Contract Administration Overview

Contract Administration

• Topic 1: Construction Contracts
  • A construction contract is a legally binding agreement, typically between an Owner and a Contractor.
  • It's usually written.
  • The Owner decides on the project, provides requirements, and pays the Contractor.
  • The Contractor is responsible for constructing the project according to the contract documents.
  • In many cases, the Owner hires Consultants to prepare the documents and manage the contract.

Contract Documents

• Content
  • Details of the work and the payments the Owner will make to the Contractor.
  • Conditions of contract, outlining responsibilities and obligations of both parties.
  • Addresses unexpected problems, defining which party handles delays or extra costs.
  • Specifications, drawings, and bill of quantities.

Contract Elements

• To be enforceable:
  • Offer and acceptance.
  • Mutual intent.
  • Consideration (something of value exchanged).
  • Capacity to contract (both parties able to fulfill responsibilities).
  • Legality (the contract's purpose is not illegal).

The Offer or Proposal

• An offer is a promise to perform a task with specific conditions.
• Offers can be verbal but are preferably written.
• Construction contracts are usually written with standard formats.

The Acceptance

• Acceptance transforms the offer into a binding contract.
• Acceptance involves execution or signing by the other party.
• Acceptance must be clear, unambiguous, and unconditional.

Mutual Intent

• Parties must agree, in contract, to do what the contract states.
• Usually, a letter of intent is issued to describe the interest in the contract.
• A letter of intent isn't legally binding until a formal letter of acceptance.

Consideration

• Each party provides something of value to the other.
• Examples include payment of money, performance of work, or supplying goods.

Capacity

• A contract must be made by parties capable of carrying out their intended roles.
• Corporations are limited by their stated powers; contracts exceeding those powers are unenforceable.

Legality

• Illegal contracts are not enforceable.
• Contracts cannot violate municipal regulations or public policy.
• Void contracts create no legal rights or recourse.

Topic 2: Contract Administration Responsibilities

• Definition

  • The method/process of managing a legal agreement between two or more parties from start to finish.

• Responsibilities

  • Planning for contract: Establishing the legal framework of the project for the parties involved.
  • Putting Contract in Place: Defining the legal framework to govern the parties' relationship.
  • Managing the Contract: Handling and managing the contractual agreement reached by the parties.
  • Enforcing provisions/Procedures of Contract: Managing and enforcing contractual provisions and procedures.
  • Managing Parties to the Contract: Handling the roles, responsibilities, rights, duties, and liabilities of involved parties.
  • Implementing Sanctions to Ensure Performance: Using methods to enforce contractual promises or compensate for non-performance.
  • First Line Dispute Resolution: Settling disagreements between parties before escalating.
  • Linkage between Project and Construction Management: Ensuring contracts effectively integrate with the project and construction management processes.