Contract Administration
Expert-defined terms from the Undergraduate Certificate in Construction Law and Contracts course at London School of Planning and Management. Free to read, free to share, paired with a globally recognised certification pathway.
Acceptance #
The unqualified assent of the party to whom a proposal is made, to the terms of the proposal. Acceptance must be communicated to the offeror, and it must be unconditional and unequivocal.
Bid Bond #
A type of surety bond used in construction contracts. The bid bond guarantees that the contractor who submitted the winning bid will enter into a contract and provide a performance bond.
Breach of Contract #
The failure to perform a contractual obligation, or the performance of it in a manner that does not comply with the terms of the contract.
Change Order #
A written document that modifies the terms of a construction contract. Change orders are typically used to make changes to the scope of work, the price, or the schedule of the project.
Claim #
A demand for payment, compensation, or adjustment under a contract. Claims can arise from a variety of issues, including changes in the scope of work, delays, and defective work.
Contract Administration #
The process of managing and overseeing the performance of a construction contract. This includes ensuring that the work is performed in accordance with the terms of the contract, resolving disputes, and managing changes to the scope of work.
Contract Documents #
The written documents that make up a construction contract, including the agreement, plans, specifications, and addenda.
Contract Price #
The total amount of money that the contractor will be paid for performing the work under a construction contract.
Defective Work #
Work that does not comply with the terms of the contract, or work that is not performed in a workmanlike manner.
Delay #
A failure to complete the work within the time required by the contract. Delays can result from a variety of factors, including weather, labor disputes, and material shortages.
Design #
Build: A project delivery method in which the contractor is responsible for both the design and construction of a project.
Dispute Resolution #
The process of resolving disputes that arise during the performance of a construction contract. This can include negotiation, mediation, arbitration, or litigation.
Earned Value Analysis #
A project management technique used to measure project performance. Earned value analysis compares the value of the work that has been completed to the planned value of the work.
Lien #
A legal claim against property for the satisfaction of a debt or other obligation. In construction, contractors, subcontractors, and suppliers can file liens against a property for unpaid work or materials.
Liquidated Damages #
A predetermined amount of damages that a party will be required to pay if they breach the contract. Liquidated damages are typically used to compensate the other party for losses that are difficult to quantify.
Notice of Commencement #
A document that is filed with the county recorder's office to start the clock on the statute of limitations for filing a mechanic's lien.
Notice of Furnishing #
A document that is filed by a subcontractor or supplier to protect their lien rights.
Performance Bond #
A type of surety bond used in construction contracts. The performance bond guarantees that the contractor will perform the work in accordance with the terms of the contract.
Request for Equitable Adjustment #
A request by the contractor for a change in the contract price or schedule due to changes in the scope of work or other issues.
Request for Proposal #
A document that is used to solicit bids from contractors for a construction project. The request for proposal typically includes a description of the project, the scope of work, and the contract terms.
Subcontract #
A contract between a contractor and a subcontractor, in which the subcontractor agrees to perform a portion of the work required by the prime contract.
Subcontractor #
A contractor who is hired by another contractor to perform a portion of the work required by the prime contract.
Surety Bond #
A type of bond that is used to guarantee the performance of a contract. Surety bonds are typically required for public construction projects.
Termination #
The end of a construction contract, either by mutual agreement or by the action of one of the parties. Termination can occur for a variety of reasons, including the completion of the work, a breach of contract, or mutual agreement.
Time is of the Essence #
A clause in a construction contract that requires the work to be completed within a specific time frame. If the work is not completed within the time frame, the other party may be entitled to terminate the contract.
Warranty #
A guarantee or promise made by the contractor that the work will be performed in a workmanlike manner, and that the materials and equipment used will be free from defects. Warranties can be express or implied.
Backcharge #
A charge made by the owner or contractor to the contractor or subcontractor for work that was not performed in accordance with the contract, or for damages caused by the contractor or subcontractor.
Cardinal Change #
A change in the scope of work that is so significant that it fundamentally alters the nature of the contract. Cardinal changes are typically not allowed without the agreement of both parties.
Concurrent Delay #
A delay that is caused by two or more events, each of which is independently sufficient to cause a delay. Concurrent delays can be difficult to allocate between the parties.
Constructive Change #
A change in the scope of work that is not explicitly authorized by the owner, but is necessary for the contractor to complete the work. Constructive changes can give rise to a claim for additional compensation.
Differing Site Conditions #
Conditions that are encountered at the construction site that are different from those that were anticipated by the contract documents. Differing site conditions can give rise to a claim for additional compensation or an extension of the schedule.
Force Majeure #
An event that is outside the control of the parties, such as a natural disaster or a labor strike, that prevents the performance of the contract. Force Majeure events can give rise to a suspension of the contract or an extension of the schedule.
No Damage for Delay Clause #
A clause in a construction contract that prohibits the contractor from recovering damages for delays that are caused by the owner or by events beyond the control of the owner.
Pay #
If-Paid Clause: A clause in a subcontract that makes the payment of the subcontractor contingent on the receipt of payment from the owner. Pay-if-paid clauses shift the risk of non-payment from the contractor to the subcontractor.
Pay #
When-Paid Clause: A clause in a subcontract that requires the contractor to pay the subcontractor within a reasonable time after receiving payment from the owner. Pay-when-paid clauses are less onerous than pay-if-paid clauses, as they do not shift the risk of non-payment from the contractor to the subcontractor.
Progress Payment #
A payment made to the contractor during the course of the project, based on the completion of certain milestones or phases of the work. Progress payments are typically made monthly, and they are intended to provide the contractor with a steady cash flow throughout the project.
Prompt Payment Act #
A law that requires the owner to pay the contractor within a certain time frame after receiving a request for payment. The Prompt Payment Act also requires the contractor to pay the subcontractors within a certain time frame after receiving payment from the owner.
Retainage #
A percentage of each progress payment that is withheld by the owner until the project is complete. Retainage is intended to ensure that the contractor will complete the work in accordance with the contract, and it provides the owner with a fund from which to pay any outstanding claims or disputes.
Stop Notice #
A notice filed by a subcontractor or supplier to stop work on a project due to non-payment. A stop notice is typically filed with the owner, and it can result in the suspension of payments to the contractor until the issue is resolved.
Substantial Completion #
The point at which the work is sufficiently complete that the owner can occupy and use the facility for its intended purpose. Substant