Construction Contract Management Guidelines and Administration

Revision as of 13:00, 20 September 2017

Contract plays a vital role in project management, business strategies, and relationships. It is the foundation of value for the business. Organizations both in public and private are looking for efficient performance at a reduced cost. ^[1] They are now realizing the importance of contract management in delivering a successful project. Effective contract management can make or break organization's vision, strategy, and its reputation.

All over the world projects are losing billions of monies due to poor contract management. The factor affecting poor contract management can be attributed to many elements such as the lack of knowledge with regards to proper contract administration, the impact of globalization creating a thicker volume of the document, strict government rules and legislation, technological innovation like BIM, and speed of change in contracting norm.

The significant impact of contractual issues affecting the overall performance of an organization leads to a realization that proper contract management guidance and administration is necessary to ensure minimal contractual risk, claim dispute and eliminate the possibility of arbitration cases.

In this article, the approaches and guidelines for Contract Management and Administration for pre-award (tender stage) and post-award (project execution stage) activities will be elaborated and discussed. The article will be divided into two sections. Section 1 includes the contract management principles such as the definition of contract, the contract management and administration definition and value measurement, the benefits from good contract management, contract management lifecycle and its processes, this is to give the readers an overview of what is contract management. Section 2 is the contract management guidelines for pre-award and post-award used to successfully implement the contract. _______________________________________________________________________________________________________________________________________________

SECTION I - CONTRACT MANAGEMENT PRINCIPLES
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WHAT IS A CONTRACT?

A contract is a legal document stating the obligations between two or more parties. The contract documents usually outline the principles of offer, acceptance, and consideration, it also defines the terms of payment, the principles of negotiation, the scope of work and the expected level of service.

WHAT IS A CONTRACT MANAGEMENT AND ADMINISTRATION

Contract Management and Administration is the process of managing the contracts between the company and the vendors/partners. It involves decision-making and timely flow of information to achieve project goal in conformity with the contract documents. Moreover, effective contract management can be measured if;^[2]

1 The arrangements for service delivery continue to be satisfactory to both customer and supplier;

2 Expected business benefits and value for money are being delivered;

3 The supplier is being cooperative and responsive;

4 All parties know their obligation in the contract;

5 There are no disputes;

6 There are no surprises;

7 The contract is fully compliant and satisfied both legislative and requirements.

CONTRACT MANAGEMENT PROCESSES

REFERENCES:
1..2 https://www.cips.org/documents/CIPS_KI_Contract%20Management%20Guidev2.pdf