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This paper provides best-practice recommendations on contract administration procedures to help a project team successfully bring or defend against change order requests, claims, and litigation. These recommendations include advice on document management, schedule analysis, cost control, and negotiation.
Complex construction projects are high-risk ventures involving multiple parties with different interests, resulting in a high potential for conflict. Often, these conflicts are left unresolved until the project's conclusion, when the parties' memories are questionable and their positions are more firmly entrenched. To avoid this, proper contract administration from the bidding phase through contract closeout is essential. Then, if disputes do arise despite your best efforts, the parties are prepared with all of the facts needed to make a decision readily available.
DOCUMENT MANAGEMENT
Pre-Award
During the bid phase a contractor generally documents its approach to the project through an estimate breakdown, correspondence with subcontractors and suppliers, preliminary schedules, and presentations to management on expected profit. This documentation helps determine what was in the bidder's mind when he/she planned the work. Some owners require contractors to escrow their bid computations. Even in the absence of this requirement, it should be. standard operating procedure for contractors to keep complete records of how the bid was prepared, including computations and their basis, quotations and price lists, correspondence, telephone records, bid clarifications, changes, and all bid documents.
If a prebid site investigation is made, the contractor should document what was seen (take pictures), any conclusions reached, and any areas of concern identified. The owner's representative leading the site visit should document all questions asked and comments made by each bidder.
Each bidder should carefully review the bid documents, including all referenced-documents that are not part of the formal contract documents. All too often, bidders do not review documents that are referenced in the bid documents, only to later discover problems they could have accounted for. Courts can imply knowledge of the documents even though the bidder may never have seen them on the theory that the bidder "should have known."
Bidders should have reviewed the contract as part of bidding the work; however, generally the reviewers are not the people who will have to live with it during the project. If this is the case, the premobilization phase is...