Contracts administration

Contracts Administration

A case of a Contracts Administrator dealing with claims from subcontractors.

Outline and Background of Case Study

The steel fixer on a particular project has continued to under resource their work. As a result, the main (head) contractor’s programme has suffered a significant delay. In the recent past the Project Manager has instructed the Contract Administrator, who is a third year University student working part time, to issue repeated contractual notices to the steel fixer explianing their obligation to maintain the programme. To date there has been no change to the level of people resources being provided and the subcontractor has not responded to the Contracts Administrator.

The Project Manager finally makes the decision to engage another steel fixer to work alongside the incumbent. The site team believes they can manage the work in such a way as to allow the two subcontractors to ‘leap frog’ each other as the structure progresses. They anticipate they can make up the lost time.

The Contract Administrator works hard late into the evening throughout the whole week to rapidly procure the additional subcontractor at acceptable rates. There are several meetings with various subcontractors to attempt to agree rates. Finally, agreement is reached with one subcontractor and arrangments are made for the firm to commence work with the proviso that they are provided new PPE to their entire workforce on site together with an enhanced site allowance for the duration of their work on site.

For a few days it appears that the problem has been resolved. However, when the incumbent steel fixer observes the preferential treatment of the new steel fixer, a massive argument ensues and they walk off the job. The steel fixer subsequently submits an outrageous payment claim that includes loss of profit on the part of the contract that had been removed. The Contract Administrator needs to deal with this.

Given the animosity that has been generated throughout the project to date, this will be a difficult and somewhat daunting task. The whole issue has created significant anxiety within the site team and the other supporting subcontractors.

Purpose – aims and objectives

The purpose of setting out this example is to show how care and discretion needs to be taken when dealing with scope changes through the life of a construction project. Contracts administration is a complicated task and what appears to be a relatively simple decision may have significant implication.

The aim is to help students understand that obtaining a clear grasp of the coursework in this program (in this instance contracts administration) will put them in a good position to manage circumstances similar to those outlined. They will have a good grasp of a particular Standard Form of Contract and be able to explain its proper use in various circumstances.

The objective is to provide students with the opportunity to seek and identify practical solutions to problems that manifest in the construction industry and build tangible coping strategies to counter any negatives associated with the hypothetical circumstances of the nature described.

Antecedents (precursor)

In a situation where the cadet contracts administrator has limited experience a reasonable solution would be to seek advice from colleagues. Draw on their expertise and brainstorm about possible alternative solutions. This would be rather similar to a group work assignment in coursework study.

Think about negotiations that happen when students are given assignments as group work. Further reading may be necessary and advice to the student to consider reflection on the problem and strategise on future action would be beneficial.

Protective Factors

  • Generally, the protective factors identified above would place the young cadet contract administrator in a good position to deal with the circumstance.
  • Particular protective factors in this instance can be identified from a discussion around problem- solving, engagement in peer group work and role-play.
  • In class it would be worthwhile to explain that whilst a circumstance of this nature is confronting, positive antecedents and use of the aforementioned protective factors should reduce the risk factors.

Risk Factors

  • The balance between risk and protective factors is said to be a dynamic process. Accordingly, a lack of protective factors would increase the possibility of risk associated with a student’s resilience when considering the case study.
  • Insufficient competency or a lack of basic skills in negotiation or problem-solving may increase the possibility of risk associated with the case study.
  • Support - it may be noted that the builder and cadet contracts administrator may take the opportunity to prepare prior to the meeting. This would be regardless of the confrontation identified.

Resilience or coping

  • Some discussion around possible outcomes associated with the case study with a particular focus on the positive is useful.
  • A capability to defuse a situation of the kind identified is positive.
  • Providing solutions and a way forward, both immediately and in the short term are helpful.

Consequences

A particular consequence arising from the case study can be identified as personal growth. This draws us back to the definition of resilience shown above.


Contribution by

Professor Peter Davis, University of Newcastle

Pat McAllister, Hansen Yuncken


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