Contract Administration

Administration of construction contracts requires an intimate knowledge of the relationship of the various skills required for the construction, which involves labor, material suppliers, and subcontractors. Feeding into the job are all of the lifesupplying services. Whether the contractor combines one or more of the jobs in more than one person is immaterial. Construction project management that will result in a profitable, on-time job involves the organization and interplay of many talents. Activities of engineers, architects, field supervisors, construction labor, material and equipment suppliers, and subcontractors, aided by accountants, attorneys, insurance and bonding underwriters, design professionals, and the owner, must be organized and carefully coordinated. Those who succeed in this complex and difficult business are the ones who familiarize themselves thoroughly with the daily operations of their jobs. They are constantly learning by reading the latest professional journals, keeping abreast of legislative developments and governmental regulations affecting the construction business, and attending seminars on industry functions. They are alert and openminded about new ideas. They understand the needs of different clients and design professionals and are able to tailor services to them. The task of the contractor, principal, or partner is to be familiar with and have responsibility for legal, bonding, insurance, and banking requirements of the firm. The contractor feeds into the job necessary organization and policy decisions. This contribution, when added to what is fed into the job by the project manager (progress), bookkeeping (money), superintendent (progress), clerical (correspondence and records), architect and engineers (plans and approvals), building department (approvals and inspection), and the owner (money), is essential for job progress. Planning of the job is dealt with in Art. 17.10.2. Profit and loss of the job are controlled in the manner described in Art. 17.19.


A contractor who engages others (subcontractors) to perform construction is called a general contractor. General contractors usually obtain subcontract bids as well as material-price solicitations during the general-contract bidding stage. Sometimes, however, general contractors continue shopping after award of the general contract to attain budget goals for the work that may have been exceeded during the initial bidding stages. In such cases, additional bids from subcontractors are solicited after the award of contract. Purchasing Report. Contractors would find it advantageous to approach purchasing of subcontracts with a purchasing report (Fig. 17.4). This report should list everything necessary to be purchased for the job, together with a budget for each of the items. As subcontracts are awarded, the name of the subcontractor is entered, and the amount of the subcontract is noted in the appropriate column. Then, the profit or loss on the purchase is later entered in the last column; thus, a continuous tabulation is maintained of the status of the purchases. These priorities are indicated in Fig. 17.4 by the numbers in the left column. Bid Solicitation. Bids are generally solicited through notices in trade publications, such as Dodge Bulletin, or from lists of subcontractors that the contractor maintains. Solicitation also can be by telephone call, letter, or postcard to those invited to bid. Where the owner or the law requires use of specific categories of subcontractors, bids have to be obtained from qualified members of such groups. After subcontractor bids have been received, careful analysis and tabulation are needed for the contractor to compare bids fairly (Fig. 17.5). In a complicated trade, such as Moisture Protection, shown in Fig. 17.5, it is necessary to tabulate, from answers obtained by questioning each of the bidders, the exact items that are included and excluded. In this way, an evaluation can intelligently be made, not only of the prices submitted but also as to whether or not the subcontractors are offering a complete job for the section of work being solicited. Where an indication in the subcontractors proposal as in Fig. 17.5 shows that a portion of the work is being omitted, it is necessary to cross-check the specifications and other trades to be purchased to ascertain that the missing items are covered by other subcontractors. Subcontract Forms. Various subcontract forms are available for the written agreements. A commonly used form is the standard form of agreement between contractor and subcontractor (Contractor-Subcontractor Agreement, A401, American Institute of Architects). A short form of subcontract with all the information appearing on two sides of one sheet is shown in Fig. 17.6a and b. Changes may be made on the back of the printed form with the permission of both parties to the agreement. Important, and not to be neglected, is a subcontract rider (Fig. 17.7), which is tailored for each job. Only one page of the rider is shown in Fig. 17.7. The rider takes into account modifications required to adapt the standard form to the specific project. The rider, dealing with such matters as options, alternatives, completion dates, insurance requirements, and special requirements of the owner or lending agency, should be attached to all copies of the subcontract and initialed by both parties. One additional clause that should appear in all subcontracts is the following:

This subcontract shall be subject to all the terms and conditions of the prime contract  between the general contractor and the owner insofar as that contract shall be applicable to the work required to be performed under this subcontract, it being the intention that the subcontractor shall assume to the general contractor all obligations of the general contractor to the owner insofar as the work covered by this subcontract is concerned and that the subcontractor shall be bound by all rulings, determinations, and directions of the architect and/or owner to the same extent the general contractor is so bound.

Also, the list of drawings (Fig. 17.8) should not be neglected. The content of the exact contract drawings should never be left in doubt. Without a dated list of the drawings that both parties have agreed to have embodied in the subcontract, disputes may later arise.

See also Arts. 17.11 and 17.14.

Project Management

In a small contracting organization, project management is generally the province of the proprietor. In larger organizations, an individual assigned to project management will be responsible for one large job or several small jobs.
A project manager is responsible in whole or in part for the following:

Progress schedule (Fig. 17.14 or 17.15).
Purchasing (Arts. 17.10.1 and 17.11).
Arranging for surveys and layout.
Obtaining permits from government agencies from start through completion of the job.
Familiarity with contract documents and their terms and conditions.
Dealing with changes and extras.
Submission of and obtaining approvals of shop drawings and samples, and material certifications.
Conducting job meetings with the job superintendent and subcontractors and following up decisions of job meetings. Job meetings should result in assignments to various individuals for follow-up of the matters discussed at the meetings.
Minutes kept of the plans of action discussed at each meeting should be distributed as soon as possible to all attending. At the start of the following job meeting, these minutes can be checked to verify that follow-up has been properly performed. Figure 17.9 illustrates typical job-meeting minutes. Figure 17.16 is a computer printout of a program Expedition, registered by Primavera Systems, Inc., which shows the submittal status of drawings for a building project.
Construction Productivity. One of the principal tasks of the construction manager is coping with labor availability and productivity. Added to this is the increased complexity of modern construction, particularly in the structural and mechanical phases. These increasingly complex factors, however, can be kept within the contractors control by efficient management tools, including scheduling and monitoring techniques.

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