Fundamentals of Contract Administration

Types of Contract Models

Construction contract administrators, in both small business and large scale companies, will engage with a wide
range of contract types.
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The most commonly used forms of remuneration

Each form of contract could deploy a range of remuneration models. The following are examples of the most
commonly used forms of remuneration.
Fundamentals of Contract Administration

What would you do ?

Fundamentals of Contract Administration

What’s in a construction contract?

While each form of construction contract will have specific content

requirements, there are some common elements to all construction contracts.
Fundamentals of Contract Administration
Fundamentals of Contract Administration

The contract administration process

Contract administrators in the construction industry follow a process known as the “Contract Life Cycle” to
manage all stages of the contract process. Each stage of the process involves different inputs and outputs to
ensure best practice is followed and maintained.
The process begins when a contract is requested. A draft contract that includes the

 scope of the work,

 start and end dates,
 payment terms and conditions and
 any other key milestones will be produced.
The contract is reviewed by all parties. Milestones, terms and conditions may be redefined or renegotiated.

Once the review and negotiation phase is complete, the contracts administrator will input any changes that
have been approved and produce a final draft. A specialist solicitor will review and approve the contract, or
review and recommend relevant changes. The contracts administrator will either approve the contract or
use the feedback from the solicitor to update the contract.
The final contract is then sent to the relevant parties to sign the execute either manually, or digitally. Once
all parties have signed the contract, it is considered executed. The executed contract is filed either in hard
copy or digitally. Accurate filing will enable the contracts administrator to easily retrieve it if necessary.
Contracts administrators will periodically review the records management system in order to identify areas
for improvement, or as part of a new contracts management system. If filed correctly, contracts
administrators can quickly locate and retrieve contracts as needed. They may do this to review, report
against, or circulate to the relevant stakeholders. Key milestones and agreements in the contract are
reported against using data from finance, project management, and the contracts administrator and
communicated to relevant stakeholders.
As a contract approaches its end date, it needs to be reviewed to see if it is still active or if it has been fully
executed.
Once the review is complete, a contract will either need to be renewed or marked as completed.
Fundamentals of Contract Administration

Identify the stage in the contract life cycle

Fundamentals of Contract Administration
Fundamentals of Contract Administration

Breach of Contract

At its most basic level, a contract is an agreement, usually between two parties, to do or complete something
in return for payment. When the parties sign the contract, it is implied that they have considered and
understand the contract, and that they agree to be bound to the terms. If any party fails to meet the terms
of a contract, this is considered to be a breach of contract. Breaches can also occur if a party does something
that they were not supposed to do from the terms of the contract, but the project should still be completed.

Examples could be the use of a material that is different from the agreement, a change of colour, or even an
unreasonable delay such as repeatedly turning up late. Major breaches of contract occur when one of the
parties deviates from the terms of the contract, and the project may either be delivered to an inferior
standard or not completed. Examples of a material breach include failure to complete work, using inferior
materials, or not completing work to the agreed upon specifications.

The three most common causes for a breach of contract in the construction industry include

 defects,
 delays and
 a failure to perform.
If a breach of contract has occurred, two options are available:

 termination or
 remedy.
Choosing the best option when a breach of contract has occurred is a complicated process. Sometimes what
seems like the best option, may have unexpected consequences which could cause further issues for the
injured party. A construction contracts administrator will be able to navigate this to prevent breaches, or
choose the best option when a breach occurs, by having a working knowledge of the requirements of each
contract and communicating regularly with key stakeholders.
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Work Experience Example

I've been fortunate to work on a number of major projects, but I think the most impressive project and most interesting
one was the Sydney Metro Project, stage one, which was North West Rail Link, building a brand-new type of
infrastructure in Sydney, the metro, which is changing the way that people commute in Sydney that's now progressed.
And these several stages of the Sydney metro being built at the moment, contract admin is really the administration
of the or the subcontracts, the supply contracts or the plant contracts, the labour contracts that we have to put
together on a on a project to pay the suppliers to come in and do the works.

That includes basically assessing the progress claims that the subcontractor puts in on a monthly basis, making sure
that the rights tie up, making sure that they've actually done the progress that they say they're doing.

And it also includes assessing variations, assessing their claims. We also look at negotiating and approving extensions
of time. So, if they need more time to complete the works and then we would also make sure that they provided the
right resources and that they actually achieving the program that we've signed them up to.

It's probably a couple of things that are the most challenging thing.

One of the ones is the disputes with the subcontractors. They're going to turn around and say, I've done 80 percent.
We might only assess that at 50 percent. So, there's always those personal disputes. But I think the key to that is
building up relationships, ensuring that we pay them the right amount on time and explaining why we're not paying
the full amount that they claim helps with that process.

Probably another one of the key challenges is there's always limited time frames for both reporting and the checking
the progress claims. So, there can be some late nights involved in the month in process where we've got to check
progress claims. We've got to get our crews done on time. And those timeframes don't change every month. And
management are not going to hear any excuses.

What's the most exciting part of the project? I think it's in the development of new infrastructure, particularly in the
inner Sydney region here. See the project start at the design phase where it's a concept on the drawing on a piece of
paper saying that all the way through to the completion and actually seeing the infrastructure open. Riding on the first
train of the North West Rail Link and design. I actually built this. This was this was an exciting project.
Fundamentals of Contract Administration

What tools do construction contracts administrators use?

Fundamentals of Contract Administration

Where is the industry heading?

As new and emerging technologies change the way construction companies scope and
deliver their projects, contract administrators are an important part of digital technologies
and innovations

Innovations and technology in the construction industry are constantly evolving. It may be hard to believe,
but before the invention of the hydraulic excavator, excavation had to be done by hand. And prior to the
invention of CAD, all designs were constructed, refined and updated by hand. Even project management was
a manual process before computer software aided the monitoring of small and large-scale construction
projects.
While there have been contract specific innovations, such as contract management systems, any innovation
or new technology in the construction industry can have a profound and exciting impact on the work contract
administrators do.
Scheduling apps can help a construction company streamline their project management and processes. This
gives the contracts administrator accurate inputs with which to draft the contract.

Scheduling apps can also send real time updates from the construction site, alerting contract administrators
to potential problems in meeting the deliverables of a project.
This provides the contract administrator with the time and data required to make accurate reports and
communicate potential changes with the relevant stakeholders.
Combining artificial intelligence, machine learning and big data helps a construction company to: Make more
accurate decisions, identify inefficiency and reduce waste, improve budgets and estimates, and Improve
safety.
Artificial intelligence can be used to improve measurements on site, and to identify variances between
predicted and actual work and resources. The data gathered through these processes not only assists a
company to be competitive when bidding on a project, but they provide a contracts administrator with a
firm set of inputs with which to draft, monitor and report on a project. Finally, 4D software, (3D software
incorporating time), is changing the way companies schedule key milestones by increasing efficiency and
decreasing waste and risk. On complex projects, such as public buildings or major infrastructure, 4D
technology enables a contracts administrator to more accurately predict the relevant inputs when drafting
the initial contract.
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New technologies in the construction industry, since I started 30 years ago, things have changed drastically. We were
just using Excel spreadsheets. Everything was still done on paper. Drawings were taken off of paper drawings. But even
in the last few years, things have changed completely from a contract admin point of view.

One of the key things that's changed is we've gone over to electronic timesheets. So no longer do we get a handwritten
time sheet that's been sitting in the back of a supervisor's Ute for three weeks. It's muddy, you can barely read it. And
then that has to get transferred into a manual Excel spreadsheet, which takes a lot of time and effort from the admin
team. That's all now done electronically through what we call a Rova system, and that's automatically put into a
database from a contractor admin point of view. That's absolutely key to ensuring accuracy and timeliness of the data
collection. Another thing that's obviously changing in the last few recent years is drone survey. And we can then
actually use that data in the contracts admin space to say "okay, the survey saying we've done 50000 cubes worth of
earthworks supplies, saying we've done 70000 cubes". Why is there a difference? So, we can use that that data to
accurately measure where we are in the progress of the project. We're now using a process called design to cost. Now,
what really happens there is as the design changes, the systems can automatically do a materials take off of those
changed designs. We can put that material take off into our spreadsheets or into our costing software that will then
give us a revised cost of the outturn of the project. Well, any particular element, whether it's a bridge, whether it's the
roads, whether it's the earthworks, and we can make decisions as to whether that was the right choice. If you're
changing a design and it's going to suddenly cost you a couple of million dollars, you might want to go back and have
a look at the design again. Changes in technology over the next five years. Well, it's difficult to see exactly where we're
going to be, but it's definitely going to make things easier, and I think quicker. I think one of the keys is going to be the
accuracy of the data that we have is, as we say, a lot of things are being done automatically, whether they're estimating
systems, whether they're design systems. That gives us really up to date fast, accurate information. So, we know what
a project is going to cost us at the outturn. And that's absolutely key in the contract admin space. Every project is there
to make a profit.
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Key skills for construction contract administrators

Fundamentals of Contract Administration