Whilst the majority of engineers throughout Australia take pride in their work in areas such as design and project delivery, a crucial area which is often overlooked revolves around contract management and administration.

Whilst this should in theory be an area at which engineers are well suited given the logical and methodical nature of tasks involved, many have not been trained in this area and consequently this is one area which is often forgotten.

This is an important area as any mistakes made could prove costly. Take, for example, a case whereby an engineering firm becomes aware that for reasons beyond their control, work could be delayed or a potential variation could be required. In these situations, contracts often specify when and how the engineer needs to give notice to the client that this could indeed be the case.  Any failure to follow these procedures properly could in fact impact the ability of the engineer to lodge a successful claim.

Consider the situation whereby an engineer fails to communicate changes to the construction program. This could lead to a situation whereby contractors are in fact unknowingly forced to work according to an outdated schedule.

From the viewpoint of engineers, all this can create the groundwork for disputes, acrimony and loss of reputation.

Especially on major projects, the magnitude of this cannot be understated. Though it does not give specific figures for Australia, multi-national built asset consultancy outfit Arcadis says the average dollar value of construction disputes with which it assisted parties throughout the Asian region in 2015 came in at $US67 million, with the average claim taking 19.5 months to resolve. Whilst this is probably not reflective of average cases across the board, it should be acknowledged that the cost of disputes is substantial. Furthermore, Arcadis says, a failure to administer the contract in a proper and effective manner is the most common cause of these disputes.

Sean McCarthy, a senior construction lawyer in Melbourne and course facilitator at EEA, says that whilst companies in the United States had come to understand that contract management was a critical skill for the future, those in Australia are not as well advanced in terms of training in this area. Whilst many engineering companies paid reasonable levels of attention to this area at the commencement and finalisation of projects, meanwhile, McCarthy said it was common for efforts to fall down over the lifecycle of the project - during which time he says the document is all too often ignored.

“I think what happens is that typically, we are very good at drafting and setting up a contract at the beginning and then we are probably not bad at looking at a contract as it closes out to make sure that we have delivered upon all of our obligations,” McCarthy said.

“Generally, a lot of organisations are terrible at looking at the contract through the middle of the project lifecycle. The contract is often relegated to the bottom drawer of the filing cabinet and people say ‘well, I hope I don’t have to look at it until the end.”

According to McCarthy, an important skill for engineers to acquire is to learn to read and understand contracts and to think carefully about what the terms of the agreement mean. Doing so, he says, helps to identify and address issues when they happen and also to understand ways in which to move toward using the contract in a progressively more assertive manner if and when problems unfortunately escalate.

McCarthy is one of three facilitators for EEA’s contract management courses; Contract Foundations and Contracting for Lead Engineers.

Contract Foundations provides an overview of the basics for all members of a project team and Contracting for Lead Engineers is a detailed workshop designed for engineers who manage or will manage contracts.

McCarthy says the formal training offered through these courses will benefit not only individual participants but their employers as well. The former, he says, will gain confidence in reading and interpreting contracts as well as in critical areas such as managing claims and dealing with conflict whilst the latter will find their people becoming more attuned to the type of problems which occur and being able to deal with issues in a proactive manner.

“It builds awareness, comfort and a new skill set,” McCarthy said.

“Engineers generally are not trained in dealing with contracts.”

Whilst quantifying the effect with precision is difficult, McCarthy says savings through identifying and dealing with issues up front and managing variations in an effective manner could easily amount to 20 or 30 percent of the value of the project. Through managing even as little as one dispute or variation more effectively, he says employers can more than make up for the cost of training.