Avoiding the Pitfalls of Contract Administration of Construction Contracts

Construction projects will usually have various professionals involved. On the smaller ones, it’s common for only one or two professionals to be appointed. ?The most obvious of those is the Architect, who will be involved prior to the work starting by designing and submitting planning applications.

Before the work starts, assuming a standard form JCT or RIBA (or similar) standard form contract is used, someone will be appointed to be the Contract Administrator (“CA”). ?The CA may be the Architect or some other professional - who may or may not have some other involvement with the project.?

Many professionals are concerned about taking on this role, due to the potential for it to conflict with other roles they may undertake on the project for the Employer – who will be paying their fees. ?Also, if the CA fails to perform his or her duties, it is the Employer who will have a claim against them.

Powers of the CA

The CA’s powers are enshrined in the contract. They are not able to exceed these powers and, if they do, that will give the Contractor opportunity to challenge the CA’s conduct.

There is an obligation to act fairly and impartially, in line with the contract Conditions, which may involve finding against the Employer.? Therefore, there is an inhering friction between the CA’s duty to the project and that of their duty to the Employer. ?For example, the Employer may instruct the CA to serve a termination notice on the Contractor when it is patently obvious there are no grounds to do so.? To compound the issue in this example, if there are no grounds to serve a termination notice the Contractor may then have a claim against the Employer for breach of contract and the CA for ‘inducing’ the Employer’s breach.

It is, however, rare for a Contractor to have a claim against the CA, as there is no contractual duty owed.? The Contractor would need to bring a claim against the Employer, who would, in turn, bring their own claim against the CA – should the CA have been in breach of their obligations to the Employer.

If the Contractor is not satisfied with a CA decision or direction, it has the right to ask an Adjudicator to determine the issue.

Duties of the CA

There are three principal responsibilities owed to the Employer which are:

1.???? The detection and correction of defective work;

2.???? Intervening if the Contractor’s working practices give cause for concern; and

3. Dealing with any design flaws which become apparent, as the project progresses.

Therefore, if a professional supervises the works, they must ensure the workmanship and materials are suitable. ?However, they are not required to personally measure or check every detail, but they should check that substantial parts of the project are being conducted correctly.

The best practice is for a CA to visit the site around once a week – the time and duration of the visits is subject to the type and progress of the work.

The CA is required under the contract to take certain steps during the project, including valuations and variations.? They will also need to check the Contractor’s final account on compilation to determine any issues on contractual entitlement or liability.

Whilst administering the contract, the CA will often have to interpret contract requirements.? Whether a misinterpretation of the contract will result in negligence by the CA depends on the circumstances.?? Therefore, if there is any doubt as whether a CA should accept or reject a proposal by the Contractor under the contract, they would well placed to explain the issue to the Employer and suggest they take independent legal advice.

Consultants who take on the role of the CA should ensure that their contract with the Employer is adequate, as they are centrally important in interpreting their duties. Unfortunately, professional appointments are frequently informally concluded or expressed in general terms.? This may result in the CA being exposed to claims for breach of their duties.