The $400 million power plant project had a perfect contract. Drafted by top lawyers. Negotiated by experienced commercial teams. Everyone signed confidently. Then the project started. Within six months, disputes exploded. Claims piled up. The client refused payment. The contractor threatened to walk off-site.
What went wrong? The contract was fine. The administration was terrible.
Nobody tracked notice deadlines. Changes happened verbally without documentation. Meeting minutes were never circulated. Site records were incomplete. When disputes arose, nobody could prove their case.
This happens constantly. Good contracts fail because of poor administration.
Here’s the truth: Most construction disputes aren’t caused by bad contracts. They’re caused by bad contract administration. And here’s the bigger truth: Contract administration isn’t a lawyer’s job. It’s an engineer’s and a project manager’s job. You’re on site. You see what happens. You make decisions. You execute the work.
If you don’t understand contract administration, your project is at risk.
What is Contract Administration in Construction and EPC Projects?
Contract administration is the daily management of your contract throughout project execution. It’s not about drafting contracts. That happens before you start. It’s not about dispute resolution. That happens when things go wrong.
Contract administration is everything in between. The daily blocking and tackling that make projects work.
It includes tracking obligations. Issuing notices. Processing variations. Managing changes. Maintaining records. Monitoring compliance. Processing payments. Handling delays. Preparing claims. Think of it like this: The contract is your rulebook. Contract administration is governed by those rules. Making sure everyone follows them. Documenting when they don’t.
When does contract administration start? Day one. Not when problems arise. Not when disputes happen. From the moment the contract is signed.
Many people think contract administration begins when something goes wrong. Wrong. It begins immediately with contract familiarization, baseline setup, and establishing procedures.
EPC versus traditional construction. Contract administration differs between project types.
In an EPC Contract, the contractor has single-point responsibility. Design, procurement, construction, everything. This means heavier obligations. More performance requirements. Stricter testing regimes. More documentation requirements.
In traditional construction, the employer provides the design. The contractor builds. Administration focuses more on measurement, quality control, and progress monitoring. But the principles are the same. Document everything. Follow procedures. Track obligations. Build your record.
Contract Administration Responsibilities: Who Does What?
| Role | On-Site Presence | Key Contract Duties | Risk If Not Done Properly |
|---|---|---|---|
| Project Engineer | Daily | Claims rejection, unmanaged variations, loss of time, and cost entitlements | Weak or missing evidence, inability to prove events, failed claims |
| Project Manager | Periodic / Regular | Issuing contractual notices, maintaining registers, preparing variations and claims, and formal correspondence | Approvals, coordination between site and commercial teams, escalation of contractual issues, and decision-making |
| Contract Administrator / Commercial Engineer | Office / Site | Issuing instructions, reviewing submissions, making determinations, certifying payments, and EOTs | Time-barred claims, missed deadlines, loss of contractual rights |
| Engineer (FIDIC – Employer’s Representative) | Employer Side | Issuing instructions, reviewing submissions, making determinations, certifying payments and EOTs | Maintaining site records, issuing/receiving instructions, identifying changes and delays, and preparing factual inputs |
Confusion about roles kills projects. Who does what? Who has authority? Who’s accountable?
Project Engineers: are often first-line contract administrators. They’re on site daily. They see what happens. They receive instructions. They deal with changes. They must understand the contract implications of technical decisions.
Project Managers: oversee contract administration. They ensure procedures are followed. They make higher-level decisions on variations and claims. They coordinate between the site, commercial, and legal teams.
Contract Administrators: or Commercial Engineers specialize in contract management. They track notices. Process variations. Prepare claims. Maintain registers. Handle correspondence with formal contract significance.
Employer’s Representative or Engineer: (in FIDIC contracts) has specific duties. They give instructions. Make determinations. Certify payments.
The problem happens when roles are unclear. Engineers think contract stuff is the commercial team’s problem. The commercial team thinks site information should come automatically. Nothing gets documented properly. Claims fail.
Define responsibilities clearly. Who issues notices? Who tracks deadlines? Who maintains records? Who prepares claims? Write it down. Make sure everyone knows their role.
Core Contract Administration Skills
Engineers and managers need specific skills for effective administration.
Contract awareness: You must understand your contract. Not every clause. But key provisions relevant to your work. What triggers notices? What requires approval? What are the deadlines?
Documentation discipline: If it’s not documented, it didn’t happen. This is rule number one.
Everything in writing. Every instruction. Every change. Every agreement. Contemporary records are created when events happen. Not weeks later. Not when you’re preparing a claim. Right away.
Communication clarity: Say what you mean. Mean what you say. Be precise in correspondence.
Don’t use vague language. “We might need more time” isn’t a proper Extension of Time notice. “We require 30 30-day extension due to delayed client approvals of submittal XYZ” is.
Time and notice management: Contracts have strict deadlines. Notice of delay within 7 days. Notice of claim within 28 days. Response within 14 days.
Miss a deadline? You might lose your rights. Track deadlines religiously.
Commercial thinking for engineers: Engineers must think beyond just technical execution. Every technical decision has commercial consequences.
Design change? That’s a variation. Delay from late approvals? That’s an EOT event. Different site conditions? That’s a claim.
Contract Documentation and Correspondence Management
Documentation is everything in contract administration. There’s a saying in construction: If it’s not documented, it didn’t happen. In disputes, this is literally true. Your memory doesn’t count. Your version of events doesn’t count. Only documented evidence counts.
Types of contract correspondence you need to manage:
Formal letters. Major contract communications. Notices. Claims. Responses to determinations.
Contractual notices. Specific notices required by the contract. Notice of delay. Notice of claim. Notice of force majeure.
Emails. Most day-to-day communication. But emails can be contractual. If you instruct a change by email, that’s contractual correspondence.
Meeting minutes. Record of what was discussed and agreed upon. Circulated within 48 hours. If the other party doesn’t object within 7 days, minutes are accepted.
Use contract numbering and reference systems. Every letter gets a reference number. Every variation gets a number. Every claim gets a number. This makes tracking and retrieval easy.
Align site records with contract records. The daily site diary should match contract correspondence. If you issued a notice of delay on March 15, the site diary for March 15 should mention the delay event.
Issuing Contractual Notices Correctly
Notices are critical in contract administration. Get them wrong and lose your rights.
Purpose of contractual notices: They trigger contract provisions. They inform the other party. They preserve your rights.
Many contracts have time-bar clauses. If you don’t give notice within the specified time, you lose your right to claim.
Notice versus general correspondence: Not every letter is a notice. A notice is a specific communication required by the contract.
It must reference the contract clause. State that it’s a notice. Describe the event. State the consequences you’re claiming.
Common notice mistakes engineers make:
Thinking a casual email counts as notice. It doesn’t unless it specifically references the contract clause and states it’s a notice.
Missing deadlines. The contract states that notice must be given within 14 days. You give notice on day 16. Your claim might be time-barred.
Vague language. “There might be delays” isn’t a proper delay notice.
Not following up. Initial notice is good. However, contracts often require detailed particulars within a different timeframe.
Best practices for notice drafting:
Reference the specific contract clause. “This is notice under Clause 20.1 of the Contract.”
State clearly what you’re notifying. “Notice of delay due to late delivery of client-furnished equipment Item CFE-007.”
State the consequences. “We anticipate 45 45-day delay to the completion date and additional costs of $500,000.”
Keep copies. File them. Track whether you got acknowledgment.
Click to read more about Drafting Strong EPC & Construction Contracts
Variation and Change Order Administration
Changes happen on every project. Administration determines whether you get paid for them.
What constitutes a variation? Anything different from the original contract scope. Client requests different finishes. Design gets modified. Site conditions require different construction methods. All variations.
The variation procedure should be clear in your contract. Follow it exactly.
Identify that something is a variation. Don’t just do extra work and bill later.
Issue a variation notice. “This work is outside the original scope and constitutes a variation.”
Assess cost and time impact. How much will it cost? How long will it take? Does it affect the completion date?
Submit a variation proposal. Detailed pricing. Schedule impact. Request approval.
Get written approval before proceeding. Do the work only after approval.
Documentation required includes original scope documents, new requirements showing the change, cost breakdown, schedule analysis showing time impact, and approval from an authorized person.
I’ve seen contractors do millions in extra work based on verbal instructions. Then the client denied authorizing it. No documentation. Contractor lost. Don’t let that happen.
Delay and EOT Contract Administration
Delays need careful administration. Money and reputation are at stake.
Critical versus non-critical delays. Only delays to the critical path matter for completion date extension. Understand your project schedule. Know what’s critical. Focus on critical delays.
Delay notification requirements. Most contracts require prompt notice. “Notice of delay within 7 days of the delaying event.”
Give notice immediately. Don’t wait to see if the delay gets worse.
Extension of Time process:
Notice the delay promptly. Initial notice within days.
Submit a detailed EOT claim within the specified period. Usually 28 days. Include schedule analysis. Show critical path impact. Demonstrate cause and effect.
The Engineer or client reviews. They decide. Grant extension or reject.
Concurrent delay handling. Sometimes, contractor delays and employer delays happen simultaneously. Both affect the critical path.
Contract provisions vary. Some give time but not money for concurrent delays. Some apportion. Know your contract’s position.
Schedule updates are essential. You can’t prove the delay impact without updated schedules. Maintain monthly schedule updates showing actual progress versus planned progress.
Claims Administration in Construction Projects
| Evidence Type | Source | Purpose in Claim |
|---|---|---|
| Site Logs / Site Diaries | Project Engineer / Site Team | Prove that the event occurred, record dates, conditions, and contemporaneous facts |
| Drawings & Specifications | Design Team / Consultant | Provide instructions, approvals, delays, and employer responsibility |
| Emails & Correspondence | Client / Engineer / Employer | Prove the quantum of claim, additional costs, and financial impact |
| Cost Records | Accounts / Commercial Team | Prove the delay impact, critical path effect, and entitlement to EOT |
| Project Schedule (Baseline & Updates) | Planning Engineer | Prove delay impact, critical path effect, and entitlement to EOT |
Claims are formal requests for additional time or money. Administration determines success or failure.
The difference between variation, claim, and dispute. A variation is a change instructed by the employer. A claim is a request for relief based on contract entitlements. A dispute is a disagreement referred for resolution.
Claim preparation requires evidence. Lots of it.
You must prove: The event happened. The event was the employer’s risk or responsibility. The event caused a delay or additional cost. The amount claimed is reasonable. All with evidence.
Records required for claims:
Site logs showing daily records of weather, progress, resources, and delays.
Drawings showing what was built versus what was originally planned.
Instructions and all correspondence showing changes, delays, and approvals.
Costs include labor records, equipment records, and material invoices.
Schedule analysis showing delay impact.
The role of project engineers is critical. Commercial teams prepare formal claims. But engineers provide the factual foundation.
Engineers know what happened on site. They have the technical knowledge. They understand cause and effect. Commercial teams need engineers to provide clear, detailed information.
Contract Administration in EPC Projects
EPC projects have unique administration requirements.
Single-point responsibility means the contractor does everything. Design. Procurement. Construction. This creates heavier obligations.
Administration must track all these elements. Design deliverables. Procurement milestones. Testing requirements.
Performance guarantees and testing. EPC contracts typically guarantee facility performance. Output. Efficiency. Quality.
Administration includes managing the entire testing regime. Factory Acceptance Tests. Site Acceptance Tests. Commissioning. Performance tests.
Document everything. Test results. Witnesses. Conditions. Any deviations.
Subcontract alignment. EPC contractors subcontract most work. Subcontracts must align with main contract obligations.
If the main contract requires notice within 14 days, your subcontracts should too. Administration includes managing subcontract compliance.
Contract Administration Mistakes to Avoid
Learn from others’ errors:
Missing notice deadlines. The most common mistake. Contracts have strict deadlines. Miss them and lose rights. Set up a deadline tracking system.
Treating a contract as a legal-only document. Many engineers think contracts are for lawyers. Wrong. The contract governs daily execution. Engineers must understand and follow it.
Informal instructions without confirmation. The site engineer gives verbal instructions. No written confirmation. Later, arguments about what was said. Confirm everything in writing immediately.
Poor coordination between the site and commercial teams. The site team doesn’t inform the commercial team about delays or changes. Regular coordination meetings are essential.
Ignoring closeout obligations. Teams focus on construction. Then rush the closeout. Incomplete documentation. Disputed final accounts. Plan for closeout from day one.
Conclusion
Here’s what you need to remember about contract administration. It’s not paperwork. It’s not bureaucracy. It’s project protection.
Good administration prevents disputes before they start. It builds the evidence you need if disputes happen. It ensures you get paid for extra work. It protects your rights to time extensions.
Bad administration costs millions. Through lost claims. Through disputes. Through delays while people argue about what happened.
Engineers and project managers are the first line of defense. You’re on site. You see what happens. You make decisions. You must administer the contract. Don’t leave it to lawyers or commercial teams. By the time they get involved, it’s often too late.
Learn contract administration. Practice it daily. Make it part of your project culture. Your projects will run smoothly. Your claims will succeed. Your disputes will reduce. Your career will advance. Contract administration isn’t exciting. But it’s essential.
Frequently Asked Questions
Is contract administration a legal or engineering role?
Both. Contract administration requires understanding the contract (legal knowledge) and understanding project execution (engineering knowledge). Engineers and project managers handle day-to-day administration because they’re executing the work. Legal teams help with complex interpretations and disputes. But frontline administration is engineering work. Engineers who understand contracts are incredibly valuable.
Can engineers handle contract administration without legal training?
Yes, with proper training. Engineers don’t need law degrees to administer contracts effectively. They need to understand their specific contract, know key procedures, document properly, and recognize when to escalate to legal experts. Most contract administration is about discipline and process, not complex legal interpretation. Training programs specifically for engineers make this achievable.
Why do most claims fail due to poor administration?
Because claims require proof, and proof requires documentation. Even valid claims fail without evidence. Missing notice deadlines, time-bar claims. Incomplete records can’t prove causation. Poor documentation means you can’t substantiate quantum. Courts and arbitrators only consider documented evidence, not memories or assertions. Good administration builds the evidence as events happen.
How early should contractual notices be issued?
Immediately, when you become aware of events requiring notice. Many contracts specify exact timeframes like “within 7 days” or “within 14 days of the event.” Never wait to see how serious something becomes. Initial notice preserves rights without committing to specific amounts. You can provide detailed particulars later, per contract requirements. Late notice often bars claims completely.
What is the biggest risk in EPC contract administration?
Single-point responsibility creates an enormous administrative burden. You’re tracking design obligations, procurement schedules, construction progress, quality requirements, and performance guarantees simultaneously. Missing any element can void warranties or trigger penalties. The biggest risk is losing track of multiple moving parts. Systematic administration with checklists, registers, and dedicated resources is essential for EPC project success.
How can teams improve contract discipline on-site?
Start with training. Ensure everyone understands key contract provisions and procedures. Establish clear roles and responsibilities. Create simple templates and checklists. Hold regular contract review meetings. Implement mandatory documentation procedures. Make contract compliance part of performance reviews. Most importantly, leadership must emphasize that following contract procedures is just as important as technical execution.