If you’ve ever worked on a large-scale project—especially a construction project—you’re familiar with the concept of contract administration. An employer hires a contractor to do work. The two parties come to an agreement on what the work will be, how long it will take and how much it is worth. These details are outlined and solidified in an official document; a contract.
But what exactly goes into creating these documents? Drawing up a contract is not as simple as two parties sitting down and having a conversation. Contract administration requires just as much attention and care as any other aspect of the work.
What is Contract Administration?
Contract administration is the process of creating a contract between employer and contractor. The process ends when the contract is agreed upon and everyone has signed the dotted line. These documents are created to protect both sides of the agreement in case something goes wrong or needs to be changed.
Those are the beginning and endpoints of contract administration, but in between, there is lots of work to be done such as planning, estimating and contract bidding. The first step is to understand the wants and needs of each party. This is no simple task, and it involves time and effort. Then, the contract administrator puts these wants, needs, expectations, etc. into a written form that is easy to understand and refer back to.
Contract administration can be a long process, especially if it is the first time an employer and contractor are working together. It can also be drawn out, as the project planning process might necessitate changes to the contract. All of these changes and tweaks, as well as initial negotiations, meetings and more, fall under the umbrella of contract administration.
What is a Contract Administrator?
A contract administrator is typically a third party with extensive knowledge of business finance and contract law. A client or someone on the client’s team can sometimes act as the contract administrator, but this is not recommended. When this is the case, contract administration can quickly become one-sided and biased. This can lead to animosity between the owner and the builder.
Contract administrators are hired to act as “go-betweens” for project owners, contractors or subcontractors to represent and communicate both of their expectations. These individuals determine the best ways to make both parties happy and even negotiate for each party, if necessary.
A contract administrator’s duties vary depending on the contract and the type of construction project. Each contract will have a unique set of demands. The consistent factor is clearly defining the terms of the contract and ensuring communication and good relationships between employer and contractor.
What is the Role of the Contract Administrator?
Think of the contract administrator as an unbiased mediator. While a contract is being created, there may be errors, disputes and miscommunication. It is the contract administrator’s job to oversee what is happening and produce the best possible version of the contract.
In many ways, a contract administrator is like a couple’s counselor. There doesn’t necessarily have to be an issue in order for the couple to benefit from counseling. But, more often than not, employers and contractors will go back and forth on terms, procurement, pricing and other things until both parties are happy. Having someone dedicated to managing these discussions makes the process run smoother.
A few examples of factors a contract administrator will be responsible for are:
- Managing disputes
- Providing contract updates
- Coordinating with different departments, such as the legal team
- Making fair, impartial decisions
- Analyzing risks
- Setting quality standards
- Communicating expectations
- Setting meetings
A contract administrator is there to make life easier, create a stronger document and initiate a strong employer/contractor relationship. This contract can make or break the project, as a whole. Miscommunication and misunderstandings are leading causes of project failure, and a great contract administrator can prevent this.
Contract Administration vs. Contract Management
Contract administration is commonly mistaken for contract management, but the two are not synonymous. Contract administration is a process that only takes place before the contract has been finalized. Once the contract is finalized, contract management begins.
A contract administrator is responsible for ensuring both parties are happy with the contract they create together. A contract manager, on the other hand, deals with contracts during the project itself. This takes the form of answering questions, making changes and mediating conflicts. These two roles require different skill sets and are therefore two distinct roles.
Best Practices For Contract Administration
Contract administration will look different from project to project, as each contract will have different terms, agreements, objectives, etc. Still, there are a few basic rules that apply to all types of contract administration:
- Become Familiar with the Project: In order to administer the contract, the contract administrator must understand it in the context of the project. In doing so, they’re able to answer questions that may come up on their end and adjust their strategies depending on the project type, size, etc. They’re also more equipped to answer questions from either party within the contract.
- Prepare for Unexpected Outcomes: There are a few extra precautions a contract administrator can take in order to be a step ahead. A construct administrator should prepare for a situation in which an employer or contractor wants to make significant changes to a contract. When and if this happens, a contract administrator will, ideally, already have a risk response to proceed.
- Remain Objective: Generally, the contract administrator is a third party so they can remain totally neutral, but there are instances when they are a part of the client or buyer’s team. When this is the case, the contract administrator must put extra effort into remaining totally objective.
How ProjectManager Helps with Contract Administration
ProjectManager is a cloud-based project management software that organizes everything to do with your project, from contracts made with vendors and contractors to project plans and reports. With our powerful software, construction projects and contract administration are made much easier.
ProjectManager makes it easy to upload all of your important documents in one central location. This includes your contract, in all its stages. This means no more jumping between different tabs and windows to refer back to key documents and correspondences. After uploading your documents into our tool, you can add comments and tag users so they don’t miss a thing.
When all your documents live in one place, you also can refer to project plans, schedules and more as the contract is being written. A project plan, especially, will contain pertinent information to include in the final document. Monitor the progression of your project on our robust Gantt charts and update contracts accordingly, all from one tool.
ProjectManager’s real-time dashboards give construction project managers a birds-eye-view of the project’s performance to ensure contractors keep to the terms and conditions of the contracts. With us, you get features that facilitate both contract administration and construction project management.
Contract administration is very important across different industries. As long as there are project owners, contractors and subcontractors, you’ll need contracts to manage projects successfully. Here are some examples of commonly used contracts for project management.
- Cost Reimbursement Contract
- Time & Materials Contract
- Cost Plus Contract
- Fixed-price Contract
- Contract Manufacturing
ProjectManager is award-winning software that helps projects run more efficiently. From online Gantt charts for visual planning to a collaborative platform that helps teams work better together, every aspect of your project management is covered. Join the tens of thousands of teams already using our tool and take this 30-day trial today.