Contract Administration in Construction

CONTRACT ADMINISTRATION
01. CONTRACT MANAGEMENT

Definition
Contract Management is the process of ensuring the

fulfillment of contractual responsibilities/obligations of
each party in an efficient and effective manner, and the
contractual entitlements of parties are duly established and
secured during the entire life cycle of a contract.

Contract Management/ Administration Procedures cover
four key areas, namely
• i. Mobilization
• ii. Execution
• iii. Completion
• iv. Closure of Contract.
Contract Management Procedures

• Parties meet targets within key dates or periods specified in the
contract;
• Manage, design changes, variations and other changes
properly;
• Parties fulfill their contractual, legal and regulatory
obligations, including notification requirements and making
payments
• Identify risks of cost overruns and prolongation of contract
period are identified through proper monitoring and their
effects minimized by providing on time information and alerts
to take adequate and timely actions;
Key Principles of Contract

Management
• Manage claims for additional cost and time in an efficient
and effective manner and prompt action is taken to
determine entitlement;
• Maintain contractual records including bonds and
guarantees, insurance policies, contractual
correspondences, and records of resources utilized and
reports with regard to quality, progress and other aspects
which are connected to performance of the contract;
• Establish dispute resolution mechanisms and resolution
of disputes, through multitiered dispute resolution
processes in accordance with the contract;

Management
• Effect contract suspension and/or termination, where absolutely
necessary in accordance with the provisions of the contract;
• Make necessary amendments to a contract to restructure a contract,
only upon following the proper procedure and obtaining necessary
approvals;
• Carry out contract close-out after all payments have been made under
the contract and the works executed and completed under the contract
are taken over; and
• Maintain open and effective communication between all parties using
appropriate channels and means, and providing feedback to enhance
contract performance. These could be in the form of meetings,
discussions, site visits, and correspondences.

Management
ACTIVITIES
The following are the key activities involved in execution
of a Contract.
1. Letter of Acceptance/Award
2. Contract Agreement
3. Documents Constituting a Contract
4. Commencement of Contract
5. Employer’s Financial Arrangements
6. Appointment of the Engineer
7. Defects Notification Period
02. CONTRACT
MANAGEMENT ACTIVITIES
3. CONTRACT PERFORMANCE
1. Contractor’s Responsibilities
2. Employer’s Rights
3. Performance Certificate
03. CONTRACT PERFORMANCE

4. CLOSURE OF A CONTRACT
A contract can only be closed or ended by:
i. Performance of the contract;

ii. Termination of the contract;
iii. Occurrence of an event categorized under Force
Majeure; 19
iv. Amending the contract with mutual agreement of parties;
and
v. A decision of a competent court having jurisdiction over
the contract.
4. CLOSURE OF A CONTRACT
5. CONTRACT ADMINISTRATION
• Key Contract Administration Functions To Be Performed
By The Engineer
5.CONTRACT ADMINISTRATION
Other Tasks To Be Performed By The Engineer
In addition to above functions the Engineer is required to carry out
following tasks to facilitate the smooth execution of the contract:
1. Arrange the Kick-off meeting at the initiation of the Contract;

2. Arrange and chair regular progress review meetings
3. Arrange and chair any ad hoc meetings with other entities such as
authorities or utility agencies whenever required;
4. Maintain records/minutes of all meetings including digital
recordings;
5.CONTRACT ADMINISTRATION
5. Receiving and responding to contractual
communications between the Employer and the
Contractor;
6. Establish and maintain documents/correspondences
management system to enable storage and retrieval of
documents/ correspondences;
7. Identify any critical issues which may affect the
performance of the Contract including progress, quality
or price of the Contract and propose remedial action to
mitigate such issues and follow up the implementation
of such action to ensure effectiveness;
8. Maintain daily site records and quality records including
inspection records and test reports;
9. Assist Employer in reviewing the guarantees, securities
bond and insurance policies to ensure that they are
complying with the Contract and remain effective
10. Assist the Employer in reviewing the financial status of
the Contract and ensure that sufficient funds are
available for contract payment in both foreign and local
currencies;
11. Communicate with funding agencies to discuss all the
relevant matters of the project;
9. Assist Employer in reviewing the guarantees, securities
bond and insurance policies to ensure that they are
complying with the Contract and remain effective
10. Assist the Employer in reviewing the financial status of
the Contract and ensure that sufficient funds are
available for contract payment in both foreign and local
currencies;
11. Communicate with funding agencies to discuss all the
relevant matters of the project;
12. Prepare progress reports;
13. Ensure proper collaboration among all parties involved;
14. Liaise with the local authorities and other government
institutions to facilitate obtaining of licenses and
permits required to carry out certain activities;
15. Advise the Employer in performing certain functions for
which the Employer is responsible;
16. Prevent issues becoming disputes due to mishandling or
negligence;
17. Advise the Client on possible modifications in designs,
specifications and methods for carrying out the Works
in order to mitigate errors, to improve the performance
of the works or to shorten the construction time; and
18. Carry out design changes as required and issue
necessary instructions/drawings to effect such design
changes.
• Monitoring Performance
• Payment Certification
• Withholding Payments
• Contract Variation Management
• Dispute Resolution
• Maintaining Contract Administration Files
• Construction Supervision, Quality Control and Quality
Assurance
• Limitations to the Engineer’s Functions
Main Responsibilities Of The Engineer

Some of the duties assigned to the Engineer’s
Representative are applicable only if the engineer has
delegated authority in writing as provided for in the
conditions of Contract and with the approval of the
Employer and after informing the contractor in writing.
1. The test of Sinification for all work done under the
contract, approval of mode and manner of construction.
2. Approval, revision and investigation of the contractor’s
programme
The Resident Engineer ( Engineer’s

Representative)
3. Assessing the adequacy of the contractor’s superintendent
4. Instructing bore holes or exploratory investigations
5. Assessing the adequacy of measures for the safety and
security.
6. Instructing repairs to the works during the construction
period
7. instructing the provision of facilities for other contractor
employed on the site\
8. Instructing on how to deal with fossils, antiquities, ect.

Representative)
9. Approval of the clearance of the site on complication.
10. Instructing the provision of the plant and labour record.
11. Approval of materials and workmanship and the right to
carry out reasonable testing.
12. Inspect any source of materials, components, etc., offside.
13. approval of work which is to be covered up ; instructing the
exposure of any works for inspection.
14. Instructing the removal, re-execution or replacement of
improper work and matireals.

Representative)
15. Granting permission for work on holidays and during
nights.
16. Approval of the works at the end of the defects liability
period; instructing the making good of defects notified
within the Defects Liability Period assessing the liability for
defects.
17. Instructing the execution of tests or trials to determine the
cause of defects.
18. Recording work to be carried out under day work rates.

Representative)
19. Recommending to issue Certificate of Complication.
20. Instructing the keeping and maintenance of records
associated with any notified claim.
21. Instructing the provision of details of ownership of plant,
granting permission to remove plant from the site.
22. Measuring and valuing the work done.

Representative)
23. Instructing the execution of works covered by a provincial
item or a nominated sub-contract; instructing the
submission of details relating to nominated sub-contracts.
24. Receiving the monthly statements of account.
25. Assessing and instructing emergency repairs.

Representative)
1. Constructing, completing and maintaining the works within
the contract period, providing all the required labour as
stipulated in the conditions, materials, plant, etc. and
avoiding any unreasonable noise, disturbance and damage
and maintaining discipline.
2. Carrying out the instruction of the engineering and his
representative.
3. Providing adequate superintendence.
4. Setting out the works.
The Constructor’s Agent (Resident

Agent)
5. Providing (and, when requested, revising) a programme
together with descriptions of methods of working.
6. Undertaking the care of the works (Including temporary
works) during the construction period and making good any
damage.
7. Providing for the safety and security of the site and all
constructions.
8. Drawing up and summating regular returns of labour and
plant.

Agent)
9. Preparing and presenting monthly and final statements of
the value of work executed under the contract.
10. Notifying any claims for additional payment, supported by
contemporary records and particulars as are necessary for
proper investigation and assessment.
11. Request for extension of time if necessary.
12. Preparing insurance claims as necessary and notifying
relevant authority.
13. Liaise with other relevant organization / parties.

Agent)
6. TERMINATION OF CONTRACT
• Termination for Convenience
• Termination for Default
• Force Majeure Clauses
• Failure to Comply with Notice to Correct
• Notice of Termination
6. TERMINATION OF CONTRACT
CONCEPTS OF CONTRACT
• General Legal Principles
• Definition of a Contract
• Offer and Acceptance
• Factors vitiating agreement/consent of parties
• Discharge of Contracts
A contract will be discharged under the following
circumstances:
i. Completeness of Performance;
ii. By agreement between the parties;
iii. Breach of Contract; iv. By operation of Law;
and
v. Frustration (when an unforeseen event renders
the performance of contractual obligations
impossible).
• Breach of Contract
• Damages for Breach of Contract
• Interpretation of a Contract

Contract Administration in Construction

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CONTRACT ADMINISTRATION

01. CONTRACT MANAGEMENT

Contract Management is the process of ensuring the

01. CONTRACT MANAGEMENT

Contract Management Procedures

Key Principles of Contract

Key Principles of Contract

Key Principles of Contract

03. CONTRACT PERFORMANCE

i. Performance of the contract;

1. Arrange the Kick-off meeting at the initiation of the Contract;

Main Responsibilities Of The Engineer

The Resident Engineer ( Engineer’s

The Resident Engineer ( Engineer’s

The Resident Engineer ( Engineer’s

The Resident Engineer ( Engineer’s

The Resident Engineer ( Engineer’s

The Resident Engineer ( Engineer’s

The Constructor’s Agent (Resident

The Constructor’s Agent (Resident

The Constructor’s Agent (Resident

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