Our Construction Contract Administration & Management services include:
At MQS, we bring a diverse range of construction experience across a wide range of projects. During the construction phase, our team offers professional and independent advice on a wide range of project types to help you minimise the associated risks. Understanding your rights and the builder’s obligations allow for a streamlined project and no shock expenses that can’t be negotiated. Our contractual and project advice keeps your project on track on moving forward.
Contract Administration and Management
Usually done during the construction phase. Controlling the project cash flow ensures the project and client have sufficient funds remaining to complete the project and further allowing a detailed trade by trade assessment of the builder’s progress claim.
Progress Claim Assessment
On-site assessment of the builder’s progress claims (i.e. monthly or staged payment claims). Our assessments also include a detailed comparison report, as well as any necessary negotiation if the claimed amount does not line up with the assessed amount.
Variation Assessment and Negotiation
Assessment, verification, negotiation and recommendation of any variation or potential variation submitted by the builder during condition. (i.e. client requested change, latent condition etc.)
Project Reports (Banks & Financial Institutions)
We provide an independent cost analysis report detailing the costs of works complete to date, cost of works not yet complete or cost of defective works if necessary to protect both lender and borrower.
Residential Construction Project: Renovation St Kilda (Budget: $750,000)
The Client Requirements
We were engaged after the project was well underway and the client was having issues with the contracted builder. The builder was on site and approximately 25% of the way through the renovation which was predominantly fit out. The project was technically at lock up stage.
The standard building contract was used, which stipulates certain percentages of the contract value must be paid at certain stages of the project. See below graph.
Standard Building Contract Percentages (%)
The client had paid the builder 65% of the value of the contract as required. Once the builder received this payment, there was not enough money remaining in the contract to finish the project. The builder recognised this and walked off site; this left a financial gap between the cost to complete the project and the available finance remaining.
The client came to us to help determine the cost of the builder’s completed works, the cost of work that was still outstanding and the costs needed to rectify defective work.
During the project, we faced several challenges, including:
The client had overpaid the builder: Unfortunately, due to misuse of the standard building contract for the project, the client did what they were contractually obligated to do. But in this case, they had unwittingly overpaid the builder.
Not enough finances left in the budget to finish the project: The client had inadvertently overpaid the builder and the builder had walked off site, leaving a shortfall in finances left to complete the project.
Additional costs to rectify defective work and certify completed works: The builder had left some defective work on site and other work half-done. There were additional costs associated with rectifying the defective work and certifying the completed works.
This project required thorough analysis of the current state of the project, the works completed and the yet to be completed works, including:
Visiting the site and preparing a report clearly stipulating the cost of works completed, works yet to be completed and cost of defective work. This helped outline the outstanding amount owed by the builder for reimbursement to the client.
Providing contractual and project advice to help get the project back on track and moving towards completion.
Providing ongoing contract administration and management services as well as progress claim and variation assessment services with the new builder throughout the remaining duration of the project.
Providing expert witness advice and consultation during the client’s legal proceedings to recover the outstanding amount.
Unknowingly, the client had entered into a high-risk contract which inevitably exposed them to a scenario where the remaining balance for the project was far less than required to complete the project.
Our report documenting the project position and remaining balances formed the basis of the legal claim against the builder, to which the client proceeded legally upon recovering the outstanding balance.
For project security and peace of mind for the client, we provided our contract administration and management services for the remaining duration of the project; this ensured the remaining balance outweighed the cost of work to complete.
Unfortunately for the client, the standard building contract had exposed them unknowingly to the above mentioned risks. These risks could have been avoided with sound contractual advice before entering into the contract as well as continual contract administration to further prevent the scenario.