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hey construction Legends So today we're going to talk about what is a contracts administrator what's the purpose how they can help your business let's get into it so for those who don't know me my name is Kim Ben I'm the CEO of a company called Quantum contract Solutions and the reason we make these videos is there's so many companies out there that are losing money they're not getting paid for what they should get paid for the cash flow is tight they're signing risky contracts and hopefully by listening to this podcast you're going to get the skills that you need to be able to negotiate better contracts have better cash flow and protect your margin so let's get into it so contracts administrations is it is such an important part of construction now there's a couple of things that we know for sure right the biggest and best construction companies have teams of contracts people so it can be different names for contracts people you can have a contracts engineering contracts advisor contracts manager have a quantity surveyor you can have a contracts administrator so lots of different names really most of them are doing roughly the same thing but with very various different levels of skill sets okay and I'll explain that in a second so in the reason we need the problems that we have in construction are basically this that construction is essentially two parts right obviously it's a little bit more complicated but in from a high level one is you have to build the thing that you're you promised to build or construct a thing that you promised to construct or deliver the thing whatever you've promised right so you've got to fulfill your obligation to deliver the thing essentially and that's obviously very very important but the second part of construction is getting paid now construction has really really high insolvency rate so it's 26 in most countries it's roughly there there are about of all insolvencies comes from the construction industry and this is because a lot of people don't understand that it is that important to get to be have your ducks in a row with regards to the contract to make sure that you get paid now everyone has different motivators right so obviously if you're a tier 2 instructor so a soap contractor right I'm kind of talking to you guys everyone in some capacity except for the client is going to be reporting of the way so it applies to the tier ones as well the general contractors main contractors and two but ultimately the people up the line have different motives to you they obviously want to make a profit they want to save their own costs and in the world we're living in now if they can save costs by not paying you for work that you've done properly because you haven't complied the contract they won't if they can use you know if if they can manage the contract in such a way that they can get you to fund most of the Fordham they can have most of the cash you can do most of the cash flowing for them it makes their business better so there's a lot of competing things that you need to understand so you obviously don't want to fall into that trap where you're not getting paid for it extensions of time that you've been delayed on like on ferry no no fault to your own you don't want to be in a situation where you're not getting paid for your change orders you don't not getting paid for proper payment claims on time just because they're wanting to push their will onto you right so you need to be able to understand the contract and push back and understand that the best and biggest construction companies have contracts teams for a reason it is to sign a lower risk contract it is to have better cash flow it is to make sure that you get paid and is to to ensure that you avoid disputes at all costs okay now this is where the contracts administrator comes in contracts administrator what he's going to do are really good so I've given you a list of the different company the different types of people but I'm going to give you their their job from start to finish right and and depending on what like where you are in in the chain but generally a contract administrator might help with your contractual documents and your tender or bid submission okay he won't do the estimating I I wouldn't I wouldn't imagine he will help put the documents together he or she will help put the documents together and submit them to as part of your bid or look for work essentially then you're going to get given yeah you're going to be part of attendance part of that tender that you're a debate that you're submitting there's going to be a contract in there in that contract fact they have essentially given you their worst terms and conditions possible and so what you need to do is play the game and you need to say hey here are all the things that we don't agree to now honestly from having done over 2500 of these in the in the in in our business you can get 80 to 90 of these to what you asked for across the line they are expecting you to negotiate if you think by not doing it you're doing yourself a favor you're going to look easier to deal with you're not they look at you and they think you're you're green you don't know what you're doing why is this guy not like pushing backward because everyone pushes back so push back you'll get 80 to 90 of things across the line when you go when you understand what to negotiate in the contract you're gonna the risk is going to be way way less you're going to set yourself up to have better cash flow during during the the construction and generally you're going to set yourself up to be more and more successful so that's on the front end so that you need is the contracts administrator needs the skills to understand what's in the contract what to negotiate and how of what I negotiate impacts the project right what to bother negotiating for what to what not to bother negotiating for go to contract administrator could do that it's very very powerful a very very good contracts a person in post Award right so you've signed the contract now you've got to essentially just there's three things you got to do right you've got to make sure that you get paid for all all of the delays that are not your fault so you're gonna document them make sure that you're following the contract to make sure that you're you're compliance so that you get paid for those delays you don't want to take on someone else's delays you want to make sure that you get paid for all the additional work that you do this is where the money is right so you please understand that the biggest companies are oftentimes they will bid for a project at a loss knowing that they got this part of the business sorted and they're going to make up all of their profit in the post award phase so you got to get that that's where the money is so get your variations get your change orders eots whatever they're called in your contract sort it get them get that process like clear as day perfect okay again if you start off submitting your paperwork they're just going to think you're very professional you know what you're doing if halfway through the project all of a sudden you're like oh we're not getting paid for our stuff we're going to start too many people I think I'm like whoa why do you submitting all this paperwork for so start professional and they'll think oh these guys are very commercially Savvy they're very good okay so that's the first thing now at the end I need a contracts person who can understand disputes and so when you understand what to do next what's the strategy of a dispute that makes a huge difference to your company now there's lots of dispute experts out there there's a lot of lawyers out there that I can guarantee you that if you're in a dispute it is a race to see who loses the least amount of money nobody wins in a dispute so avoid disputes at all costs even take a hit it's worth taking a hit to avoid a dispute small hit to keep the relationship to yeah get get a resolution get money into your bank account quicker it's definitely worth doing that so you want to be able to devise strategies to be able to negotiate a settlement of some kind to get it done you know in an organized way so if you can get a contracts administrator has those skill set that one can negotiate contracts in the front and they can do all their paperwork during the contract and can make sure that they can give you the contractual advice and help to make sure that you avoid the dispute you're on to a win and that's if you're if you're a contracts administrator looking to see how can I be the best in in my in my area that's what you need to be able to work at that's the that's what companies will look for when they're looking for a good contracts administrator now sometimes people will won't pay a lot of money for a contract to administrator an app contracts administrator is probably just going to be a paper pusher right person that will might do the post award stuff just from a paperwork point of view it doesn't really understand it definitely can't help you negotiate front end and definitely can't help you with it with a strategy sometimes you can get those guys who are very very expensive they know the front end they know how to avoid disputes and that's obviously very valuable to your business but are they going to do the paperwork day to day it's very hard to get those so a lot of companies end up having both in the in in their in their business to make sure that they have you know all of those things sorted so so that's it so if you want to be a good contracts administrator learn how to negotiate what's in the contract learn how to do all the the paperwork to make sure that you're contractually employing so you can get paid for everything you're supposed to get paid for and lastly make sure you understand strategies ahead to avoid disputes that's it I'll see you next one [Music]