Improving Effectiveness Of Your Contract Administration Process

I just got back from our local Associated General Contractors (AGC) winter membership meeting and would like to share some thoughts.  Bob Barker and our local AGC team lined up two excellent presenters.  The latter speaker, Ryan Howsom, focused his presentation around a survey commissioned by AGC’s Surety Bonding and Risk Management Forum in collaboration with FMI. The presentation was about contractors’ perceptions of risk and explored how risk is being managed in today’s business environment. The results were interesting.

construction contract administration

One risk discussed caught my attention immediately: construction contract administration and risk transfer.  We all devote significant resources in battling the complexity of certificates of insurance, and rightly so, as there is inherent risk in this process. Ryan indicated that most general contractors have procedures to track contract administration and risk transfer. However, if a big claim occurs and the procedures are not followed, the contractor could face a grave financial challenge.

As fate would have it, we were just completing an audit of contract administration procedures for one of our large general contractor partners. After reviewing a variety of jobs, we built a tool to quantify the effectiveness of their contract administration process.

Our partner can now improve their contract administration performance and identify training opportunities within their staff.  Ryan suggested that this could also tie into HR and compensation plan design, by rewarding those responsible for performing those mundane, but essential, contract administration tasks. 

Most importantly, the tool can measure the risk reduction of hitting what I call a “reverse home run”.  As Ryan said, in an environment of heady recovery, it is not famine that can sink a contractor, but gluttony. To borrow a sports metaphor, we are all just trying to improve our game, and by having the right equipment you increase your probability of success.

About the Author

Tim Hausmann

Posted in: Property & Casualty, Construction

Posted by Tim Hausmann

Tim joined Hausmann-Johnson in 1980 after working in the oil fields in the North Sea, as well as for Del Monte Foods. During his time in the insurance industry he has found that he is most passionate about helping clients succeed. He takes pride in being an insurance resource and consults with clients to help them make the right choices for their company. Tim’s clients would say that he tells them what they need to hear, not what they want to hear, which helps them make the best decisions. Tim sits on the Board of Directors for Hausmann-Johnson. He graduated from Hamilton College in Clinton, New York with a BA in Economics. Traveling is one of his favorite pursuits and he especially enjoys the anticipation leading up to a big trip. If he’s not on the road, you can find him cooking a full family style dinner every Sunday.