RICS APC: Contract Administration

Author: Tom Haley

As we ease our way back into 2025, and given numerous APC candidates will be looking to sit their assessment in the coming months, we thought we would continue our RICS APC series, and this time look at a couple of the optional competencies. These are focused on those optional competencies that contractor QS’s tend to select when sitting their APC assessment.

This week we will look at contract administration. Remember your competence only needs to be demonstrated to Level 2 for optional competencies, which is “doing”. If you have Level 3 competence, then that’s great, but your experience record should focus on demonstrating your Level 2 experience; don’t overlook the obvious.

The Level 2 definition has 6 bullet points stated in the pathway guide: issuing instructions; dealing with payment provisions; managing change procedures; involvement with dispute avoidance; dealing with completion and possession issues; and issuing certificates.

It would be a lengthy and repetitive article if I covered each of these as subheadings, so I have grouped these into four subheadings: payments, change control, dispute avoidance, and completion.

Level 2: Payments

Your construction contract will contain provisions that explain how payments are made and the basis of those payments. If you demonstrate an understanding of those provisions (i.e. you can explain them), then that is sufficient for Level 1.

At Level 2, I would want you to demonstrate how you comply with those provisions either when you are applying for payment or when you are giving a payment notice. It would make sense to start at the beginning and explain how you setup your payment procedures to comply with the contract. Then take an example of one payment application or notice and explain specifically what you do to ensure compliance.

A pitfall to avoid is rolling over old templates and processes from previous contracts and trying to make them fit. Are you referring to variations on an NEC contract? Are you calling the payment application something different than that stated in the contract? A competent QS should not be doing this because there is a risk that it impacts the valuation or, worse still, invalidates the notice altogether.

You want to be showing the assessors that you can prepare a valid and compliant application for payment or payment notice.

Level 2: change control

Your construction contract will contain provisions explaining how changes can be made to the agreement and how, if relevant, those changes are assessed from a time and cost perspective. If you demonstrate an understanding of those provisions (i.e. you can explain them), then that is sufficient for Level 1.

At Level 2, I would want you to demonstrate how you comply with those provisions either when you are raising or receiving a change notice. What is the form of the notice, what do you include in it, and what happens after the notice has been submitted? You would be looking to show that you understand how that change process ends, either through payment at an agreed amount or, if required, how you escalate a disputed valuation.

Again, avoid using old templates that are not relevant to your contract provisions. Ensure terminology is aligned and that you comply with the agreed time periods for submitting notices. As a QS, you are the first line of defence when it comes to contract compliance, so you have to show that you know this and do it competently.

You want to be showing the assessors that you can administer the change process from start to finish on your current project.

Level 2: dispute avoidance

It sounds obvious, but administering the contract helps avoid disputes. If you are following the contract when it comes to payment and change processes, then you mitigate the risk of a dispute arising on a technicality (i.e. did you serve the notice on time, if the terminology is different, then is it still valid, etc).

There is plenty of case law on this, but if you are following the contract, then these issues won’t arise, so, in effect, your demonstration of Level 2 competence arises from you being able to explain the impact of not administering the contract. You also give the other party clarity as to what you are doing and why; it is surprising how often those basics are not done and lead to issues between the parties.

Beyond that, the NEC contract, for example, obliges the parties to act in a spirit of mutual trust and cooperation. You can avoid disputes by working in accordance with these obligations, ensuring that not only are you timely in your administration of the contract, but you are also reasonable in the assessments that you make.

Inevitably you will aggravate a situation if you do not allow cash to flow, and that approach is often a one-way street to third-party dispute resolution. You want to show the assessors that you understand the consequences of your actions, good and bad, and how you can avoid disputes by doing the right thing.

Level 2: completion

If you are administering contracts, then you must know and be able to demonstrate that you have operated completion procedures. This is an important milestone in a construction contract because the risk profile between the parties shifts significantly at completion, and not administering the contract correctly can cause issues.

For example, the old classic (I have actually known this to happen!), what happens if a fire occurs the day after completion allegedly occurred, but no completion notice was given? Who is responsible for the insurance of the building—the contractor or the employer?

The responsibility to administer the contract is very serious, and you should give examples explaining how you followed the completion provisions to the letter, that the notices you gave were timely and compliant, and that you understand the impact of failing to administer the provisions.?

The consequences of not administering the completion provisions correctly can be severe.?

Final reflections

This is another 5-minute, bite-sized article aimed at helping those going through their APC, those counselling anyone going through the APC, or other construction professionals who are looking to improve their knowledge of contract administration issues.

Next week we will cover the conflict avoidance, management, and dispute resolution procedures competency.

If you would like to read any of our previous articles, focused on RICS APC or other topics, you can find them all on our website.