Contractors are more likely to follow the spirit and intent of the agreements when they know the Owner is actively involved in the management of the contract.
Contract Administration is a common and more formal term for “management of a contract”. Contract administration is essentially a process whereby key provisions of the contract are evaluated proactively to ensure that the provisions of the agreement are working as intended. Proactive involvement (whether it is Contract Administration or Contract Audit) has an added benefit – it lets the contractor know that an Owner is “looking” and that they are paying attention the details. We believe that contractors are more likely to follow the spirit and intent of the agreements when they know is Owner is actively involved in the management of the contract. While audits often provide certain tangible and intangible benefits, it is a far greater strategy to develop and implement controls aimed at prevention rather than relying on the audit process to catch anything that may go wrong. Procedures associated with contract administration may encompass many elements and typically include, but are not limited to:
- Pay Application Reviews
- Change Order Pricing Reviews
- Subcontractor Oversight (Bid, scope review, award, contract, change orders)
- Buyout analysis (subcontractors and suppliers) of purchased work
- On-site Monitoring (site reviews and site visits)
Contract Administration can range from heavy involvement to light and represent a broad spectrum of responsibilities and oversight. And while no project or contract is immune to problems, we strongly believe that Owners who fully grasp the importance of proactive involvement, and are willing to make the investment of time and resources, are those that are much less likely to problems. Also, by being actively involved, we further believe Contract Administrative procedures build consensus and teamwork across all members of the project team.