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Author: Elyse, PMP, CPHIMS
August 24, 2007


The Contract Administration process helps to assure the project’s goals and needs are on track and on schedule and the seller is behaving appropriately. The Contract Administration process is apart of the Monitoring and Controlling Process Group. The inputs for this process are:


  • Contract - A contract is an agreement between the buyer and the seller which details their legal requirements and obligations.

  • Contract Management Plan - The Contract Management Plan utilizes the existing contract requirements to provide the buyer and the seller with guidelines for administering and monitoring contracts for significant purchases or acquisitions.

  • Selected Sellers - The selected sellers are sellers that the buyer deems the best candidates for the project and that have negotiated a draft contract.

  • Performance Reports - Performance reports are more detailed than work performance information, they use methods such as bar charts and S-curves to organize and summarize information such as earned value management and project work progress.

  • Approved Change Requests - Approved change requests verify which changes to contracts or procurement procedures have been processed and approved.

  • Work Performance Information - Work performance information, which comes from the Direct and Manage Project Execution process, provides statuses of the project schedule activities being done to accomplish the project work. The team uses it to monitor the sellers' progress on schedule, deliverables, and costs.


Once you have been able to get through the selection/acquisition phase, the project manager needs to track administrative issues, contract changes, and the seller's progress and quality of work to assure that the project is running smoothly. The tools and techniques for the Contract Administration process are:

  • Contract Change Control System - A contract change control system defines the procedures for changing a contract. It encompasses all forms, documented communications, tracking systems, and dispute resolution procedures. Additionally approval levels are necessary to authorize changes and the procedures for getting the changes approved within the performing organization. The contract change control system should be integrated into the Integrated Change Control System.

  • Buyer-conducted Performance Review - A buyer-conducted performance review tracks the vendor’s progress in execution and product delivery within contractual parameters. Hopefully, your organization is including the cost and project schedule in the contract. The purpose is to manage contract performance by recognizing performance success and failures, anticipated completion on the contract statement of work, and finally identify areas of contract non-compliance.

  • Inspections and Audits - Inspections and audits identify any defects in the delivered work or product. Project managers assure inspections are conducted and audits occur with the live event of a new process or inspect new procedures.

  • Performance Reporting - Performance reporting involves gathering the vendor’s performance data and distributing it to stakeholders. Performance Reporting can help to alert management on whether the vendor is meeting contractual objectives.

  • Payment System - Payment systems are tools and claims administration processes used for Contract Administration. The buyer uses a payment system to compensate the vendor according to contract terms. Payment systems include project management teams' reviews and approvals. Larger projects may have individual payment systems.

  • Claims Administration - Claims administration resolves claims according to the contract's dispute resolution procedures when the buyer and seller cannot resolve a claim on their own. Claims administration documents, processes, monitors, and manages claims during the life of the contract, usually according to the contract terms.

  • Records Management System - A records management system is a set of processes, related control functions, and automation tools which are used to manage contract documentation and records. Project managers use records management systems to manage contract documentation and records; to keep an index of contract documents and correspondence; and for help with retrieving, accessing, and archiving that documentation.

  • Information Technology - Information technology makes contract administration more effective by providing electronic data exchange between the buyer and seller, and automating portions of certain systems and processes. Using information technology automates parts of the records management system, payment system, claims administration, or performance reporting.


The Contract Administration process outputs are:

  • Contract Documentation - Contract documentation includes the contract, schedules, requested unapproved contract changes, approved change requests, any seller-developed technical documentation, and work performance information.
  • Requested Changes - Requested changes to the Project Management Plan, its subordinate plans, and other elements—such as the project schedule and Procurement Management Plan—may occur due to the Contract Administration process. They are submitted for approval to the Integrated Change Control process. Normally requested changes are addendums to contracts.

  • Recommended Corrective Actions - Recommended corrective actions are measures to make the seller compliant with the terms of the contract, such as sending a warning letter requesting resolution of the problem or withholding payment until the problem is corrected.

  • Organizational Process Assets (Updates) - Updates to organizational process assets consist of the buyers' and vendors' written records of all contract administration, including actions taken and decisions made, results of buyer audits and inspections, payment schedule updates, and seller performance evaluation documentation.

  • Project Management Plan (Updates) - Updates to the Project Management Plan will consist of approved change requests affecting the Procurement Management Plan.


That’s the ITTO’s of the Contract Administration Process.

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5 Comments to “Contract Administration Process”

P/s tell me about the best method to be used during BPR pilot implementation for existing (at implementation phase)HYDRO POWER PROJECTS EPC Contract .

N.B I'm working as Employer Engineer in the contract administration proces.

Hi.

I provide Contract Administration to the staff of our public agency. I'm looking for examples of Contract Management Plan or Contract Administration Plan documents to share with our employees.

If you have any samples, or references to other individuals or sites, I'd be grateful.

Thanks for any help you can provide.

Hi,
I would like to get a project management plan for EPC contracts to submit to our client.

With regards
S.Kannan

Hi,
i would like to know contractual payment administration process for constraction.

Hi Tigist,

Unfortunately, I have no property management or construction experience - yet.

Elyse


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