The Administrator: Part 1 – Introduction

The major project and construction industry is booming. The Australian Government announced that 15 infrastructure projects worth AUD$72 billion have been fast-tracked as a part of the 2021 infrastructure led economic revival plan.

The success of these major projects often lie in how their contracts are administered. Major project contracts can be complex, voluminous and heavily bespoke.

For the purposes of this article series a contract administrator is an individual who is responsible for developing, interpreting, reviewing, negotiating and managing a construction contract on behalf of an organisation. Depending on the size of the project, contract administrators can have dual roles (i.e. document controllers, superintendents etc.) or be referred to as contract managers, principal’s representative or contractor’s representative.

This article series released over the next few weeks will explore topics relevant to:

1. Contract Administration;
2. Construction Administration Best Practice;
3. The root causes for contract administration problems and how to avoid them; and
4. Assessing the performance of contract administrator.

The first and most vital step in contract administration is recognising its importance for the project and then allocating the appropriate resources to manage the contractual arrangements. All effective project directors will understand contract administration compliance will either ensure the project runs smoothly or protect their position if a dispute arises.

The core skills of an effective contract administrator need to be:

1. relationship management, especially with their principal or contractor counterpart;
2. project management, to handle performance and problems that arise;
3. contract and industry knowledge, to understand how the contract terms work in practice; and
4. accountability and financial management expertise, as time and cost drive the bottom line.

These core skills allow problems to be identified and resolved at an early stage, and if not resolved, elevated to the appropriate level of expertise and responsibility. Initial meetings between the contract administrators engaged by the principal and contractor are vital to understand the respective rights, responsibilities and obligations of each of the parties. Daily site office meetings between contract administrators often drive communication and prevent circumstances that lead to disputes.

In the early stages in any major project, contract administrators often undervalue comprehensive records. Contemporaneous records are the most effective tool of a litigator, and extremely persuasive to any expert, arbitrator or judge. A contract administrator is often judged by their record of contract changes, formal notices, site inspection records and meeting minutes.

During any major project, principal directed variations and contractor requested variations have a substantial impact on time, cost and project risk. The mismanagement of variations by contract administrators can unnecessarily elevate disputes relating to time and cost. Based off the contract administrator’s performance it can be claimed by a contractor that the principal had established a course of conduct not to adhere to contractual timeframes, or alternatively, a contractor may be time barred from claiming contractual entitlements.

The tips to avoid major project litigation are simple:

1. initial whole of project team meetings to explain how the contract works;
2. conduct daily meetings to communicate any issues between the contract administrators;
3. provide manuals for key contractual processes such as risk registers, an authority matrix, contractual changes, KPI registers etc.
4. diarise all key dates and manage any missed deadlines;
5. always comply with formal notice requirements under the contract; and
6. escalate as early as possible any disputes to those with an appropriate level of authority to resolve at an early stage.

Our team at Lamont Project and Construction Lawyers have the knowledge and experience to assist with all major projects, especially contract administration and management. If you would like to discuss any matters raised in the forthcoming ‘The Administrator’ Series as it relates to your specific circumstances, please do not hesitate to contact Peter Lamont ([email protected]) or myself ([email protected]).