The Complete Guide to Construction Contact Management

What is contract management?

Contract management is all about managing the agreements between stakeholders – including contractors, sub-contractors and suppliers – through the course of a project. It begins with selecting or creating appropriate contracts and ends with the completion of the project to the satisfaction of all parties involved.

A construction contract sets out the procedures to be followed by all parties, and what will happen if they are not followed.

Keeping an audit trail of all contract communications is critical. Without this, disputes can easily result in protracted arguing over contract points.

“A party to a dispute… will learn three lessons: (often too late) the importance of records, the importance of records and the importance of records.”

– Max W. Abrahanson, Engineering Law and ICE Contracts 4th Ed, p. 443

What contract types are used in construction?

Several different ‘standard forms’ of construction contracts exist, drafted in different styles. Each standard form has a suite of contracts for employing consultants, subcontractors and main contractors.

There are different contracts for minor works and major projects. Minor works contracts are more straightforward to administer. Contracts for major projects are more complex with more focus on risk management and project reporting.

Each standard form contract refers to procedures slightly differently and uses different naming conventions. But they all cover the same procedures.

Contract types

Construction contracts are diverse documents. They vary depending on the scope of the work required, how complex the work is and the value of the project. There are several popular types of construction contracts available so it’s important to choose the most appropriate for your project.

The Joint Contracts Tribunal (JCT)

JCT contracts are some of the most widely used in the UK. You can choose from a suite of contracts including ones with quantities, ones with estimated quantities and those without quantities. There are also sub-contract forms, consultancy contracts and contracts for scenarios such as domestic builds, maintenance and repairs and minor works.

New Engineering Contract (NEC)

The NEC is also popular in the UK construction industry. NEC contracts were developed to prevent costly disputes and are drafted in a straightforward and easy-to-understand way. The current NEC4 is a positive evolution of the preceding NEC3 with the main differences being improved clarity, new support for dispute avoidance and innovative approaches to project efficiency. NEC4 contracts are endorsed by the Government Construction Board of the Cabinet Office, and NEC use is growing internationally.

International Federation of Consulting Engineers (FIDIC)

FIDIC contracts are considered the international standard for the consulting industry and are widely used throughout construction. They aim to allocate risks fairly to the party that is best able to bear and control that risk.

Bespoke

Most construction projects use standard form contracts but sometimes a bespoke contract is drawn up. Standard form contracts cover most construction project types so there’s little benefit to not using one. There are also inherent dangers to using a bespoke contract. The procedures will be untested and can cause problems and difficult-to-resolve disputes if poorly drafted.