The importance of contract management
The proposed training of young people on contract management in Nigeria will help contractors understand their responsibilities and get them to successfully deliver the projects on time and budget for the benefit of local people.
These are interesting times for the people of Abia State in Nigeria.
The Abia State Government recently obtained a loan from the African Development Bank (AfDB) to rehabilitate 248.46km of roads in Umuahia and Aba. Upon completion, these roads will bring significant benefits to the state and help solve infrastructure problems that have affected the area for years.
What’s even more interesting and commendable is the decision to train young people involved in the project on contract management.
This demonstrates a commitment to making sure that the loan from AfDB is deployed correctly, the projects are effectively administered and managed, and the government fulfils its pledge to address Abia’s infrastructure issues.
In the past, contractors have lacked management skills and failed to understand their contract responsibilities, leading to project failures and delays.
In this post, I will discuss the value of contract management to construction projects.
What is Contract Management?
Contract management is about managing resources, relationships, and risks in construction projects. It ensures that projects run flawlessly and cohesively and that both parties get their desired result.
Contract management is indispensable for any project owner who desires that its project runs efficiently, on time and within budget.
Six benefits of contract management in construction projects
1. Guaranteed adherence to the project scope, technique and materials
The project scope describes the work to be performed on a construction project and provides clear expectations and technical details required to complete the project. Effective contract management will guarantee that the parties understand the project scope and strictly adhere to it. This will prevent misunderstandings, help avoid scope creep and ensure that the project runs efficiently and on time.
2. Interpretation and implementation of the owner’s selected project delivery and contract strategy
Project delivery methods and contract strategies vary. Project owners select them based on their expectations, resources and the nature of the project. Largely, these varying methods and strategies affect the relationships and risk allocation in the project. Effective contract management administers the contract in accordance with these unique methods and strategies.
3. Effective tracking of key project deliverables timeline
Projects do not run infinitely. Milestones, deliverables and important dates are broken down for accountability and to meet the project's deadlines. With effective contract management, parties are regularly prompted about these deadlines and the value of work required for each milestone. If there is non-compliance with the timelines, the available contractual remedies are triggered.
4. Reinforces the parties’ roles and responsibilities
To ensure clarity and avoid delays and potential disputes in the project, the contract defines the roles and responsibilities of parties. Effective contract management regularly reminds parties of their distinct responsibilities and promptly activates available contractual remedies for any breach. This saves the projects from delays and cost overruns.
5. Enforces compliance with contract processes and requirements
To ensure adequate record-keeping and cost management, several construction contract models have provided processes for payments, notices, and claims (extensions of time or additional payment). Adherence to these processes is mandatory and key to any entitlement. Effective contract management enforces these contractual provisions by ensuring that parties thoroughly understand and follow every contractual process.
6. Secures compliance with project changes and variations procedures
Because the scope of work is not set in stone, the contract will usually allow the project owner to instruct variations to the project’s original scope of work, original design and quality. Effective contract management will monitor the variation/change process to ensure that the parties comply with the procedures. Equally, it will capture changes to the scope in the addenda to the contract.
Without a doubt, the proposed contract management training is laudable. However, there are two key actions the state government will also need to take to ensure the successful completion of the projects within time and budget:
Firstly, it should establish draft contracts that clearly define parties, responsibilities, and the projects’ deadlines. These contracts can be prepared by a legal team or lawyer with expertise in construction contracts and projects.
And secondly, it should engage a contract manager with relevant experience in construction contract management. An efficient contract manager can only achieve the goals of contract management. The contract manager can work with the state’s project team to deliver the project successfully.
In addition to engineers and architects, lawyers with experience in construction contracts and projects can effectively manage a construction contract.
Photo: © Kharyadi | Dreamstime
Osinachi Nwandem is a lawyer and arbitrator with vast experience and expertise in construction law and arbitration. He also had prior exposure to litigation and arbitration in a range of commercial disputes ranging from contracts, labour and employment, debt recovery, telecommunications, maritime and taxation.
He practices at the law firm of Aluko & Oyebode, which is based in Nigeria and has been rated as one of Africa's leading law firms.
Osinachi received his law degree from the Rivers State University of Science and Technology, Port Harcourt Nigeria. He obtained his LL.M. degree from the University of Ibadan, Nigeria.
He has a particular interest in assisting clients to resolve their construction disputes and is passionate about developing the practice of construction law in Nigeria. He is a member of the Institute of Construction Industry Arbitrators (ICIArb), the International Bar Association and the Nigeria Bar Association – Section on Business Law.
Osinachi is a regular contributor to several peer-review journals, texts and publication platforms including the Gravitas Law Review, AELEX Article Series and Mondaq, where he proffers viewpoints on recent developments in construction disputes and contracts.