POST CONTRACT ADMINISTRATION

Tools for Effective Contract Administration

• Good understanding and application of the contractual regime
• Having a good contract administrator
• Effective supervision and close monitoring of the works
• Adherence to Work Programme and milestones
• Proper issuance of Instructions and Notices
• Record- Keeping and Documentation
Conditions of Contract
Key Terms
1. Obligations of Parties
2. Key Contractual dates
3. Standard of Performance
4. Risk Management, Performance
Security, Performance Bond,
Insurances, Advance Payment
5. Interim Payment
6. Time of Completion
7. Completion and Taking Over
8. Extension of Time
9. Defects Liability Period &
Maintenance Period
10. Consequences of Default in Payment
11. Termination
12. Liquidated and Ascertained Damages
(LAD), Delays, Non-Completion
13. Change Management
14. Variation Orders
15. Final Measurement & Statement of
Final Account
16. Claims
17. Arbitration
Post Contract administration

• Site possession
• Risk management, performance bond, insurances and advance payment
• Contract documentation
• Evaluation for interim payment
• Change management
• Variation orders
• Extension of time
• Defect liability and maintenance period
• Liquidated ascertained damages, delays non-completion and termination
• Final measurement and statement of final account
• Claims
• Arbitration
Site possession

• Site must be made available to the contractor – partial or full

• Employer must give possession of site ( or and access) on or before
Date of Commencement. To enable Contractor to begin construction
and completion of Works.
Risk Management
Risk management is the act of identifying and solving potential risks.
A risk is defined as anything that has the potential to negatively affect a
business or organization.
Risk management is used to assess problems that either have or will
occur.
After the risks, the business or organization then takes steps to reduce
the risk or eliminate it completely.
Proper utilization of risk management can avert financial disaster.
Types of Insurances
1. Insurance of Works :
Contractor’s All Risks Insurance (Cl 21A)
Employer’s All Risks Insurance (Cl 21B)
Indemnity (Cl 22)
Insurance for Workmen (Cl 23) - SOCSO,
- WorkmenCompensation Ins.
Types of Insurance
Professional Liability :
Services of “professionals” where their advice, specifications,
prescription or design could be negligent or faulty by means of
error or omission and cause a loss to Institution or a third party.
Includes medical professionals, lawyers, accountants, IT
consultants, engineers, architects and others.
Environmental Impairment Liability:
Risk that the contractor’s operations or products will cause the
discharge, dispersal, release or escape of irritants, contaminants
or pollutants into or upon land, air or water.
Property Insurance:
Assets owned by Institution in the care, custody or control of the
contractor OR assets the contractor owns that if lost or damaged
would impair their ability to perform the contract.
Workmen compensation
Performance Bond / Security (clause 10 ,
pg10)
• In the form of guarantee or bond
• Equivalent to the percentage of the Contract Sum stated in the LA or
Appendix of the Conditions.
• Employer may retain the amount required of the performance
security from any amount due to the Contractor if the contractor fails
to produce the performance security.
• Requirements (see Cl 10.2)
• Extension of validity ( see Cl 10.3)
• Claims of PS (see Cl 10.4)
• Utilization (see Cl 10.5)
Advance payment
• Advance payment may be provided on percentage basis ( e.g 15% of
contract sum cost of works).
• Contractor must provide security in form of bank guarantee ( or
Insurance)
• To be recouped from progress interim payment for specific no of
payment certificates.
Evaluation for interim payment

• Contractor to submit Interim Payment Application to Engineer at

regular intervals based on all Works properly completed before or on
the Date of Evaluation.
• IPA may include:
i. cumulative value of works completed up to the Valuation Date;
ii. value of unfixed materials on site;
iii. cumulative values of all completed Variations which have
been valued;
iv. any cumulative amounts due to NSC plus P&A
Interim Payment Certificates
• Engineer must issue within 21 days upon receiving of IPA from
Contractor
• Engineer certify amounts in his opinion Contractor is entitled
• Engineer must certify deductions : - cumulative preceding IPC
- Retention Monies (Cl 58.6, p54)
Period of Honouring Certificates
• Employer must pay on or before end of Period of Honouring
Certificate as stated in the Appendix
Final Payment Certificate (Clause 59, p55)
• Within 3 months of Certificate of Making Good Defects Contractor
submit Final Payment Application FPA
• Engineer must issue draft FPC within 2 months of receiving FPA
Termination By Employer (Cl 61, p58)
Termination By Contractor (Cl 62)
• Due to breaches by Contractor / Employer
• Due to bankruptcy or insolvency of the Contractor / Employer
Dispute Resolution
• Arbitration
• Litigation
• Mediation
Change management &
Variation orders
• Change of scope of works
• Must be communicated in writing