For those who start construction in civil projects, many reasons come to mind. These reasons are a kind of necessary concern that how to solve it is one of the implementation priorities for all employers and contractors. One of these solutions is contract management.
In simple terms, contract management includes bilateral or multilateral contracts. In this contract, the employer gives the construction of the project to the contract manager for the sake of convenience and ease in work and tasks, and frees himself from facing the risks and technical issues and elegance in the construction.
On the other hand, the contractor performs all his duties well for the amount received from the employer. Tasks such as management and reduction of excessive costs in the project, prevention of implementation time delays, project management issues that contract managers consider for their clients.
With more than half a century of experience in construction and construction projects at the national level, Saqqal Sazeh Tahkeem Banyan Company is active in the field of contract and project management, and using the experience and technical knowledge of its experienced builders, it is ready to cooperate with respected employers regarding Contract management of projects.
The main goal of this part of the company’s activity is to reduce additional costs, to implement the project quickly and with quality, and to prevent the occurrence of unfortunate disasters when earthquakes occur in most regions of our country.
Stay with us for a detailed review of the full terms of contract management…
How is the contract management contract concluded?
This contract, in fact, determines and explains the necessity of maintaining obligations such as financial and life obligations, as well as the legal responsibilities of contract managers and employers in the course of the project. Therefore, it should be clear and obvious for both sides of the transaction. These contracts are legal documents that are given to the owner and manager of the contract so that the plans and responsibilities are strictly implemented and registered as a legal document.
If there are changes in the negotiation process between the owners and the project managers, it will be recorded in this document as a contract.
This contract also acts as a controller for the employer or project owner. In the discussion of contract management, there are issues that may not contain full confidence for both parties in terms of fulfilling the responsibility of the other party. Therefore, in order to resolve the doubt of the employer, the contract manager can give the employer the assurance that he can control the progress of these steps according to the contract and reduce the concern of the implementation of this project for the employer by concluding the contract management contract.
It should be mentioned that these factors also reduce the delay in project implementation and additional costs.
Budget control according to executive plans is one of the vital principles of the project management contract.
What is the importance of contract management?
Being able to manage this contract well is one of the necessary requirements in contract management. If this contract is managed properly, it will have positive consequences. Let’s examine some of these consequences together:
Contracts are the main pillar in contract management for construction. Because they are contracted to protect the project, and if they are not there is no success for the project.
When a contract is concluded, all the interests of the beneficiaries are included in it, and all parties are required to comply with them. By concluding the basic contract, all work will inevitably proceed according to the plan, therefore, the interests of the beneficiaries will be respected during the execution of the contract.
Construction is not always successful. The people of this industry are always trying to prevent disputes between the parties. Most of these disputes are over implementation costs. Therefore, to avoid disputes in this regard, it is suggested to prepare a planned contract at the beginning of the work.
A contract is an enforceable guarantee that is binding for each party.
According to this important contract, the management parties of the contract are obliged to comply with the terms of the agreements – budgets – specific programs. This contract guarantees that the owner’s project needs will be met in terms of quality, quantity and time, as well as the needs of the contract manager.
The contract manager considers important details in the registration of contracts and helps to reduce costs with his technical knowledge. To what extent a contract manager can help the employer in reducing costs can become a source of conflict between the employer and the contract manager. This difference can be resolved by writing clear items about the scope of the project – the amount of implementation costs and the duration of the project. Of course, this issue can be raised in the contract when there is no high inflation in construction goods and the cost can be estimated.
What are the specific details of the contract?
The first part of contract management contract specifications is writing and registering the contract.
Technical details of implementation
Plans are the basis of every project. To build a residential, commercial, office and villa building or to renovate them, we must have floor plans. That too with all the necessary details precisely and in writing that should be mentioned in the contract.
All jobs used in the project should be considered and clearly written about them in the contract document of the project.
scope of work
Description of the services and equipment provided by the employer to the contract manager; In a specific place, the nature, quantity and quality of the items should be specified.
Special general conditions
General conditions actually govern all construction projects. In addition to the general conditions, there are specific conditions that cover the specific details of each project
Terms and conditions that can save time and money. These items can include documents required in each project, change procedures, dispute resolution methods, arbitration procedures, bank guarantees, etc.
The commercial business value and project management strategy is based on the contract that is closed. In construction projects that have public and private ownership, everyone is looking for cost reduction and excellent performance.
The basic part of insurance; It is a concern for all project personnel such as building owners, contract managers and project workers. For peace of mind from the occurrence of possible risks at the project site, the contract manager must pay for the members’ insurance and the project’s accident insurance with the opinion and approval of the employer. The contract management must fulfill its obligations under the items mentioned in the clauses of the document. Therefore, know your role as a project manager and be diligent in doing the project and minimize the risks of the work.
The salary of the contract manager
The salary of the contract manager must be included in the contract and this amount varies depending on the type of project and working conditions.
Wage settlement time
The contract must specify when the employer must pay the contract manager’s salary or fee. This will prevent future disputes. Also, fines should be considered for late payment of fees.
How to calculate the contract management percentage
This percentage varies depending on the type of project, whether it is a building or a villa, whether it is commercial or administrative. In general, what is usually considered for this percentage is determined by the specific conditions of the project.
The following are among the variable factors to determine the percentage of contract management…
that the employer provides the materials or is responsible for managing the contract; will change the percentage.
Complexity or simplicity of design and implementation:
The simplicity or complexity of the building design is an effective factor in reducing or increasing the execution time, as well as the amount of budget required for execution.
The amount of duties assigned to the contract manager:
The amount of duties assigned to the contract manager plays a role in increasing and decreasing the percentage.
If the project route is far from the city, the movement of workers, the purchase of materials and supplies, the ease of transportation for contractors, and the amount of facilities for project members will bring their own difficulties. And it requires a percentage increase.
Weather and atmospheric conditions:
For example, the percentage of contract management is higher in executive projects that are located in northern or southern cities. Because the working conditions in these geographies are more difficult.
Usually, the percentage of contract management in construction projects is about 8% to 12% and in villa projects it is 10-20%.
Since in such contracts the goal of the contract manager is to satisfy the owner and protect his interests. Therefore, there are no profitable cases of contracting among them. And the fee of the contract manager is also paid gradually according to the project process.
It should be noted that since the project manager has access to good resources for the supply of materials and materials; It also employs skilled craftsmen and teams; The client will complete and deliver the project in less time and at a lower cost.
Who is the contractor?
If the size of the project is such that there is a need for more labor to closely monitor the details and different parts of the building; The contract management can choose a person or people as a subcontractor and entrust them with responsibilities according to the contract.
If it is stated in the contract that the employer needs to approve the subcontractors as well; Therefore, the contract management must get the approval of the subcontractors from the owner. Otherwise, all project responsibilities are on the contract manager.
The costs of the people under the contract manager, who are used for the successful management of the project, are the responsibility of the contract manager, unless it is explicitly stated in the contract that these costs are the responsibility of the employer, in which case the employer will be obliged to pay the costs of the people of the contract manager. .
At the end of this excerpt, we will have a general look at some of the duties assigned to both sides of the contract (employer – contract manager):
Duties of the employer in contract management
Supplier of project costs on time
Consultant selector and contract manager
Approval and provision of all amendments to the contract
Getting the necessary inquiries before starting work
Obtaining all necessary permits to carry out the project
Basic decisions and orders in the contract
Considering the benefit and suitability of the project in public contracts
Paying the salary of the contract manager within the deadline specified in the contract
Duties of the contract manager
Having enough experience and skills
Having an employment license from the engineering system
Determining implementation methods
Determine the executive team
Action to insure the project and executive agents
Creating coordination between subcontractors
Monitoring the implementation of subcontractors
Fulfilling obligations in the contract
Control over all factors and implementation steps
Project implementation based on national building regulations
Installation, commissioning and delivery of the project within the contract period
Implementation of the project according to the implementation plans