Stage 4 of 7 · Procure

Contracts: FIDIC, NEC, JCT, AIA, VOB

Choose and administer the contract form that sets price, risk, time and payment rules.

Manage the contract NEC4 ECC Option B contract detail with value, retainage and payment terms

Output: Executed contract and contract administration record
Module: Change, variations and claims
Documents: Contract agreement
Contract notices
Contract register
Standards and references: FIDIC Red, Yellow and Silver Books (2017)
NEC4
JCT
AIA A201
VOB/B

What it is

Construction contracts set out who carries which risk, how the price is calculated, how change is valued, how and when payment is made and what happens when things go wrong. Standard forms such as FIDIC, NEC, JCT, AIA and VOB/B are widely used because their terms are known, tested and balanced to a degree that bespoke drafting rarely achieves. The choice of form and pricing option matters as much as the price itself.

Contract administration is the daily work of operating the contract: issuing notices on time, recording instructions, valuing variations and certifying payment. Many disputes arise not from the contract wording but from missed notices and poor records. A team that knows its notice periods and keeps an orderly record of instructions and events is in a far stronger position when claims are made.

Who does it

Contract administrator or engineer: Operates the contract on the client side: issues instructions, certifies and values.
Commercial manager: Manages the contractor's contractual position, notices and claims.
Project manager: Makes decisions that have contractual consequences and must know the notice rules.
Legal adviser: Reviews amendments and advises on disputes.
Client: Decides the procurement route and the risk allocation it is prepared to accept.

How it runs

Select the form and pricing basis
Choose the standard form and option that suit the risk allocation, such as lump sum, remeasured, target cost or cost-plus.
Complete the contract data
Fill in dates, rates, retention, liquidated damages and other particulars, and record any amendments.
Execute and distribute
Sign the contract and give the team a summary of key obligations and notice periods.
Record instructions and events
Log every instruction, notice and event that may affect time or money as it happens.
Issue notices on time
Give and respond to notices within the periods the contract requires.
Value change and certify payment
Value variations under the contract rules and certify interim payments on schedule.
Close out
Agree the final account, release retention and close the record.

How it differs by country

United Kingdom: JCT forms such as the Standard Building Contract and Design and Build Contract are common in building. NEC4 Engineering and Construction Contract offers main options A to F, from priced contract with activity schedule to cost reimbursable, and relies on early warnings and compensation events.
Germany: VOB/B is the standard set of contract terms for construction works, used mandatorily on public works and often on private projects. The BGB construction contract law in §§ 650a ff. applies alongside it, including the client's right to order changes under § 650b.
France: Public works contracts usually refer to the CCAG-Travaux, the general administrative terms, last revised in 2021. Private works often use the NF P 03-001 standard terms.
United States: AIA A101 is the owner-contractor agreement on a stipulated sum and A201 the general conditions that sit behind it. ConsensusDocs is an alternative family of forms developed with contractor and owner associations.
International: The FIDIC 2017 suite includes the Red Book for employer-designed work, the Yellow Book for plant and design-build and the Silver Book for EPC turnkey projects. Under Sub-Clause 20.2 the contractor must give notice of a claim within 28 days of becoming aware of the event, or risk losing the entitlement.

Common mistakes

Missing a contractual notice period, which can extinguish an otherwise valid claim.
Heavily amending a standard form without understanding how the changes interact with the rest of the contract.
Choosing a lump-sum form when the design is too immature to support it.
Acting on verbal instructions without written confirmation.
Not briefing site staff on the contract, so they agree changes they have no authority to agree.

In OpenConstructionERP

Module: Change, variations and claims

OpenConstructionERP maps contract administration to its change, variations and claims modules. Variations & Site Measurements follows the path from notice to variation order, including site measurement and daywork. Change Orders records scope changes, cost impact and approval. Claims Evidence assembles an ordered evidence pack for a claim or dispute, and Event Reconciliation pulls one event together across modules and channels. Change Intelligence shows what is waiting on whom, which helps teams keep to notice periods. Cost Recovery records back-charges against responsible parties.

Variations & Site Measurements · Change Orders · Claims Evidence · Event Reconciliation · Change Intelligence · Cost Recovery

The app runs at openconstructionacademy.com/app for course learners.