The delivery of every built asset, from a building to an infrastructure project, requires a contract. Contract management is the process of managing contracts that are made as part of the delivery of a built asset. Contract management involves the creation, analysis and execution of these contracts to ensure operational and financial performance is maximised and risks are minimised.
There are three phases in contract management:
- The pre-contract phase: this is the preparation stage before the contract is drawn up
- The contract execution phase: at this stage, the final contract documents are prepared for execution
- The post-award phase: this phase is concerned with ensuring compliance with the conditions of the contract
Let’s look at the first phase in some more detail.
Pre-contract management is defined as the management of activities involved in the stage prior to the commencement of work on a construction site. This phase includes the preparation of an Invitation to Tender (ITT), which invites contractors to submit a bid for the work. When a tender submission from a prospective supplier leads to an offer, contract negotiations between the client and the preferred tenderer are undertaken.
Contract negotiation is a discussion between the parties to a contract in order to finalise the terms of that contract. These parties may include clients, contractors, sub-contractors, professional consultants, and suppliers. As these parties often have different and sometimes conflicting interests in the form and content of the contract, these negotiations usually involve some degree of compromise in order to achieve a final contract that is acceptable to all parties.
The pre-contract management phase includes the following activities (Dennis 2010):
Inception: meeting the client, receiving the client’s brief, initial design ideas
Feasibility: formulating the design brief, including contributions from all the consultants, considering basic options
Outline proposals: establishing a concept in principle from the design brief requirements, obtaining outline advice from interested authorities
Scheme design: developing an agreed idea into a coherent working proposition, obtaining approvals from interested authorities
Detail design: fully developing the idea, incorporating specialist design work for structures, electrical and heating installations, etc
Construction information: detailed working drawings and specifications defining all the elements in the new building
Measurement: preparation of bills of quantity with numerical measurement of all the materials and labour required to construct the new building
Tendering arrangements: obtaining competitive prices from a number of selected contractors
Pre-contract planning: analysis of tenders and exchange of contracts between the client and the successful contractor to construct the building as designed; confirmation of construction methodology and construction programming
Review the case law British Steel Corporation v Cleveland Bridge and Engineering Co Ltd: 1983, (1984) 1 All ER 504.
Has the law of contracts been applied correctly in this case?
Discuss your thoughts with other students.
If you want to know more about the formation of construction contracts, you may want to read Contract Formation – a Reminder of the Basics for the Construction Industry (CMS Law-Now 2004).
British Steel Corporation v Cleveland Bridge and Engineering Co Ltd: 1983 [online]. available from https://swarb.co.uk/british-steel-corporation-v-cleveland-bridge-and-engineering-co-ltd-1983/,  1 All ER 504. [16 August 2019]
Denis H.A (2010) ‘Pre-contract and Post-Contract Stages, Tags of Building Design: Development’. Building Design Processes [online]. available from http://design-of-building.blogspot.com/2010/01/pre-contract-and-post-contract-stages.html. [16 August 2019]
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