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What is Construction Contracts Management?

By Maggie Worth
Updated May 16, 2024
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Construction contracts management is the process of negotiating and managing all contract agreements involved in a construction project or company, such as those involving vendors or clients. Contract managers must monitor cost, scope, quality, and time frame and must ensure that all contract conditions are met. This important job affects both the financial and the actual success of the project or company.

The first step in construction contract management is contract negotiation. For vendor contracts, this might include soliciting bids, researching vendors, and verifying insurance. Negotiating client contracts could include responding to bid requests, writing bid conditions, and assembling job costs. In either case, it will involve negotiating price, time frame, and terms for the job.

Once the contract is signed, the contract manager is responsible for ensuring that vendors charge the agreed-upon amount for products and services and complete all work correctly and on time. In construction contracts management, vendor responsibilities may include pulling permits, meeting code inspections and using specified materials. When managing client contracts, a manager is mainly responsible for ensuring that all deliverables are provided to the client on time and ensuring that the client meets each payment date with the correct payment amount.

In many cases, contracts are managed on a per-job basis, meaning that the contract is for a single, specific job. Sometimes, however, construction contracts management involves monitoring over-arching contracts that cover many jobs. Large construction companies that complete many jobs in a year, for instance, often contract with one company to handle a specific function on every job.

For example, residential builders usually bring in a cleaning crew to clean the inside of a house after construction is complete. A contract manager might be responsible for negotiating the initial contract, ensuring that the cleaning is scheduled and completed correctly for each job and paying as per the contract terms. He might also evaluate the success of the relationship over the life of the contract and renegotiate a new contract when the old one runs out.

Good construction contracts management is critical to the health of a construction company. Managing time and quality commitments contributes to positive client perceptions. Managing cost and price aspects dramatically affects the financial success of a project and, ultimately, of the company.

Sometimes, the term construction contracts management might be used to describe the process of managing contracts for buildings that a single company has commissioned. For example, a retail outlet might have physical stores being built in several locations at once, each under contract with a different general contractor. Like vendor contract management, managing all of the contracts for these projects from the client side will entail ensuring that the general contractor meets its deadlines, follows the specifications, and charges the correct amount.

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