Free Contract Administration Procedures Essay Sample

Time extension refers to the change in the completion date of the project which has been brought about changes of circumstances which are beyond the control of the builder. In a contract, there are provisions that are allowed. These provisions can be divided in to 3 categories depending on the person whose control can be proprietor, builder or none. The delay calls for a payment of fine to the one inconvenienced depending on the terms in the contract. The factors that can cause delay are diverse and at times cannot be controlled. In such a situation, an extension of time delay letter is drawn. They are of two types, if the delay period is known with certainty or not. The letter gives details on the reasons for delay and the new completion date. Otherwise if the delay is not known, then only the reasons for delay are listed.

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Variation in building terms is applicable in two ways, one it may mean the change in the contractual terms upon which the agreed work was to be performed. These may include issues such as the extension of the completion date to a later than the originally specified date. Secondly, the word variation may refer to the alterations, which may be either inclusion or omission in to the work content that was specified in the original contract or as a separate contract between the two parties that the builder is required to perform. In that case, a Variation of Verbal Confirmation, Instruction & Price Adjustment letter is drawn. It serves the purpose of verification of the further instructions and their implications in to the prices and therefore the adjustment in the same.

Retention also known as the security refers to a portion of the money held by the proprietor. This serves the purpose of ensuring that the builder adhere to the terms agreed upon and the payment is withheld until the proprietor is satisfied. This continues until the construction reaches a particular level and the money withheld is released. This is agreed during the negotiation stages and the implementation strategy is as well subject to the agreement between the two.

Progress claim refers to the amount that is paid to the builder owing to the amount of work that has already been completed and the delivery of the products. The amount of the completed work and the amount of the payment are calculated as estimates by the builder and are verified by the superintendant in favor of the proprietor. Precision to the amount is a subject to the nature of the contract. For lump sum contracts, the amount is calculated as percentage. The payment dates are specified in the contract but can be altered to suit the need of the concerned party upon the agreement between the two. Failure by the proprietor to pay the due in times accounts to the breach of contracts as it can plunge the builder in to serious liquidity crises. A progress claim letter is written by the builder instructing the proprietor on what to do and as well stating the next date for the progress claim.

Practical completion refers to the stage where the contract has been completed as per the agreement with only the exceptions of minor defects that needs to be rectified. At this stage, the structure can be used for the purpose intended for. The term is however subject to the nature of the contract. An example is a theater block. Mere finishing the construction of the block cannot be referred to as practical completion as it still cannot be used for the intended purpose. In certain contracts, the builder is required to write informing the proprietor that practical completion is through and the client is given some days to inspect and request for any amendment or correction as it may be deemed necessary. This letter is known as the practical completion letter and is sent just before the completion. The letter instructs the client on matters such as the insurance and instruct him that the final and over will be made after the clearance of the payment.

Suspension of work refers to a situation whereby the overall work is halted after instructions from the superintendant. The superintendant is expected to give the instructions soonest possible and the costs incurred are beard by the builder unless it was a mistake by the client. The builder is as well allowed to suspend the work in case there is a bleach of contract. Other factors that can cause the construction to be suspended include failure to produce the title deed, failure to pay the progress claim for whatever reason or failing to show the prove that he can afford to pay the amount required. The procedures and the guidelines towards the suspension are as outlined in the initial contract.

Statutory Warranties refers to those laid down statues that one is bound to oblige to regardless of the terms in the contract. This provides like a standard guideline for the builders to adhere to as well as the quality standards. These include issues such as, the material used should be new and proper unless otherwise stated, and ensure that building act and other laws are followed among others. The statutory warranties are adhered to in the standard contracts terms.

Defective work by subcontractor is treated in the same way as the defective by the principal contractor; this is in the sense that the subcontractor is held in the same guidelines as the principal contractor. In the case of defection, the Variation of Verbal Confirmation, instruction and the Price Adjustment is written to authorize the correction or variation of the work.

Liquidated damages refer to the compensation in terms of cash that is paid to one party owing to the inconveniencies that are brought about by the breach of contract. An example is the failure by the builder to complete the task in the specified time and thus the proprietor may demand for compensation for the inconveniencies till the contract is completed. The terms and the circumstances are specified in the contract. In case they are not specified, then the proprietor seeks the common law guidance on the matter. The builder may caution against the liquidated damages by negotiating a two weeks allowance in the contract with the client.

Defects liabilities refer to any breach of contract that may result to the alteration of the outcomes. The contract specifies a clause that demands the builder to carry out any rectification that may be required. The defects must be within the maintenance period. The proprietor has the authority to call upon another builder to finish up the work which the original builder has not been able to complete. The proprietor cautions by withholding a part of the unpaid due till the work has been completed.

Subcontract documents refer to the documentations that tie the subcontractor with the proprietor. The principal contractor may sub contract but the subcontractor is guided by the conditions in the original documents. The supervisor is responsible for vetting the subcontractor and ensure that he adhere to the terms in the contract. In the case of a default in the subcontractor’s duty, the superintendant applies the same procedure as the above case of the contract breach with the principal contractor.  

Disputes are bound to occur in an agreement owing to the misinterpretation and or omissions in the contracts. The best way to prevent them is to ensure that the two parties prior to signing the agreement have understood all the terms and conditions bound by the contract. This will prompt the stake holders to seek clarification and or amendment where necessary. 

Dispute refers to a situation where there is a disagreement between the two parties; that is the builder and the proprietor on the matters pertaining to the contract. In case the builder fails to agree with the superintendant on a particular issue, then he lodges a claim to the proprietor who decides on the way forward. The lodgment notifies the other party on the dispute and demands for a quick resolution to the matter (usually 7 days). Otherwise the matter may be referred to the arbitration. Each contract specifies the procedure that is to be followed in case there is a dispute between the parties. Normally, the contract requires an appointment of an expert independent appraisal who is mandated to steer the negotiations on the matter. The procedure applies to the dispute between the principal contractor and the client or between the subcontractor and the client or amongst any two parties involved in the contract.

The proprietor appoints a superintendent or a supervisor who is mandated with the responsibilities of ensuring that the builder adheres to the terms in the contract. He acts on the behalf of the proprietor in enforcing his will and ensuring that the contract terms are followed. His focus on the checking will be on the contract terms in matters such as the quality, time adherence, materials used, and compliance with the general state law among others. The checking frequencies can be rhymed with the payment of the progress claim so as to ensure that the builder is paid for what has already been achieved. This will also ensure that the project is within the stipulated time frame.  

Below is a sample checklist that can be applicable throughout the construction work: it can however be customized depending on the specifications in a particular contract.


Legal address

Registration plan

Building permit information:

            Lot size

            Road access

Building specifications:

            Square feet









            Natural gas

Drive way



            Concrete depth

            Preserved woods



            Supporting beams

            Load bearing walls

            Make ups on the exterior walls

Sheathing and insulation


Trim details


Kitchen vanities

Stair cases

Plumbing and electrical



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