Contract administration

Contract administration ensures that the supplier conducts the work or service stated in the contract, while the buyer conforms to their requirements included in the contract. If there is more than one contract involved with the project then a key integration task is to manage the various interfaces within the project.

The activities undertaken as part of contract administration can involve the following (see also Figure 12.3):

• Managing the project invoices.

• Completing the change control system.

• Authorizing the seller's work and payments.

• Interpreting the contract and determining what falls inside and outside its scope.

• Verifying that the scope is being achieved.

• Maintaining quality control.

• Updating the risks to the project.

• Identifying and evaluating new risks as they arise.

• Keeping records and correspondence throughout the life of the contract to track changes and to record the reasons behind them.

Figure 12.3. Contract administration activities involved to meet contractual requirements

PMI says

'Contract Administration is the process of managing the contract and the relationship between the buyer and seller, reviewing and documenting how a seller is performing or has performed to establish required corrective actions and provide a basis for future relationships with the seller, managing contract related changes and, when appropriate, managing the contractual relationship with the outside buyer of the project.' PMBOK Guide (p.355)

If the work performance information identifies that the seller is failing to meet their contractual requirements, and corrective actions are not able to resolve the issue, the termination clause within the contract could be invoked. For a less severe matter, the contract could be amended by joint consent, although this must occur before contract closure. The change control process would need to be followed for an amendment to the contract, but the instigation of this process could add cost to buyer or seller, depending on the contractual terms and conditions. If either party disagrees with the requested change, there may be the need to resort to the claims administration procedure, as stated in the contract. If the differences cannot be resolved within the terms of the contract, the dispute resolution procedure is the only course open for arbitration or litigation, and the only winners in this case are the solicitors.

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