Construction contracts, especially for large projects, can be extremely detailed with many key documents often compiling thousands of pages. Because of this, larger firms have a dedicated role to keep track of the contract.
Contract administrators serve as the dedicated point-person among stakeholders, meticulously converting non-legal documents into legally binding contracts without distorting the original intent. While they are seldom the sole originators of contract language, much of their expertise lies in organizing the many elements into cohesive drafts for executive and legal endorsement.
This article aims to demystify contract administration, uncovering the contract administrator’s role in the construction industry.
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There is some confusion within the construction industry between the terms “contract administrator” and “construction administrator.” This could possibly be due to a generational change of meaning, misuse of the terms or a general misunderstanding of what each role does.
Contract Administration: Contract administration is centered on overseeing contractual agreements and ensuring that all parties involved adhere to these agreements.
Construction Administration: In contrast, construction administration is typically the responsibility of architects, who ensure that the construction work aligns with the established drawings and specifications.
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Additionally, construction administration involves the management of on-site operational execution, verifying that the build complies with the design and design intent.
Generally speaking, the contract administrator plays an intermediary role amongst the many parties involved in a construction agreement, safeguarding contractual compliance and fostering relationships. This individual is tasked with transforming non-binding documents into full-fledged legal contracts, ensuring the original content remains unaltered. While not always charged with the initial writing of a contract, the administrator is instrumental in assembling its various components.
The responsibilities of a contract administrator will vary depending on whether the contract administrator is working for an owner or a general contractor. Highlighted below are a few of the differences between the two:
Contract Administrators who work for GCs hold the responsibility of putting together each contract for the specialty contractors, approving that each document adheres to the prime contract, and getting each contract signed by the respective party.
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One of the earliest tasks to ensure successful Contract Administration should be the creation of a contact list for as many people and entities associated with the project as possible. On the owners side, this will include the architects and GCs.
When working for a GC, this includes the project’s owner, manager, architect, superintendent, field engineers, subcontractors, vendors and materials suppliers. Defining the legal entities and persons who are responsible for signing parties to the contract is the role of the Contract Administrator, as these could be different from the point of contact for operations and logistics.
Another aspect of the role is incorporating non-binding documents into contract documents, which requires a high-level comprehension of their purpose in construction and the authoring source of those documents. Additionally, understanding the way in which the contract defines scope, schedule and cost allows contract administrators to establish clear contractual obligations and performance expectations, in hopes that all parties are protected from future litigation.
That being said, contract administrators do not write all of the contractual language. Though contract administrators are expected to have a better understanding of the project scope, schedule, and logistics, they often collaborate with consultants — such as legal counsel, who would be more experienced in legal language and contract law — or use an industry-recognized template.
Changes in construction projects are inevitable. Omissions or oversights in the contract documents may be discovered only during the construction process, or exigent circumstances can come to bear, making schedule adherence impossible. Perhaps the owner wants to upgrade or alter the project somehow. No matter the reason, properly applying for a project change is part of contract administration and is done via change orders.
Change orders are written submissions for adjustments to a project’s scope or timeline. Upon approval they become incorporated into the prime contract, creating new (and legally binding) rights and obligations between the owner and GC.
Change orders can adjust the project’s schedule, scope or value either up or down: For example, an owner may abandon the previously intended tile floors of a structure in favor of (typically cheaper) carpeting. Change orders can be small, but also large — such as adding an entirely new subdivision onto a planned community.
No matter the change requested, the cardinal rule for those administering the contract is to never authorize work that deviates from the contract documents without an approved change order. Doing so creates the risk of double work, unpaid work, project disputes and breach of contract.
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Successful contract administration is all about synthesizing and managing the (often thousands) of documents associated with a project. This task could have been near-overwhelming in the days of pencils, spreadsheets, logbooks and paper forms.
Fortunately, construction has gone digital in the last few decades. Now, platforms exist on which all functions of contract administration can be accomplished seamlessly and at scale. Admins can use digital platforms to track and remind project participants of upcoming actionable dates, when reviews, renewals, reports or special filings will be required, in order to keep a project on track for the scheduled completion.
Even more exciting are the possibilities for artificial intelligence to revolutionize the contract administration process, taking away the grueling tasks of organizing the thousands of compiled documents or searching through them for project forensics.
