December 6, 2021
Construction projects have a substantially high rate of business failure, bankruptcy, delays, losses and budget overruns. Not only this, but construction projects are also highly influenced by external factors such as economic, environmental and political issues. It is therefore more important than ever to control the controllable, in particular – contract administration.
The contract administration process is inevitably complex, and poor performance of associated tasks often lead to disputes and drives up the project’s bottom line. Improper management, lack of technical skills, lack of innovation, financial resources, communication and poor control of project activities often occur as a result of poor contract administrators.
Performance management of a contract administrator is a process of quantifying the effectiveness and efficiency of previous actions. This is done by linking project performance measures to the project objectives to indicate project success.
Contract administration performance is often difficult to assess given it is generally concerned with aspects of daily operations and operational decisions to minimise contract risks. A study contained with the Journal of Construction Engineering and Management in 2020 that explored this issue found 11 areas where a contract administrators’ performance can be assessed:[1]
| CA’s Performance Review Area | Areas of Assessment |
| 1. Project governance and start-up | This criteria comprises of activities related to establishment of the project management plan, reviewing the quality plan, reviewing the health, safety, and security (HSS) plan, reviewing the environmental plan, reviewing the program, reviewing the subcontractors’ qualifications, reviewing the contract securities, reviewing the logistics plan and the ability to avoid bureaucracy and lengthy process. |
| 2. Contract administration team management | This criteria consists of activities related to assignment of a competent team, early assignment of the team, clear roles and responsibilities, regular performance assessment, and setting of performance dialogue for the team. |
| 3. Communication and relationship management | This criteria contains activities related to the establishment of a communication system, communication of project management meetings, timely response to queries, timely management of operational issues and clear language of communication. |
| 4. Quality and acceptance management | This criteria embraces activities related to auditing the quality management system, timely review of construction material and auditing contractor’s environmental plans. |
| 5. Performance monitoring and reporting management | This criteria consists of activities related to the establishment of a monitoring and reporting system, early reporting of major issues, regular progress reports, reviewing contractor’s reports, monitor resources, and early notification of any contract obligation failures. |
| 6. Document and record management | This criteria relates to the establishment of a documentation system and maintenance of documentation with registers. |
| 7. Financial and payment management | This criteria relates to the establishment of financial management systems, instructions to spend the provisional sum, certify due payments, timely assessment for payments compensation and collecting quotations for price estimates. |
| 8. Changes and change control management | This criteria includes activities related to establishment of a change control system, timely evaluation of proposals, notification of urgent works, and timely process of change orders. |
| 9. Claims and disputes resolution management | This criteria includes activities related to the establishment of claims and disputes resolution system, timely notification of claims, timely assessment of extension of time claims, timely assessment of payment claims, effective negotiation of claims, supporting parties in alternative dispute resolution, represent the employer in dispute resolution and legal support for employer during court cases. |
| 10. Contract risk management | This criteria includes activities related to periodically assessing the contractual risks, assigning contractual risk responsibility to appropriate stakeholder, monitoring the project’s financial status and bankruptcy potential. |
| 11. Contract close-out management | This criteria includes activities related to establishment of a closeout system, communication of closeout activities, timely review of closeout documentation, timely release of retentions, work inspections during defects notification, Timely issue performance certificate, documenting lessons learned and best practices, timely processing final account, management of suspension of work, and management of termination of the contract. |
Our Team at Lamont Project & Construction Lawyers have the knowledge and experience to assist both principals and contractors with any major project related issues. If you would like to discuss any matters raised in the above article as it relates to your specific circumstances, please do not hesitate to contact Peter Lamont ([email protected]) or myself ([email protected]).
[1] Gunduz, M.; Elsherbeny, H.A. Operational framework for managing construction-contract administration practitioners’ perspective through modified Delphi method. J. Constr. Eng. Manag. 2020, 146, 04019110.