3. Introduction
• Contract administration involves the
planning, negotiation, execution, and
performance of any contract with
customers or vendors.
• The preparation and implementation of
contracts have great potential for
aligning mutually agreeable contracts
that lead to positive business outcomes.
• Contract administration refers to the
supervision of the contract lifecycle and
the steps taken to achieve the desired
outcomes.
4. 1. Post-award contract administration
• Setting up systems
• Briefing the contract management team
• Getting all key documents in place
2. Ongoing contract administration
• Document Management
• Monitoring resource levels and costs
• Expediting – how frequent is it in your environment?
5. Deviations / Variations
• Deviations or Variations are the changes from the scope of work of a
contract resulting during the execution of work except for the duration
of the contract.
• Mostly, Deviations or Variations are
considered the changes in the quantities
(Schedule of quantities) of a contract
resulting during the execution of work
as changes in design, quantity or conditions
ultimately lead to affect BOQ/SOQ.
6. Deviations to the contract may be requested because:
• The specifications are inaccurate or incomplete
• New ideas
• The buyer or its customer changes its mind
• Statutory or certification bodies require changes to be made
Changes to the contract are often necessary because insufficient
time is spent at the preparation stage.
Make sure the value of the change is higher
than the cost of making it!!!
7. • Deviations / Variations in quantities of items
• Extra Items
• Substituted items
Deviations / Variations
8. Deviation in Quantities
• These are the deviations or variations from the quantities taken in Bill
of Quantities or Schedule of Quantities
• These are the items for which rates are available in the contract
• The deviations/variations may be +ve or –ve i.e. Quantities may
increase or decrease from the quantities available in BOQ / SOQ
9. Reasons of Deviations in Quantities
• Wrong assessment or mistake during the preparation of
detailed estimate/BOQ/Tender documents
• Assessment of quantities without the availability of
architectural, structural, or MEP drawings.
• Revision of drawings/design
• Revision due to local bye-laws or local body agencies
• Revision due to nonavailability of materials at a
particular time
• Revision due to client, architect, or engineer and
contractor
10. Extra or Additional Items
• Items that are completely new and in addition to the items contained in
the contract
• These are the items other than those available in BOQ and not covered
in conditions of contract
• In some contracts, these are the items which are not available in
contract and not taken up in substitution of items available in BOQ
11. Reasons of Extra / Additional items
• Left or mistake during preparation of
detailed estimate/BOQ/tender documents
• Specifications not available during
preparation of detailed estimate/BOQ
• Nonavailability of architectural, structural
or MEP drawings during preparation of
detailed estimate/tender document
• Revision of drawings/design
12. Reasons of Extra / Additional items
• Revision due to local bye-laws or local body agencies
• Revision due to nonavailability of materials at a particular time
• Items not anticipated during preparation of tender documents i.e.
Contingent items
• Revision due to client, architect, or engineer and contractor
13. Substituted item
• Items taken up as partial substitution or in lieu of items of work available in
the contract
• Therefore, the items are basically due to change of specifications during
execution from those considered during preparation of detailed
estimate/BOQ/tender documents
Reasons of Substituted item
• Specifications/drawings not available during the preparation of detailed
estimate/BOQ i.e. Nonavailability of architectural, structural, or MEP drawings
• Revision of drawings/design/specifications
• Revision due to local bye-laws or local body agencies
• Revision due to nonavailability of materials or non feasibility of the item at a
particular time
• Revision due to client, architect, or engineer and contractor
14. Implication of Variations/Deviations
• Extension of time
• Possible justification of regularisation of
delay caused by the contractor
• Chances of non-compatibility of such items
with respect to other services
• Source of Disputes about the rates, time
extension, loss of profit, idle establishment
and thus arbitration
• Delayed decisions
• Nonapproval of items and rates of
variations
• Time overrun and cost overrun
15. Claims
• A claim is a demand or assertion by one of the parties seeking, as a
matter of right, payment of money or other relief with respect to the
terms of the contract.
• A demand or assertion by the Owner or Contractor seeking an
adjustment of the contract price or times, or both, or relief with respect
to the terms of the contract.
• A claim is a request that is based on a “situation that differs materially”
from what “could have been anticipated” in the bidding/contract
negotiation phase of a project
• Properly handling claims can avoid them becoming disputes and can
quickly aid in the forward progress of work on the project.
16. Contractor’s claim against the client
• Claim for extras
• Claims for refund of amount wrongly recovered or deducted by the client.
• Claims for compensation for extra expenditure incurred or losses suffered
by the contractor due to delays & hinderances caused by the client &
extension of the contract period.
• Breach of contract conditions by the client.
• Interest on delayed payments.
• Interest on various claims amount.
17. Client’s claim against the Contractor
• Claims for damages due to delay caused by the contractor in
completing the work.
• Claims for defective work done by the contractor.
• Claims for over payment done by the contractor.
• In case of incomplete works, or abandoned work, claims for
expenditure incurred by the client for getting balance work completed
through other agencies.
• Interest on amount claimed by the client.
18. Disputes
• A dispute implies the assertion of a right (claim) by one party and
repudiation thereof by another.
• A claim and counter claim (without repudiation) do not constitute a
dispute.
19. Disputes
Disputes usually occur when a party breaches the contract, which
means they do not do what they have promised to do in the agreement.
Types of contract breaches include:
• A material breach, in which one party does not perform his or her duty
and, as a result, the contract is irreparable. The party affected by this
breach can sue the party who has breached the contract for damages.
• A minor breach, also called an immaterial breach, in which the core of
the contract is not changed. Both parties still must fulfill the contract
when a minor breach occurs, but the party who has not breached the
agreement can still sue the other party for damages.
20. Types of Dispute in Contract
Disputes may include but are not limited to
those associated with:
• Offer and acceptance
• The definition of a technical term used
• Contract drafting and review
• Errors in the contract
• Coercion or fraud
• Breach of contract
21. Causes leading to dispute and arbitration
• Incorrect ground data
• Faulty and ambiguous provision
in contract
• Faulty administration of contract
• Deviations
• Suspension of works
• Overpayment
• Contractor being of poor means
• Default by contractor
• Unreasonable attitude adopted by
contractor
• Levy of compensation for delay
• Delay in payment of bills
• Observation arising out of
technical examination of works
22. Dispute Avoidance
• Good management
• Clear contract documentation
• Partnering and alliancing
• Good project management
• Good client management
• Record keeping
• Regular reporting and proactivity
• Good constructor management
• Good design team management
• Good payment practice
23. 1. Good management: Proactive planning and management of future
work, as well as raising early issues of concern can avoid disputes.
2. Clear contract documentation: Ambiguities in contract documents
can lead to argument, disagreement and dispute. Focusing on the
specific details of the particular project (rather than generalization)
is important.
3. Partnering and alliancing: Building cooperation between the
project participants and fostering team spirit is extremely valuable.
4. Good project management: Planning ahead and managing
generally and specially the time, money and risks associated with the
project are crucial.
24. 5. Good client management: Understanding the client’s objectives
and communicating issues and problems early on are fundamental.
6. Good constructor management: A regular objective assessment of
progress and the costs relating to a project also involve
communicating well with the constructor and dealing positively an
objectively with problems that arise. Do not ignore problems in the
hope that they might go away.
7. Good design team management: Good information is crucial.
8. Record keeping: Disputes can often be resolved by retrospectively
considering records that have been kept during the project. However,
those records are often not sufficiently detailed.
25. Protection of Rights
To protect the rights of the contractor, Five important
provisions to include in construction contracts:
• Delay And Damage Provisions: Some of the most
common damage provisions include a mutual waiver of
consequential damages, liquidated damages, and no
damages for delay. These particular provisions will
provide a limit on how much the injured party is entitled to
recover or remove the potential for liability exposure
entirely.
• Change Order Provisions: The change order form will
detail the new requests – including services, materials, and
costs – which are then agreed upon by both parties.
26. • Contingent Payment Provisions: The risk of non-payment is a
consistent concern amongst contractors in the construction industry.
Construction contracts should include risk-shifting payment provisions
to clarify what happens if a party does not pay the general contractor
on time.
• Flow Down Provisions: A “flow-down provision” is a provision that
can usually be found in subcontractor agreements allowing provisions
from the prime contract between the property owner and general
contractor to apply to subcontract agreements.
• Risk Of Loss Provisions: If the contract includes a “risk of loss”
provision, it may shift the risk of loss due to damage or destruction to
the contractor until the project has been completed.
27. Negotiation
• Involves two or more parties.
• Process of finding point of balance between the objective and the other party
Mediation
• It is the next step if negotiation proves unsuccessful
• The mediator helps with communication and promotes reconciliation between parties to
accept mutual agreement
• The mediator does not influence the decision of the parties it helps the parties to better
understand each studies
Dispute Resolution Methods
28. Avoidance
• Avoidance is an international development of resentment by sorting
out critical issues independently, without challenging or unsettling
the other party.
Judicial dispute resolution
• JDR is a confidential pre-trail settlement conference led by a judge.
• The objective of a JDR is to resolve the dispute so a trial will be
• either unnecessary or at most limited to those issues on which the
• parties do not agree.
• The judge’s non-binding opinion may help the parties to reach a
• resolution without having to go to trial.
29. Arbitration
• Arbitration is the submission of a disputed matter to an impartial person (the
arbitrator) for decision.
• It is an out-of-court method to resolve the dispute.
• The arbitrator gives the decision after hearing both parties and is call as The
Award.
• The Award is given as an ‘ACT’ and hence is binding for both parties.
• In arbitration, court is avoided, giving quick results.
Conciliation
• Conciliation is similar to mediation except for the active role of the third party
(conciliator) in putting forward suggestions of compromise.
• It’s structured to bring disputing parties to acceptable agreement through
concessions.
• There are variations of ‘Conciliator Power’ in conciliation practices of some
countries.
30. Mediation and conciliation
• An information process where the parties are assisted by one or more
neutral third parties in their efforts towards settlement.
• Mediators do not ‘judge’ or ‘arbitrate’ the dispute;
• Mediator advice the parties to assist in bringing about a mutually
acceptable solution.
• Given the very nature of the process, the mediators have no power to
impose an outcome on disputing parties.
31. Mediation and conciliation
• Voluntary – the parties participate with their own free will.
• Neutral third party assists the parties towards a settlement.
• Non binding unless an agreement is reached
• Private confidential and conducted without prejudice to any legal
proceedings
32. Details of Mediation
Pre Mediation
• Agreeing to mediate and preparation
• Initial inquiry and engagement with parties
• Preliminary communications and preparations
Direct and indirect mediation
• Meeting the parties
• The parties presentation
• Information gathering
• Facilitating negotiation
• Terminating mediation and recording agreements
33. Benefits of mediation
• Faster and cheaper disposal of dispute
• A more satisfactory outcome to the disputes
• Minimizes further disputes
• Open channels of communication
• Preserves and enhances the relationship
• Empowers parties
34. Arbitration
• Arbitration is the settlement of a dispute by the decision, not of a
regular and ordinary court of law. but of one or more persons chosen
by the parties themselves who are called arbitrators. Thus, arbitration
is a domestic court where the arbitrator acts as a judge.
• Form of Alternative Dispute Resolution
• Alternative to court room litigation
• Parties submit their dispute to a NEUTRAL third party called the
Arbitrator or Arbiter for resolution
• Binding dispute resolution, equivalent to litigation in the court
35. Need for arbitration
• In developing countries, the complex and outdated law system makes
the judgement through law courts extremely time consuming. There
are cases which are pending for more than 30 years.
• In the national interest and for quicker disposal of such cases,
departmental officers should themselves make every effort to appoint
an arbitrator with mutual consent and wherever the cases have already
been referred to law courts, the judges at various levels can refer
suitable cases for settlement through arbitration.
• It should be clearly understood that the progress of important and
national development projects, are jeopardized for want of timely
settlement of such disputes.
36. Arbitration
Benefits
• Confidentiality
• Limited Discovery
• Speed
• Expert Neutrals
• Cost Savings
• Preservation of Business
Relationships
Drawbacks
• Arbitration agreements are
sometimes misleading
• If arbitration is not mandatory
parties waive their to access the
courts.
37. Types of Arbitration
• Ad-hoc Arbitration
• Institutional Arbitration
• Statutory Arbitration
• Domestic or International Arbitration
• Foreign Arbitration
38. Arbitrator
• An arbitrator plays the role of a neutral person, who makes decisions
based on the evidence presented by the parties.
• The decision the arbitrator makes is not always legally binding, but if
it is, individuals and/or businesses are not able to go to court later if
they do not agree with the outcome.
• With the lengthy process, expense and publicity often associated with
traditional litigation, parties, particularly in the commercial sector, are
increasingly using an arbitrator in order to settle their disputes.
• In addition, parties can choose their arbitrator and so you may be
chosen for a particular skill or expertise.
39. Duties of arbitrator
• On appointment as arbitrator to check whether (s) he is qualified
• Understand the issues under disputes – either through a meeting or
send notices to parties and ask for statements or submissions by parties
• Necessary disclosure to parties about his knowledge of the case or
having dealt with the case
• Should not receive any evidence in absence of the other party
• Should not make private inquiries
• Should not delegate authority
• Should not exceed the scope of reference
• Should adhere to time schedule laid down
40. Conciliation
Conciliation - The process of ending an argument/disagreement.
-Adjustment and settlement of the dispute in a friendly and non-
antagonistic manner by using a nonbinding procedure.-
41. Conciliation : Introduction
• The most important method for prevention and settlement of industrial
disputes through third-party intervention.
• Applies to the settlement of disputes arising out of legal relationships,
whether contractual or not, and to all proceedings related to section
(S.61)
• Party who wants conciliation shall “INVITE” other parties to
conciliate
• Proceedings commence only when a reply is received within 30d else
invitation is rejected
• After rejection first party must inform another party
42. • Conciliation is limited to encouraging parties to discuss their
differences and help them to develop their own proposed solutions
• It is a flexible, confidential, interest-based process. The parties seek to
dispute settlement with the assistance of a conciliator, who acts as a
neutral third party.
• Conciliator – is a neutral third party, that seeks to find mutual
agreement between the disputants so that the deadlock is brought to an
end at the earliest as possible.
• He tries to reduce differences by suggesting alternative solutions
Conciliation : Introduction
43. Appointment of conciliators – s 64 (1) & (2)
Subject to sub-section (2) – of s 64
• In conciliation proceedings with one conciliator the parties may agree
on the name of a sole conciliator
• In conciliation proceedings with two conciliators each party may
appoint one conciliator
• In conciliation proceedings with three conciliators each party may
appoint one conciliator and parties may agree on the name of the third
conciliator who shall act as the presiding(in-charge) conciliator.
44. Parties may enlist the assistance of a suitable institution or person in
connection with the appointment of conciliators and in particular,
• A party may request such an institution or person to recommend the
names of a suitable individuals to act as a conciliator
• The parties may agree that the appointment of one or more conciliators
be made directly such as institution or power
45. Role of a Conciliator : s.67
• As a discussion leader
• As a communication link
• As an innovator
• As a protector
• As a fail-safe device
46. Conciliator not bound by certain Enactments
S.66
• The conciliator is not bound by the code of Civil Procedure 1908 (5 of
1908) or
• The Indian Evidence Act, 1872 (1 of 1872)
47. What can be referred to
Conciliation?
What cannot be referred to
conciliation
Civil Nature Criminal Nature
Breach of a contract Illegal transactions
Disputes of a movable or
immovable property
Matrimonial matters like divorce
suit etc
48. After proceedings : s71 cooperation of parties
with conciliator
• Before proceedings conciliator shall request each party to submit a
statement explaining the nature of the dispute
• The statement must clearly specify and state the conciliator’s position
and the facts and grounds in support thereof
• During the proceedings the conciliators can call for further
information from the parties and s.71 calls for cooperation by parties
49. Termination of Conciliation Proceedings
• By the signing of the statement agreement by the parties, on the date
of the agreement; or
• By a written declaration of the conciliator, after consolation with the
parties, to the effect that further efforts at conciliation are no longer
justified, on the date of the declaration; or
• By a written declaration of the parties addressed to the conciliator to
the effect that the conciliation proceedings are terminated, on the date
of the declaration; or
• By a written declaration of a party to the other party and the
conciliator, if appointed, to the effect that the conciliation proceedings
terminated, on the date of declaration.
50. Advantages of conciliation:
• Conciliation ensures autonomy
• Ensures the expertise of the decision-maker
• Time and cost-efficient
• Ensures confidentiality
Uniqueness of Conciliation:
• A conciliator generally does not follow the same procedure in every
case
• A conciliator makes adjustments to his approach, strategy, and
technique according to the circumstances of each dispute
51. Arbitration Conciliation
Meaning Arbitration is a dispute settlement
process in which a impartial third
party is appointed to study the
dispute and hear both the party to
arrive at a decision binding on both
the parties.
Conciliation is a method of resolving
dispute, wherein an independent person
helps the parties to arrive at negotiated
settlement.
Enforcement An arbitrator has the power to
enforce his decision.
A conciliator do not have the power to
enforce his decision.
Prior
Agreement
Required Not Required
Available for Existing and future disputes. Existing disputes.
Legal
proceeding
Yes No
Comparison between Arbitration and Conciliation
