsibilities, and remuneration, among other key issues. It’s also important to note that a CA must have professional indemnity insurance. This is a safety net to protect both the employer and the CA from any potential risks or claims that may arise during the project.

Even though the role of a CA technically begins only at the execution of the building contract, there are a few implied pre-contract duties that the CA should adhere to, such as the preparation of the contract documents. These pre-contract duties ensure a smooth transition into the formal role of CA and set the stage for a successful project.

 

Summary

In conclusion, the role of a Contract Administrator (CA) in the construction industry is vital and multifaceted. A CA is a vital thread that holds the fabric of the construction contract together, ensuring that all stakeholder obligations are met, and the process set out in the contract is adhered to. Misunderstandings about the CA’s role, particularly regarding the need for impartiality, can lead to complications. It’s important to remember that a CA while representing the employer, must meet the requirement of objectivity when dealing with certain matters.

In upcoming articles, we’ll delve deeper into the specifics of Contract Administration. We’ll examine the detailed responsibilities of a CA, the differences between the roles of a CA and an Employer’s Agent, and more insights into the appointment process. The overarching theme will be the importance of having a well-qualified and skilled CA to ensure the smooth execution of construction contracts. Stay tuned for a thorough exploration of this critical role in the construction industry.

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