CONTRACT ADMINISTRATION

Once the contract has been signed between the client and the contractor, efficient and effective administration of the contract becomes very important to get the best results.

This becomes mandatory for the architect in case of a comprehensive contract agreement with the client. Some of the responsibilities which are important and the architect needs to be aware of in contract administration are:

The client/project director needs to inform the contractor about the authority given to the architect and his project engineer to administer the contract. Similarly, the contractor needs to inform the client and the project engineer about the authority delegated to his representative, especially with regard to acknowledgement of directives.

The architect/project engineer should thoroughly study the plans, specifications, estimates, contract documents etc. before commencement of the works. Any errors or omissions discovered or reported by the contractor should be notified to the client and rectified. The working drawings and specifications complement each other and must be read in conjunction. All items may not be shown in both the plans and specifications but they need to be present in at least one of them, otherwise they will be considered

additional items. In case of conflict, as stated in the general conditions of contract, normally precedence is given to the specifications. Specifications are of two types, method specification and performance specification. Method specification details out the exact equipment and procedure to be used in performing a construction operation

whereas the performance specification indicates the result to be achieved and the contractor has the freedom of choice of equipment and method e.g. in structural, electrical, plumbing works etc.

The architect/project engineer should be fully acquainted with the contractor’s plan of operations, safety provisions and schedule of progress. He should also keep track of all revisions in the plan and its impact in the progress of the works. The time of completion is normally mentioned in the contract. When a project is not completed on time, the contractor has to pay for the damages suffered by the client due to such delay, not as a punitive measure. This is covered in the clause on liquidated damages and specifies the amount to be paid by the contractor for each day of delay. On the other hand, there are provisions in the contract to allow time extensions to the contractor if certain events occur which are beyond his control – owner directed changes, acts of God, strikes, war etc. In case of delays due to acts of God, time extension needs to be provided but compensation can be claimed from the insurers. In owner caused delays both time extension and additional payments may be required. But in case of delays due to the contractor no time extensions or payments are required.

The architect/project engineer needs to ensure construction is carried out as per the plans and specifications according to the terms of the contract

The architect/project engineer needs to take measurements of quantities and determine payments to the contractor. The progress payments need to be made on a monthly basis or after reaching predetermined milestones. Payment is generally made for work completed, material delivered to the work site and work prefabricated but not yet incorporated in the project. It is customary to withhold a certain amount referred to as a retention money from the progress payment as a guarantee against any defective work as well as make proportional deductions for any advances paid in accordance to the terms specified in the contract. The typical retention amount is 10% of the progress payment – sometimes 5% for smaller contracts – of which half is released on the issuance of the Substantial Completion Certificate and the remainder is paid after the expiry of the

Defects Liability Period (normally 6 months to 1 year but covering at least one full monsoon season).

Maintain records of all project activities: correspondence, daily diaries of events (source of information, outcomes etc. which can serve as evidence in case of later controversies), personnel, supplies and equipment, project progress reports, final report, photographs etc.

If necessary, the architect/project engineer needs to issue contract modifications and directives within the scope of the contract. The change orders are often necessitated due to design modifications initiated by the owner or designer. Changes may also be required due to differing site conditions, unforeseen work essential to complete the work,

variations in the estimated quantity of an item of work (if initiated by the contractor), unforeseeable delays which increase the cost or time of construction, substitution by alternate equipment, material or process. Modifications often require adjustments in the contract price and construction time which needs to be carefully determined by the project engineer and mutually agreed upon by the client and the contractor. Often prior agreement cannot be made when the work has to be continued and agreement is made later. If there is disagreement later on, this becomes a dispute.

The architect/project engineer should keep control of materials at the site. He needs to approve different materials, samples and tests of materials carried out by the contractor.

He must also ensure that the materials are being stored and handled in a way so as not to destroy their quality or strength. He must conduct regular inspections and keep records of materials and equipment brought to the site or used in construction. This becomes

important in case of termination due to default of contractor.

After the contractor submits a letter stating that the works have been completed, the project engineer, together with the contractor or his representative, should inspect the works and make note of any defects or unfinished works. If these are considered to be minor which can easily be completed during the defects liability period, the substantial completion certificate is to be issued after which the building can be taken over by the client and the defects liability period commences. Once the contractor corrects all previously noted defects as well as any new defects by the time the defects liability period is completed, the project engineer issues a defects liability certificate after which final payment is made to the contractor and all retention is returned. Except for any outstanding disputes, the contract between the client and the contractor is deemed to have ended.

The architect/project engineer should properly evaluate and decide on any claims and disputes, if any. A claim is a request by the contractor for additional payments or time extension because of an occurrence of an event beyond his control. A dispute is a disagreement between the client and the contractor on some contractual matters. The project engineer needs to give his unbiased judgment on any dispute; however, if any of the party is dissatisfied with his decision, he is entitled by the contract to refer the matter to arbitration.

References:

Standard Bidding Document; His Majesty’s Government of Nepal; 1998.

Sample Bidding Documents, Procurement of Civil Works; Asian Development Bank;

1988.

Manual for the Administration and Supervision of Construction; Harihar Man Amatya;

1993.

Construction Methods and Management; S. W. Nunnally; 1998.