Contract Administration

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TABLE OF CONTENTSPAGE

1 STANDARD OPERATING PROCEDURES (SOP)2

1.1 Introduction2

2 ROLE OF THE CONTRACT ADMINISTRATOR3
2.1 Role and Responsibilities of the Contract Administrator3

3 PAYMENT PROCESS4
3.1 AS 4000 - 19974
3.2 JCC –C 19945
3.3 AS 2124 - 19975

4 THE PROCESS OF CASH FLOW IN THE CONSTRUCTION INDUSTRY6

4.1 The meaning of Cash Flow 6
4.2 Cash Flow Concept6-7
4.3 S Curve cash Flow model8

5. SECURITY8

5.1 Cash Retention8-9

6. INTERCONNECTION RELATIONSHIP BETWEEN CASH FLOW/PROGRESS PAYMENT/SECURITY9

6.1 Discussion and Diagram between Cash Flow/Progress Payment/Security9-10

7. CONCLUSION 10

8. REFERENCE11-12

9. APPENDIXES 13

9.1 Appendix A13-14
9.2 Appendix B15

1. STANDARD OPERATING PROCEDURES (SOP)

1.1 Introduction

A construction [company] is focusing on becoming a mid -tier commercial building producer in Victoria. The Company has recently employed a contract administrator to prepare and develop standard operating procedures (SOP). The standard operating procedures will be a document that outlines the business practices that are approved by the company board and administered by the contract administrators. It will intend to be used as a reference manual by administrators, and other management staffs that have budgetary/financial responsibilities. Its purpose is to provide an efficient cost control and accountability system that will help assure appropriate use of financials funds. This report has been prepared to provide general information about the role and responsibilities of a contract administrator in a construction [company] and will detail the function of the (CA) and the [company’s] cost controls system concerning:

1 Role of the contract administrator
2 Payments process (progress claim/progress certificates/progress payments) 3 Detail of cash flow process( cash management)
4 Security (bank guarantee and cash retention) and
5 Interconnection relationship between cash flow, progress payment and security

All five areas must be managed successfully by the contract administrator, in the contract is to be a success. In addition, good preparation and the right contract are essential foundations for good contract process management.

2.ROLE OF THE CONTRACT ADMINISTRATOR
2.1 Role and Responsibilities of the Contract Administrator The role of contract administrator is a vital component in a construction contract. The contract administrator acts as the representative of the employer. Therefore, placing the contract administrator in a role of the employer’s representative places him/her in a decision-making position. The contract administrator will be responsible for managing and negotiating the contract terms and conditions such as: the Initial tendering process, original budgets, purchase orders, committed contracts and payment processes.

From the company’s perspectives, overall responsibility for contract administration will rests with the contract administrator. For instance, contract administration will likely to include negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing any changes that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creating, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.

3. PAYMENT PROCESS

Payment process consists of different claims which include progress claims, progress certificates and progress payment...
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