Drawing on real project experience, Inside Construction Delivery explores the patterns, behaviours, and challenges that shape major construction and infrastructure projects. The series highlights the issues that frequently cause cost escalation and conflict, and offers practical guidance to help teams identify problems early and deliver better outcomes.

Administering a construction contract is one of the most important parts of project delivery, but it can also be one of the least well performed. If done well, it can enhance commercial performance, strengthen risk management, and materially reduce disputes. Yet many projects struggle to apply the contract in a disciplined and coordinated way, leading to inevitable issues.

The purpose of this article is to explain why contract administration often breaks down in practice, and what project teams can do to strengthen their processes, improve performance, and avoid unnecessary conflict. Drawing on real project experience and sector insights, this piece highlights the systemic, behavioural, and operational factors that make contract administration challenging, and outlines practical steps that can support better outcomes.

The contracting maze

Standard form contracts exist in New Zealand, but most signed project contracts include bespoke amendments and special conditions. While this practice isn’t necessarily problematic, bespoke amendments can introduce interpretive complexity, create additional obligations to monitor, and increase the number of notice and evidence requirements that must be complied with during delivery. The more customised the contract, the greater the discipline required to keep administration aligned.

Continuity and the impact of losing key people

On many projects, the people tasked with administering the contract were not involved in drafting it and may receive limited handover from the procurement phase. This lack of continuity compounds the challenges created by bespoke contract terms. The loss of key personnel during delivery further magnifies this risk. When individuals with institutional knowledge depart, the project often loses understanding of why certain risk allocations were made, how specific contractual clauses were intended to operate, or what assumptions were incorporated into the tender. New personnel that inherit obligations mid way through delivery often do so without full visibility of what’s gone before, increasing the likelihood of material mistakes in the administration of the contract, arising. 

Contract administration miscast as “paperwork”

A persistent misperception is that contract administration is a clerical rather than commercial function. Poor variation management, missed extension of time notices, weak payment claim/payment schedule processes, and inconsistent record keeping are often the primary causes of commercial underperformance and disputes. Contract administration is how commercial risk is managed in real time. It protects margins, safeguards cashflow, and prevents disputes from escalating. Treating it as an afterthought can be a fast way for a project to lose value.

Human factors lead to missteps

Even the best drafted contract cannot neutralise the human factor. Problems often arise due to:

• under resourcing and capability gaps;
• communication breakdowns;
• inconsistent or unclear instructions;
• misaligned expectations;
• informal scope creep;
• organisational or team silos; and
• reluctance to escalate issues early.

Many disputes originate from behaviour rather than ambiguous contract drafting. Communication gaps, unclear scope, and personality driven conflict are all common drivers of misalignment, and all can be identified and managed early with appropriate processes.

Another behavioural nuance is individual overconfidence, particularly when individuals are placed in roles that require specialist judgement they may not possess. This manifests when someone takes a firm position on a complex interpretation issue or adopts a particular negotiation stance without understanding the contractual or commercial implications. Similarly, placing technically strong people into commercial or claims facing roles without support exposes the project to unnecessary risk. The key point is ensuring that decisions are made by the right people, with the right context, at the right time.

Documentation is critical

One of the most misunderstood aspects of project delivery is the importance of documentation. A party with clearer, more comprehensive records almost always finds itself in a stronger position when issues escalate into negotiations, claims, or formal dispute processes.

Site diaries, contemporaneous records, validated programmes, meeting minutes, and correspondence trails often form the backbone of demonstrating (or challenging) entitlement. When documentation is inconsistent or inadequate, variations and extensions of time become difficult to substantiate, claims fail for lack of notice, contractual rights are lost by inaction, and negotiation leverage weakens. Ironically, record keeping is one of the few aspects entirely within a party’s control.

What can help

The foregoing points signal what delivery teams should prioritise. Some points to consider include:

• Integrating procurement and delivery: Structured handover processes between bid teams and delivery teams are essential. Continuity across the procurement – delivery divide can significantly improve outcomes, as can handover procedures for when key personnel leave mid project.
• Creating a delivery strategy before delivery begins: A delivery strategy gives the project team a shared understanding of how issues will be identified, escalated, and resolved. It sets expectations around communication protocols, risk monitoring, and the approach the team will take to variations, delays, or claims. It promotes consistency: when pressures arise, the team does not waste time debating how to respond, because those principles were agreed early.
• Treating contract administration as a commercial discipline: Contract administration roles should be filled by individuals with the experience and authority to make informed decisions. People who understand when to seek help, escalate issues, or involve specialist advice are far more likely to help navigate the complexities of delivery.
• Maintaining detailed records: Good record keeping supports day to day decision making, enables early identification of emerging risks, and reduces dependency on individual memory, particularly important on long projects with personnel turnover. These habits ensure that when disputes arise, the project is grounded in fact rather than recollection or hindsight.
• Aligning behaviours through a project charter: Developing a practical project charter at the outset of delivery can establish behavioural norms across project participants. These might include agreed expectations around communication, collaboration, issue escalation, and meeting conduct. On large or multi party projects, a charter helps align multiple teams to shared standards and reduces the fragmentation that often contributes to disputes.

Conclusion

Construction contracts are hard to administer because they require a mix of skill, discipline, documentation, continuity, and aligned behaviour, all under the pressure of real time delivery. But with early planning, such as establishing a clear delivery strategy, embedding the right people in commercial roles, investing in strong documentation systems, and adopting behaviours that support early issue identification, the contract can shift from being a compliance burden to a control system that protects value, reduces disputes, and supports successful delivery.

Read more from the Inside Construction Delivery series