Contract Administration
Contract Administration
This domain tests how the contract documents are assembled, interpreted, changed, paid, and closed out. Expect questions on notice, change orders, payment applications, retainage, and the difference between a promise and an enforceable written modification.
Core rules
- The contract documents usually include the agreement, general and supplementary conditions, specifications, drawings, addenda, and executed change orders.
- Follow the order-of-precedence clause when documents conflict; do not silently choose the cheapest interpretation.
- Most changes require written authorization before work. Oral direction should be confirmed in writing immediately.
- Pay applications are certified by the contractor and reviewed by the owner or architect; retainage is withheld under the contract or statute.
- Substantial completion triggers warranty, punch-list, and retainage consequences; final payment follows closeout documents and lien waivers.
Worked example. A contract has $1,000,000 original value and 5% retainage. The contractor has earned $400,000 to date and has been paid $300,000. Current payment: $400,000 earned minus $20,000 retainage = $380,000 due, minus $300,000 previous payments = $80,000. Reasoning: retainage is calculated on cumulative earned value, not only the current month; subtracting prior payments avoids double billing.
Traps. Performing extra work on a handshake; missing a notice deadline for delay or differing site conditions; sending an unconditional lien waiver before payment clears; confusing substantial completion with final acceptance.