Contract Administration is a vital part of project execution and an integral part of managing risk. Active administration of the contract is required to provide early notice of problematic issues or events as they occur and ensure a project stays on track.

The well-drafted project contract should contain all necessary information for project execution. Contractual scope of work and price, risk allocation and payment provisions, change order allowances and protocol, project milestones and deliverables should all be contained within the contract. Yet, during the technical work phase, few project personnel will refer to the contract for guidance, ignoring risk management protocols for notices, approvals and other "paperwork", allowing contractual safeguards to go by the wayside. Frequently, this will result in miscommunications- the major cause of disputes and claims.

Compliance with contract obligations enhances professionalism and protects parties from unintentional breach of contract. Attention to contract obligations conveys attention to detail to project partners and ensures the protections negotiated into the contract remain intact. Complying with contract obligations requires little day-to-day management, but has great risk management/risk reduction benefits.

From a risk management standpoint, performance of obligations under the contract is expected to be documented. Failure to fulfill contract obligations can change the enforceability and availability of contract rights, duties, obligations and remedies. Failure to confirm decisions and events in writing also leads to misunderstandings. Performing out of scope or unauthorized work, missing deadlines and failing to document or perform contract administration activities should all be recognized by staff as red flags that affect project performance, liability and risk.

Benefits of Contract Administration
A general familiarity with contract terms on the part of all project personnel means personnel are more likely to comply with contractual work and obligations. The project team is more likely to stay on schedule, provide notices on time, and obtain authorization and approvals.

Contract administration is an internal process that manages non-discretionary portions of a contract. Assigning administrative duties to a contract administrator is a cost-effective means of freeing up your contract manager or project manager for more productive activities. By way of example, if a contract says that progress meetings will occur at a certain point, this data is cataloged for notices and reminders to be sent out in advance of the date to increase project productivity. If the contract requires owner approval prior to a decision point, the administrator will provide an internal reminder that the decision has/has not been returned, and that work can/cannot begin. (see our Lessons Learned page for more examples). This is non-discretionary, contract-factual work that does not require advanced management skills and is most effectively performed by administrative staff or as an introduction to contract management with junior staff.

Recent studies showing that failure to document project events is a major problem, confirm our experiences. Utilization of QA and QM programs are the fastest route to addressing the skill-gap problem, but take time to develop and implement. See our Tools page for QA/QM systems and protocols developed for the contract administration and change management portions on two projects.

Clearly, conscious administration of the contract will more than pay for itself through greater and more timely cost awareness, risk avoidance, documentation of project work decisions and decision makers, and reduction of claims and disputes through identification and coordination of extra work. Good contract administration practices benefit all project participants and should not be undervalued.

Administration Tools

Improving contract administration need not be costly or burdensome. Once a contract is executed, dissect the contract into information sheets for project team members. Inform your team how contract terms and performance are integrated portions of project work. Educate your team on retainage, risk and safety issues, identify the important issues for both owner and consultant.

All project personnel are usually aware of the scope of services, but should also be aware of work specifically excluded from the scope, contract start and stop dates, what is required for substantial completion, when, how and who gets notices of change, who is authorized to request and approve change, what risk issues are associated with the project, and any unusual issues specific to the project. See our Tools page for a cost capturing weekly team status report geared toward identifying and documenting scope creep.

Other useful tools include regular checklists of contract concerns for the items that tend to be overlooked in the day-to-day routine of work and a deliverables or milestones calendar.

Contract Administrator

Improving contract administration need not be costly and can improve productivity. Expanded utilization of contract administrators and project assistants is a trend increasingly being used as a cost-effective means of monitoring and implementing contract execution. Regular review of project execution should already be a part of your internal quality management and quality assurance programs.

Providing a non-technical project staff person to oversee contract administration is an excellent way to increase compliance with contract administrative requirements while taking some of the administrative burden off new or technically-minded project managers. Cost capturing, identification of and addressing client concerns, independent review of schedule/work/budgets, monitoring progress and performance and project event documentation are just a few of the areas where contract administrators can be of great value.

Regular, objective review of project activities is a basic level of duties that can be performed by a contract administrator or project assistant. Other duties can include regular updates of project milestones, monitoring the schedule/calendar, project deadlines and events, comparison reviews of invoicing or time sheets for coordination with schedule and budget and review of project meeting minutes with an eye toward detecting potential change or scope creep.

A contract administrator will provide the duties listed above and may also draft contract administration documents for distribution to project staff, and lessons learned end-of-project summaries, interface with financial, legal or risk management departments, and assist in performance of QM/QA/QC duties.

Project Assistant

The project assistant is generally a non-technical member of the team, facilitating information transfer for the project manager. Project assistants will typically coordinate communications between the project manager and staff, the client and the entire project team, gathering and funneling project information to the project manager and team as well as internal departmental heads in accounting, legal, finance, and risk management. The cost of utilizing a contract administrator and project assistant are usually viewed as legitimate direct project costs of mutual benefit, incurred to improve the efficiency of project management activities.