Contract administration purpose, focus, and influence

The administration of contracts during project management is a process that begins from the award of a contract through to completion of the work, and then on to acceptance of work undertaken, payments being made, and any disputes resolved. In this first part of three, we’re going to examine the purpose and focus of contract administration.

Why contract administration?

Contract administration in project management actually starts very early in the process, enabling the project manager to develop the means and methods to meet the needs of the project. There will be legal requirements that need to be met, too (for example with regards to health and safety laws). All project risks will need to be assessed with regard to the contract.

A contract cannot be completed without access to proper and adequate resource. This resource will be described within the contract, and will need to be made available as and when required.

Once the contract has been awarded and work started, contract administration moves into the monitoring mode. The purpose here is to ensure that the works carried out stay on track and consistent with the contract. The project manager does this by:

• Measuring performance against established standards
• Ensuring open lines of communication throughout
• Making certain that works, products, goods, and services meet all the requirements as laid out in the contract

Final results should be documented and used in the learning process to inform future project management projects.

Focus of the project manager during contract administration

The project manager’s focus should be on a number of elements. The intention of contract administration is to ensure that all of these elements are monitored continuously and that adjustments can be made accordingly to bring them back in line if they start to diverge. In this regard, the project manager will focus on:

1. The obtaining of services, goods, and supplies that meet or beat expectations set in the contract specifications.
2. The administration of the schedule of works under the terms of the contract. This should ensure that the contract is completed on time, with adjustments made to make certain of this.
3. HR issues
4. The adherence to budget, and the completion of works at or within the stated budget.
5. Closing the contract to a satisfactory conclusion, so that the completion is free of problems.

Influences on contract administration

There are a number of influencers that may have an effect on how a project manager conducts contract administration.

For example, where staff, employees, and contractors are experienced and committed, less administration of them will be required.

The type of project management contract employed will also have an impact on the amount of administration required, as will the nature of work being undertaken.

In my next blog, I’ll look at how an overview of monitoring during contract administration, and the weaknesses that might affect effectiveness.