Contract administration process

Contract administration (Control Procurements) is the process of managing procurement relationships, monitoring contract performance, making changes and corrections as needed, and closing contracts. Both the buyer and the seller administer the contract to make sure that both parties meet their obligations and that their legal rights are protected. It is performed during execution of the contract and integrates with other project management processes.

Activities

1. Monitor seller performance: compare actual work with contract requirements (quality, schedule, cost).
2. Inspections and audits: verify deliverables and the seller's processes.
3. Performance reporting: obtain regular reports from the seller.
4. Payment system: verify invoices against progress and approve payments as per the terms.
5. Contract change control: manage changes in writing through a formal procedure, with the approval of both parties.
6. Claims administration: handle disputed changes and claims through negotiation, alternative dispute resolution (mediation, arbitration) or litigation.
7. Records management: keep all correspondence, contract changes and approvals.
8. Manage relationships and communication with sellers.
9. Monitor risks and ensure compliance with legal terms.
10. Integrate with other processes, e.g. scope, schedule and cost control.

Contract -> Monitor performance -> Inspect
   -> Approve payments / changes -> Resolve claims
   -> Prepare for closure

Tools

Contract change control system, procurement performance reviews, inspections and audits, performance reporting, payment systems, claims administration, records management system.

Outputs

Procurement documentation, change requests, work performance information, updates to plan and OPA.

Importance

Ensures that sellers deliver the right quality on time, controls cost, reduces disputes and protects the interests of the organisation.

Example: For a software vendor on a milestone-based contract, the manager reviews each deliverable, pays only on acceptance, processes a signed change order for an added module and records everything.