Construction projects are complex undertakings involving multiple parties, significant sums of money, and a web of contractual obligations. Contract administration is the discipline that keeps all of this in order - and when it is done well, it is largely invisible. When it is done poorly, the consequences can be severe.

This article explains what contract administration involves, who typically carries it out, and why it deserves more attention than it often receives.

What Is Contract Administration?

Contract administration (CA) is the management and administration of a building contract on behalf of the employer (the client). The contract administrator acts as an independent certifier and decision-maker under the terms of the building contract - typically a JCT or NEC form - ensuring that both the employer and the contractor fulfil their respective obligations.

The contract administrator is not an advocate for either party. Their role is to act impartially in accordance with the contract, making fair and timely decisions that protect the integrity of the project and the interests of both sides.

Key Responsibilities of a Contract Administrator

Issuing Instructions

During the construction phase, circumstances inevitably arise that require changes to the original scope of works. The contract administrator issues formal instructions to the contractor - whether for variations, clarifications, or the expenditure of provisional sums - ensuring that all changes are properly authorised and documented.

Undocumented instructions are one of the most common sources of construction disputes. A rigorous contract administrator ensures that nothing is agreed verbally without a corresponding written instruction.

Certifying Payments

The contract administrator is responsible for issuing interim payment certificates at regular intervals throughout the project. These certificates confirm the amount due to the contractor based on the value of work completed and materials on site.

Timely and accurate certification is essential. Late or incorrect certificates can give rise to contractual claims and, in extreme cases, the contractor's right to suspend works.

Managing Variations

Variations - changes to the agreed scope of works - are a fact of life on most construction projects. The contract administrator's role is to assess the value of variations fairly, in accordance with the contract's valuation rules, and to ensure that the cumulative impact on the project budget is properly tracked and reported to the employer.

Practical Completion

One of the most significant milestones in any construction project is practical completion - the point at which the works are sufficiently complete for the employer to take possession. The contract administrator inspects the works and, when satisfied, issues a certificate of practical completion.

This certificate triggers a number of important contractual events: the defects liability period begins, half of the retention is released, and the contractor's liability for liquidated damages ceases. Getting this right matters enormously.

Managing the Defects Liability Period

After practical completion, the contractor remains responsible for rectifying any defects that emerge during the defects liability period (typically six or twelve months). The contract administrator manages this process - scheduling inspections, issuing schedules of defects, and ultimately issuing the certificate of making good defects when all outstanding items have been addressed.

Final Certificate

At the conclusion of the project, the contract administrator issues the final certificate, which settles the financial account between the employer and the contractor. This is a significant document with important legal implications, and it must be issued correctly and within the timeframes specified by the contract.

Who Should Act as Contract Administrator?

The contract administrator is typically an architect, project manager, or quantity surveyor - someone with a thorough understanding of the relevant form of contract and the technical knowledge to assess the works.

Critically, the contract administrator must be independent. An employer who attempts to administer their own contract, or who appoints someone without the necessary expertise, is taking a significant risk. The contract administrator's decisions can be challenged by the contractor, and poorly made decisions can expose the employer to substantial claims.

What Happens When Contract Administration Goes Wrong?

The consequences of poor contract administration can be serious:

• Undocumented variations lead to disputed final accounts and inflated contractor claims
• Late or incorrect payment certificates can give the contractor grounds to suspend works or terminate the contract
• Incorrect practical completion certificates can affect the employer's rights in relation to defects and liquidated damages
• Missed deadlines for issuing certificates or responding to contractor notices can have significant contractual consequences

In our experience, the majority of construction disputes have their roots in inadequate contract administration - not in the underlying technical or commercial issues themselves.

The G&G Approach

At Godfrey & Godfrey Consulting, we provide contract administration services across a wide range of project types and contract forms. Our approach is methodical, proactive, and grounded in a thorough understanding of the relevant contractual framework.

We believe that good contract administration is not just about following process - it is about building a clear, well-documented record of the project that protects our clients' interests at every stage, and that provides a solid foundation for resolving any disputes that may arise.

If you are planning a construction project and would like to discuss how we can support you with contract administration, please get in touch.