What is a construction contract?

Construction contracts are among the most complex of commercial agreements. Section 104(1) of the Construction Act 1996  defines a construction contract as an agreement designed for any of the following:

• The carrying out of "construction operations".
• Arranging for construction operations to be carried out, whether under a sub-contract or otherwise.
• Providing labour (either his own labour or others' labour) for the carrying out of construction operations.

Often containing cross-border elements and various dispute resolution clauses, construction contracts can comprise of ten or more documents and cover projects in which hundreds of millions of pounds are invested. It is therefore highly advantageous to have a dedicated contract manager to oversee the risks and manage relationships. 

In this article, we will explain more about construction contracts and how a contract manager can help with the delivery of your construction project.

What is contract management in a construction project?

Contract management is a stand-alone career. World Commerce & Contracting defines contract management as:

“a discipline that supports commercial management through the preparation, negotiation, implementation and oversight of legally enforceable performance commitments and risk positions, both outbound (to the market) and inbound (from the market). 

It converts commercial policies and practices and technical capabilities into specific terms and conditions that are offered to or required from its suppliers, customers or business partners, ensuring compliance or gaining approvals for non-compliance. 

Through active monitoring of performance needs and outcomes, contract management informs commercial management with regard to actual and required commitment capabilities, together with their financial and risk impact.”

Free legal document templates

Phases of a construction project

Construction projects span several phases, including conception, design, pre-construction, procurement (materials, equipment, and skilled workers), building, and delivery/post-construction. The duties of a construction contract manager are, therefore, highly varied and may include: 

• Preparing tenders for clients and commercial bids to aid business acquisition
• Developing and presenting project proposals
• Client meetings to establish their requirements and the scope of the project
• Producing plans and estimating budgets and timescales
• Discussing, drafting, reviewing, and negotiating the terms of construction contracts
• Agreeing budgets and timescales with the clients
• Managing construction schedules and budgets
• Dealing with any unexpected costs
• Attending site meetings to monitor progress
• Promote health and safety and environmental best practices
• Acting as the main point of contact for clients, site and project managers
• Working with third parties to ensure that everyone understands their duties and responsibilities
• Making sure construction projects meet agreed technical standards
• Liaising with technical and financial staff, sub-contractors, legal teams, and the client’s own representatives
• Managing any disputes
• Overseeing invoicing at the end of a project

Furthermore, a contract manager may be involved in individual or all stages of the contractual process, including the pre-contract phase, the contract execution phase and the post-award phase. It may also be that a contract manager is allocated to work on one large project or several smaller projects.

What does a contract manager do?

Engaging an experienced contracts manager to prepare, negotiate, and oversee your construction project provides several distinct advantages. Having a contract manager can;

• Set the objectives of the project and make the ROI more likely to be realised
• Help reduce the risk of disputes which can delay the completion of a project
• Reduce the risk of costly, unforeseen problems, as there is one person (or a team of people, depending on the size of the project) overseeing every aspect of how the contract is being performed
• Give the project a clear point of contact who is overseeing the contract and its terms. This will mean suppliers, subcontractors and partners could be more cooperative

Most contract managers use specialist contract management software, especially if they are managing contracts across multiple projects. 

Contract management software creates an integrated system for document management, relationship management, monitoring of payments, change control, resource allocation, legal questions and answers, and resource allocation. 

As such, it enables the efficient control and management of what can be extremely complex and wieldy legal documents during each stage of the construction process.

Get legal assistance from LawBite

Construction contracts require meticulous attention to detail at every stage. Having a contract manager overseeing the procurement, negotiating, drafting, and performance of the contract mitigates many of the risks associated with such complex, multi-faceted agreements.

At Lawbite, our contract law solicitors have a wealth of experience in negotiating and drafting bespoke construction contracts that protect the interests of your customers, suppliers, partners, and your organisation. We also support construction managers in understanding all legal elements of construction contracts and managing disputes.

Book a free 15 minute consultation

Additional resources

• Contracts in construction
• Why is negotiation important
• Commerical property lease terms
• Resolving disputes
• Contract review services