Contract Administration Article
Contract administration is an indispensable element in all construction projects, with the objective of avoiding claims and ultimately disputes. Definitions of contract administration are varied and wide, and so we sat down with Isam Saad Sahawneh, President and CEO of Construction Management Associates (CMA), in order to gain a better understanding of the concept. Mr. Sahawneh is a civil engineer with international construction experience and an advocate of dispute avoidance through proper contract administration. These are the highlights of what he had to share.
WHAT IS CONTRACT ADMINISTRATION?
We believe that contract administration includes things like contract formation, commercial management, risk management, time management, claims management, subcontractor management, project closeout and dispute resolution, and this is how we generally provide this service. Good contract administration requires an understanding of how these things affect a project individually and together. So it’s about managing money, risk, time and disputes –it’s much more than just writing letters, as many people would have you believe.
WHY DOESN’T A CONTRACTOR HIRE INDIVIDUAL CONTRACT ADMINISTRATORS TO DO THE JOB?
Because it’s what we do best and it’s what we have years of experience focusing on. Likewise, a contractor focuses on what he does best, which is building things, so he invests his money in equipment, technology and things like that. Our pitch is that we can offer them a better service at a price they are willing to pay. And this is our goal with all our services, from design management to construction management: we want to help our clients save time and money on their projects.
WHAT IS DIFFERENT ABOUT THE CMA WAY OF DOING CONTRACT ADMINISTRATION?
A good contract administrator should exhibit managerial, technical and personal competencies. All our contract administrators are trained to be proficient in commercial management, risk management, time management, claims management and dispute resolution, and they all undergo site training. With this deeper understanding of the different parts of a project, we are able to provide better advice that is rooted in having a sense of what things can go wrong later in the project. We adopt a very risk-averse approach with our clients, which is really what they are looking for. We also stay up-to-date with the latest case law in construction because we run into so many unique problems that require our advice, and case law helps us give better advice to clients when we are asked the question “What are my chances if we go to arbitration or court?”. We become familiar with how a judge would think.
WHAT IS A TYPICAL DAY LIKE WORKING WITH A CLIENT?
We’re almost in daily contact with the project manager on a project, and we’re also giving advice over the phone, not just through writing letters for our clients. So we’re advising on risks, courses of action, even things like construction techniques. We’re always using what we know about construction and site operations to help push the project forward. We also deal extensively with CEO’s because they are always involved in risk-related decisions and we advise them on the implications of these decisions. We’re somehow in the risk management business.
HOW ARE YOUR SERVICES PRICED?
We generally work on monthly retainer fees so it’s a very flexible setup for our clients. There is no long-term commitment and most of our clients take us on board from the beginning of the project. This way we live through the project and maintain proper documentation, and with a full history of the project, we are more efficient if we need to prepare a claim towards the end of a project.
If we are brought in at the end, this is more costly for the client, because we have to spend a lot of time reading the files, asking for missing correspondence and meeting with the project team to catch up on all the events that happened.