Commercial Contract Administration – The Potential Pitfalls and Solutions

Construction contracts have many participants, many variables and are usually run to a tight programme thus if the terms are not set up with clarity at the beginning and managed tightly throughout projects can often go off the rails with adverse consequences for everyone, including late or no payments, late handover, quality issues and costly dispute resolution procedures.

Melbury Construction Consultants Limited [‘Melbury’] understands the importance of good commercial contract management and has been providing advice to a wide range of clients [Developers, Employers, Contractors, sub-contractors and other specialists] for over 15 years.

Melbury seeks to work with clients as early as possible in the process in order to develop a strategy that uniquely suits them and the needs of their business at that time.

Melbury understands that solutions need to be proportionate and cost effective so the agreed strategy will be consistent with this approach.

Having agreed terms that are understood and applied will reduce risk and uncertainty and make it much more likely that the project will run smoothly and deliver all of its objectives for all of its participants.

Recent cases that have come to our attention, late in the process, include:

  • A £4m infrastructure project where no contract had been agreed and hence there were no terms – a dispute followed.
  • A £2.5m house development where no contract had been agreed and hence there were no terms – a dispute followed.
  • A £1m house development where no contract had been agreed and hence there were no terms – a dispute followed.

Melbury can help avoid disputes arising by being engaged early. Alternatively if disputes do arise Melbury can advise on the most cost effective solution.

Melbury understands the issues involving commercial contract management and can provide the strategic advice needed to deal with it successfully.

Recent Case Studies

1. Case Study – Contract Formation

  • A client received a tender, and ultimately won a contract, for work using a contract form which it had not used before and which it did not understand.
  • Melbury vetted the terms for the client and explained the operation of those terms.
  • Melbury attended meetings and assisted in the negotiation of the terms.
  • Melbury provided on call advice during the project.
  • The contract was completed successfully and profitably for Melbury’s client.

2. Case Study – Contract Termination

  • In a recent case a client had its contract terminated and its client held it responsible for the substantial extra costs for completion of the works by others.
  • Melbury reviewed our client’s case and on its behalf accepted the repudiation [the wrongful termination] of its contract.
  • Using the adjudication provision of the contract an adjudicator then agreed that the contract had been repudiated and that Melbury’s client was entitled to damages.
  • At the end of the process Melbury’s client had been paid in excess of £250,000 including £160,000 in damages and all the claims against it had been rejected in the adjudication.

3. Case Study – Adjudication, Contra Charges & Claims

  • Melbury’s client had a claim for delay damages levied against it for £890,000 on £2m of work.
  • Additionally Melbury’s client had a withholding notice issued against it in the sum of £172,000.
  • In 2 simultaneous adjudications it was decided that the withholding notice had been incorrectly issued and therefore the sum of £172,000 had to be paid.
  • The second adjudication was abandoned by the contractor as it realised that its claim had no prospect of success after it received the Response issued by Melbury in the adjudication.
  • Melbury’s client received the payment it had sought and the claim against it was abandoned.

This experience can work for you too, why not call us on 01992 704704 or 0845 604 8322? We are confident we can provide you with an expert service cost effectively.