The document discusses contract administration and close-out. It defines contract administration as ensuring the duties and responsibilities of each party are properly discharged according to the contract terms. It lists 10 fundamental elements of effective contract administration including contract awareness, document control, compliance with legal requirements, relationship management, variation control, claims management, program management, subcontractor control, material control, and quality control. It also discusses contract interpretation rules, dispute resolution methods, contract modification, termination, and the key aspects involved in contract close-out.

1. CONTRACT
ADMINISTRATION &
CLOSE-OUT
By
Ajit Philip B.E., P.G. Dip. MCM

2. CONTRACT ADMINISTRATION & CLOSE-OUT
CONTRACT ADMINISTRATION: Nothing but making sure that the duties and
responsibilities of each party is properly discharged as required by the terms and
conditions / provisions of the contract agreed by the parties
FUNDAMENTAL ELEMENTS OF CONTRACT ADMINISTRATION:
In order that a contract is effectively administered the following
fundamental elements listed under 10 headings need to be understood.
The contract administrator with Employer / Contractor should be fully on
top of these things, as a bare minimum the status of matters as it stood
should be clearly understood.
Contract awareness – Must familiarize himself with the contract. Should
clarify any pre-contract matter, take history of pre-contract discussions,
especially if not involved at tender/contract formation stage.
Document Control – A proper process to be set up for correspondences,
minutes, reports, photograph, and so on. A complete log and other
mechanisms for easy retrieval of information should be set up.

3. CONTRACT ADMINISTRATION & CLOSE-OUT
 Compliance with all the commercial/legal requirements of the
contract (notices etc) – Ensure timely notices as required by the
contract are served and replied to. This will prevent the party from
loosing its right to a claim.
 Relationship management – Establish good working relationships with
own project team, with other party to the contract and their project
team, to ensure smooth running of the project. Be friendly but at the
same time professional.
 Variation / Change control / management – To be fully aware of the
variation / change mechanisms in the contract and act in accordance to
the same. In addition, obtaining in parallel the necessary internal
approvals from management especially for variations resulting in
additional cost / time is a must. A proper process for internal and
external approvals to be set up in place.
 Claims management – Starts from the moment a tender is submitted
and continue through the various stages of the project’s life.

4. CONTRACT ADMINISTRATION & CLOSE-OUT
 Claims management (cont)
At tender stage – deviations, queries, amiguities, are fully addressed
During execution & close-out stage – timely submissions, approvals,
timely notifications, timely communication, recording oral
instructions, maintaining records of all events, maintaining accurate
minutes of meetings, maintaining monthly, daily, weekly reports etc,
review contract cost against contract budget, identifying cost, time
over runs, change orders, dayworks, backcharges, address disputes in a
timely manner, serve notices of arbitration thereby reserving the right,
etc
 Programme management – will include ensuring the baseline program ,
revised program are submitted and necessary approvals are in place. In
addition ensure appropriate program related to extension of time
claims are prepared / submitted (make sure whether it is as planned, or
as built or time impacted)
 Sub-contractor / supplier control
 Material control – Long lead items, ABC analysis
 Quality Control – Proper QA / QC team and QA / QC processes are in
place.

5. CONTRACT ADMINISTRATION & CLOSE-OUT
CONTRACT & ITS ESSENTIAL ELEMENTS
The Key Aspects to look for in a Contract
What I generally look for in a Contract – The six ‘Cs’
Certainty
Consideration
Commencement & Completion
Change mechanism / provisions*
Claims & Dispute Resolution provisions*
Capacity to act.
* Understanding the priority of various documents forming part of a
Contract is a must to deal in situations of conflicts.
Six C’s applies to both PRE & POST CONTRACT award stage

6. CONTRACT ADMINISTRATION & CLOSE-OUT
Contract Modification – What is it?
Simply revising, adding, deleting certain terms and conditions than those
previously agreed between the parties.
How is it done
By way of both parties signing a supplementary agreement or a contract
amendment.
Settlement agreements may also be a form of contract modification.
Purpose:
This is required when the existing provisions / mechanisms in the
contract does not permit a party to enforce a new requirement or does not
permit the party to waive certain requirement in the contract. E.g.
submission of a performance security is to be waived and in lieu of the
same the Contractor proposes 10% additional retentions from every
payment.

7. CONTRACT ADMINISTRATION & CLOSE-OUT
RULES OF CONTRACT INTERPRETATION –
Basic Rules in use internationally for interpreting a provision and for determining the
true meaning of particular or contradicting clauses in a contract.
Intention is to be found from the contract itself.
Contract to be read as a whole – precedence etc
Ordinary Meaning – words written to be given their plain, ordinary meaning as
generally understood, unless to do so would give rise to inconsistency or absurdity.
Validity of meaning – if different meanings then one shall understand it in the one
with which it may have some effect, than in the meaning with which it could not
produce any.
Particulars prevail over standards
Words prevails over figures
Contra proferentem – In case of doubt, the interpretation goes against the drafter
Expressio unius – Express mention of one thing rules out other things that are not
expressly mentioned
Ejusdem generis – Where particular words are followed by general words the
general words are to be taken to apply to things of similar kind or nature

8. CONTRACT ADMINISTRATION & CLOSE-OUT
DISPUTES – What is it?
A disagreement between parties
Contract Disputes - Why does it happen?
Largely due to different interpretation of the provisions in a contract from
person to person. Furthermore, interpretation rules may vary from region
to region as well.
How are they addressed –
Most contracts will include clear provisions to address disputes between
the parties.
If the contract does not provide a mechanism to address disputes then the
disputes will be addressed by the courts that has competent jurisdiction.
Dispute resolution – ADR & Arbitration
Contracting parties adopt various Alternate Dispute Resolution methods to
address disputes without having to go to courts. Suitable method are
agreed and provisions in such regard are incorporated into the Contract.

9. CONTRACT ADMINISTRATION & CLOSE-OUT
Some of the Dispute Resolution methods are
Negotiation – between the parties
Mediation – third party acts as a facilitator
Conciliation – similar to Mediation but the conciliator takes more
active role
Early Neutral Evaluation – Confidential process. Parties appoint
neutral evaluator, often a practicing or retired lawyer, to assess
their respective chance prior to going into litigation.
Expert Determination – Mostly for technical disputes
Adjudication
Dispute Review Boards (DRBs) – Panel meets on a regular basis,
throughout the contract work process, .
Arbitration
The last session will deal with this subject in detail

10. CONTRACT ADMINISTRATION & CLOSE-OUT
CLOSE-OUT
A common expression used by parties once substantial completion is
reached. ‘Final Account’ is another commonly used phrase.
Basically what it means is that the parties are at the stage where
finalization of any necessary re-measurement, finalization of variations,
provisional sum valuations, co-ordination and finalization of documents,
finalizing extension of time and other claim matters, attending to snags,
etc, are to be done.
Ideally it should start once the Taking Over Certificate is issued i.e. when
the works are substantially complete and should end upon the issuance of
a Final Acceptance Certificate or Defects Liability Certificate.
The most common documentation required would consist without
limitation the following
As built drawings,
QA / QC Records (Test results etc)
Operation and Maintenance Manuals
Providing spares, providing training to Employer’s personnel
Warranties, guaranties from suppliers, subcontractors,
Snag/punch lists

11. CONTRACT ADMINISTRATION & CLOSE-OUT
Termination – What is it?
In general sense, when the services / works performed by the Contractor
comes to a permanent stop, is when we call Termination of works /
services under a Contract has occurred.
How does it come into effect
Most contracts contain termination clauses, which sets forth the
procedure to use should you wish to terminate the works / services under
the contract.
A common termination clause will provide that the party who wishes to
terminate must notify the other party of his or her intent to do so in writing
and within a certain number of days from the intended date of
termination.
In absence of a provision in the contract for termination, the termination
needs to be done by way of mutual agreement.

12. CONTRACT ADMINISTRATION & CLOSE-OUT
Types of Termination
For Cause: A termination for cause occurs when one party terminates due
to a breach in performance by the other party.
e.g. Contractor’s termination due to Employer’s default in payment
Employer’s termination due to Contractor’s non performance
For convenience: A termination for convenience occurs when the Employer
decides to stop proceeding ahead with the work for their own reason. e.g. due to
feasibility issues, financial issues, etc
However, Termination for convenience clause should not be used to terminate
the works with the intention to award the same to others or to carry out on
their own. This would be considered as a termination in bad faith.
Normally, the Contractor ensures that such termination for convenience clause
excludes termination and award to others.
Mutual Agreement: In absence of a termination for convenience clause and if the
Employer wishes not to proceed ahead for any of the reasons mentioned above,
then termination can be effected by way of mutual agreement to terminate.

13. QUESTION/ ANSWERS
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