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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Leith Al-Ali - Associate - Construction and Infrastructure
Contract management and administration within the context of a construction project is the process of managing and administering the relevant project contract in order to facilitate the timely and efficient delivery of the project with a view to ensuring that operational and financial performance is optimised and that project risks (including the possibility for disputes), are where possible, minimized.
The importance of effective contract management and administration is often overlooked by parties until a dispute occurs. It is fundamental to the effective operation of any construction contract and arguably needs to be implemented well before a contractor has even mobilized to site.
A lack of good contract management and administration is one of the most common causes of disputes in the region. Therefore as well as helping ensure timely and efficient project delivery it can also help parties potentially avoid or at least mitigate the possibility of formal disputes arising by dealing with issues in the manner which the parties intended under the contract as and when they occur, thereby potentially helping to mitigate the impact of such disputes if and when they do arise.
Where formal disputes cannot be avoided, good contract management and administration can also prove critical to being able to successfully bring or rebut a claim.
In this article we will briefly examine in further detail some, key effective contract management and administration strategies that parties may deploy in the Kingdom of Saudi Arabia, in order to ultimately help facilitate the timely and efficient delivery of the project with a view to minimizing scope for disputes between the parties. These may have broader relevance and application not only in Saudi Arabia but also elsewhere in the Middle East.
Unsurprisingly, the starting point to ensuring effective contract management and administration is of course the contract itself.
Entering into a legally sound, mutually advantageous, robust construction contract is critical to the success of any project. The contract must describe in sufficient detail what is expected of both parties during the term of the contract in order to limit the scope for breaches or other issues occurring that may lead to either side not fulfilling their contractual obligations. This includes but should not be limited to:
This emphasis on the terms and conditions of the contract is made all the more important in the Middle East, where in numerous jurisdictions (including Saudi Arabia) the principle of ‘freedom of contract’ prevails, such that where a dispute arises, the overwhelming emphasis in terms of deciphering parties’ rights and obligations is invariably not only what is enshrined in law but fundamentally also what has been agreed between the parties in the underlying construction contract.
As well as having a detailed and well drafted contract in place, various strategies can be implemented in order to help ensure effective management and administration of the contract and the project with a view to minimizing the risk of disputes occurring. This includes the following:
In addition, the project stakeholders, namely the employer and the contractor, their respective representatives and key personnel, should be acutely familiar with and understand the terms of the contract they’ve signed up to, so as to ensure alignment and common understanding of roles, responsibilities, expectations and key deliverables and importantly, to ensure compliance with the contract;
This document management and record keeping should preferably be done in one place so that you have a single platform to turn to in order to refer to the relevant contracts, correspondence, photographs (if indeed photographing the works on site is permitted as pictures of actual progress take away much of the doubt as to progress report accuracy), minutes of meeting and other ancillary project documents. These should be kept up-to-date in order to ensure they clearly and accurately track and record actual progress and in doing so align with developments on site and reflectwhat has been agreed off-site, for example in project meetings;
“By properly implementing good contract management and administration strategies, and more generally the contracting parties approaching a project in an organized, coordinated , reasonable and transparent manner, this can go a long way towards ensuring the project completes in a timely and efficient manner and is considered a ‘success’ for all project stakeholders.”
There is no doubt that a myriad of important factors and considerations can help enhance the overall contract management and administration process for a construction project, only some of which have been briefly discussed in this article.
By properly implementing good contract management and administration strategies, and more generally the contracting parties approaching a project in an organized, coordinated, reasonable and transparent manner, this can go a long way towards ensuring the project completes in a timely and efficient manner and is considered a ‘success’ for all project stakeholders.
For further information, please contact Leith Al-Ali.
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