Have you ever come across the term ‘Contracts Administrator’ whilst browsing through some project material and wondered what it means? Or have you ever considered the purpose of such a role and what skills are required to be successful at it?
The implementation phase of a construction contract can be fraught with uncertainty and, at times, lead to scenarios where disputes between parties cannot be settled, meaning escalation to Alternative Dispute Resolution procedures is required. Preventing such situations from occurring is the desirable option, but for this to happen the contract must be managed or ‘administered’ effectively and proactively, which is where the role of the ‘CA’, as the Contracts Administrator is commonly known, becomes of major significance.
What is the Contracts Administrator?
The role of Contracts Administrator has been in existence for a long time, but it was not until 1980 when the position was formally recognised that it was introduced into Amendment 4 of the JCT Contract. The employer appoints the individual or company to act as CA. The integral part of the role is to manage the contract between the Employer and the Contractor in an impartial manner.
Historically the Architect performed the role, as the JCT Form initially referred to ‘Architect/Contract Administrator,’ which led to the idea that there was not a contractual difference between the two titles. However, employers have been known to appoint other professionals, such as a Building Surveyor or a Quantity Surveyor, meaning the role is not purely confined to the Architect.
To understand the role of the CA, it’s useful to appreciate when their involvement starts on a project. Technically speaking, the role doesn’t start until the building contract is in place between the Employer and the Contractor, but the reality is different as the CA will be involved throughout the entire delivery.
Once a Contractor has been selected for a project, the CA is assigned to administer the contract between the parties, working essentially as an agent for the Employer. However, it’s critical that the CA acts impartially on all decisions it chooses to make as part of this ‘agency’ function. This is an important requirement of the CA role, as the ability to make decisions on projects in a fair and reasonable way, whilst not showing bias towards any of the parties, is crucial for projects to run smoothly. The decisions made by the CA are derived from their core responsibilities which are summarised below.
Key Responsibilities of the Contract Administrator
- Chairing meetings – preparing agendas and distributing minutes of progress meetings
- Ensuring the provision of information – i.e. preparation of an information release schedule
- Periodically inspecting the works – to report to the Client on quality, progress, and conformity with the contract documents
- Issuing instructions – including variations or CCO’s (Contract Change Orders)
- Determining applications made by the Contractor for extensions of time and other claims such as disruption
- Producing regular reports to keep the Employer updated on all relevant project matters
- Authorising and certifying interim payments to the contractor
- Issuing Practical Completion Certificate
What information does a Contracts Administrator need from a Client during the Pre-Construction Phase?
Throughout all stages of an engagement, the Contract Administrator is a recipient of a constant flow of information and data that needs to be processed efficiently to enable timely decision-making. As part of this process, the CA must receive certain information from the Client at the planning stage to manage the contract effectively. This is especially important, as the purpose of this exercise is to mitigate any potential problems before they happen when the construction works begin.
In addition to familiarising themselves with the project by obtaining documents such as the building contract conditions, the schedules of works, the design, and the Appointments agreements, the CA will require a substantial amount of material and documents from the Employer to ensure that all will be in good order on the project. Such documentation can include, but is not limited to, the following:
- Employers written acceptance(s) of tender quotation and authority to commence the works
- Planning permission detailing any conditions and other related applications relevant to the project
- Building Regulations approval
- Licensing i.e. oversailing and hoarding
- Traffic Management proposals and road closure notices
- Party Wall Agreements
- Archaeological Notice
- Digging permits
- Asbestos Notice
- Wayleaves & Easements
- Details of Live Services
What does a Contracts Administrator need from a Client during the Construction Phase?
This stage is more about process as opposed to planning and the CA should look to establish a clear working platform with the client that enables decisions to be made in a timely manner, therefore not jeopardising the programme.
To administer the contract appropriately, the CA would potentially want the Employer to invest in a Document Management Solution that stores all project related information, including any pre-contract and post-contract material, in a central database. If this is not possible, the CA should insist that the client keeps all details of instructions, confirmations, and records in writing and that any correspondence, digital or physical, is filed in a way that clearly shows the dates that the information was received. Having internal systems in place to manage this can lead to a better overall understanding of the issues in question, meaning disputes can be avoided or at least resolved more rapidly.
There are several financial matters to consider when administering a construction contract to which the CA will need a certain level of commitment from the Client if there are to be minimal complications. For example, items such as pay less notices that must be issued by the Client in accordance with the timescales stipulated in the contract. The CA needs reassurance from the Client that any obligations they have under the contract are in hand and will be honoured to prevent any issues occurring, such as time-barring.
In addition to this, the CA may require details of the valuation and interim payment dates, which can likely be obtained from the Client’s PQS who may also provide the latest contractor’s cash flow forecast if available. To ensure there are no commercial issues, the CA may request that the Client provide a copy of the drawdown schedule they have arranged with their funder to ensure everything is correctly aligned from a financial standpoint.
Transparency is key in the construction phase and this is arguably the most important element that the Client needs to provide to the CA. The Client must always make their intentions clear to the CA, ensuring everybody is working collaboratively.
What makes a successful Client/Contract Administrator Relationship?
There are several ingredients that create a successful relationship between the CA and the Client. The Architect or CA can develop a solid foundation for a good relationship with their Client by adhering to certain principles, which includes setting reasonable expectations from the outset. The Architect or CA must be clear in what their limits are and how realistic the scope is in relation to the Client’s capabilities.
Being candid is essential for developing a good relationship and necessary when acting as a Contract Administrator. The CA is an impartial figure on a construction project and even if they are also the Client’s Architect, they cannot be seen to act favourably in any way as this would imply a conflict of interest.
Therefore, being open and honest about issues that might not be good news for the client needs to be communicated in a way that is professional and demonstrates an approach that is fair and reasonable.
These skills enable the CA to set a clear scope of service between them and their client, which is vital for developing a successful relationship. There have been many instances in which relationships have broken down between Clients and Construction Professionals because the service provided was ambiguous, meaning the Client often thought they were not getting value for money. The absence of a clearly defined scope of service can create misunderstandings and conflicts between parties, but can be easily avoided if measures are put in place to manage the engagement process.
What are the common areas of tension between Clients and Contracts Administrators?
The CA is an impartial party to the contract, meaning their stance is neutral when considering contractual developments on a project. For example, if the CA believes a Contractor has entitlement for a claim, but the Employer thinks otherwise, the CA needs to communicate their decision and vice versa if they believe the contractor does not have a claim.
There are many ways in which conflicts can occur between the Client and the CA, which link back to this unique situation in which the CA must be impartial whilst also representing the Client in other capacities. Professionals must always be fair and reasonable, but this dynamic can sometimes be difficult to comprehend, especially for Clients when CA’s make decisions that do not appear to be in their favour. The contract will usually provide a mechanism for the Employer to challenge a decision made by the CA, which can further add to the tension.
Other common problems can centre on advice that the CA has given to the Employer concerning instructions in relation to variations of the works. There may be a need to vary the works to use a substitute material for performance purposes, resulting in a hefty cost to be borne by the Employer. It is possible that the CA advised the Client to use the now unsuitable material in the pre-contract stage whilst the Client was still deciding what they required. Another issue can flare up around the issuing of verbal instructions from the CA on site, which may prove to be inconsistent with the Client’s requirements. Any re-work needed because of having to undo the works done can often lead to tensions between the Client and the Contract Administrator as this comes at a cost.
Another problem that sometimes reveals itself between the Client and CA concerns the scope of service and confusion around who is responsible for doing what on the project. For example, if we take the CA’s obligation to undertake inspections of the works, this is an integral part of the service but the CA must be clear to all parties in terms of what their level of responsibility is when inspecting the site. This means that the CA should not allow their responsibility to extend to checking compliance of the works with the design. This is something the Employer must do in co-ordination with their design team. A simple misunderstanding around this area presents yet another potential avenue in which tensions can needlessly arise.
How can these issues be addressed before they become a problem?
In order to prevent these issues from becoming a problem, it’s essential that the CA is proactive in their approach and has a robust process in place for thoroughly assessing all relevant project material.
From a practical perspective, it’s important that the CA clearly outlines their responsibilities and addresses any potential issues with the Appointments documents that appear to be unclear. It is essential to begin the project on the right footing. A clearly defined scope of service for each party is a good starting point that is often overlooked.
For any issues related to changes in the scope and variations, the CA should ensure that any instruction given to the contractor is approved by the designer and the Employer. Any instructions without such approvals can create significant problems on projects and should be avoided. Having a systematic approach (i.e. a Change Control procedure which should be a structured process) can be hugely beneficial in ensuring a project is managed properly and reducing tension between the CA and the Employer.
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