Contract Administration New Zealand
Contract administration is the process of managing a building contract on behalf of the principal (owner) during construction. In New Zealand, QS firms provide independent contract administration under NZS 3910:2013, the most widely used standard form of building contract, as well as NZS 3902, NZIA residential contracts, and bespoke commercial forms.
Under NZS 3910, the engineer to the contract (typically the project architect or a nominated QS) has specific statutory functions including certification of payment claims, assessment of variations, determination of extension of time claims, and issue of the practical completion certificate. When a QS is appointed as the contract administrator, they bring cost expertise to these functions that an architect or project manager may lack.
Payment claim assessment is the most time-sensitive contract administration task. Under the Construction Contracts Act 2002, payment schedules must be issued within 14 days of a payment claim, failing which the full claimed amount becomes due and payable. A QS contract administrator ensures payment claims are properly assessed against the contract, progress is independently measured, and any over-claimed amounts are identified and supported by written reasons.
Variation management is equally critical. Uncontrolled variations are the most common cause of construction cost overruns in New Zealand projects. A QS will assess each variation instruction for scope, price it from first principles or against submitted contractor pricing, and maintain a variation register that tracks committed and potential cost movements throughout the build. Clients who engage a QS for contract administration typically experience far fewer disputed variations at final account.
The final account process - agreement of the total sum due to the contractor at project completion - is the culmination of the contract administration role. A QS will prepare or review the contractor's final account claim, resolve any outstanding variations, adjust provisional sums and prime cost items, and issue the final payment certificate. A properly managed final account reduces the risk of post-completion disputes.
Frequently Asked Questions
Do I need a separate QS for contract administration if I already have an architect?
An architect can perform many contract administration functions, but a QS brings specialist cost expertise to payment claim assessment, variation pricing, and final account management. For larger or more complex projects, appointing a QS alongside the architect to handle the financial administration of the contract is standard practice and provides the owner with independent cost oversight.
What happens if the contractor submits an inflated payment claim?
Under the Construction Contracts Act 2002, a payment schedule disputing the claimed amount must be issued within 14 days. A QS contract administrator will assess the claim, prepare a payment schedule identifying any disallowed or adjusted items with reasons, and advise the owner of the certified amount. The contractor can then adjudicate any disputed items through the MBIE adjudication process.
How are variations priced under NZS 3910?
Under NZS 3910, variations are valued at the contract rates if applicable, or at fair and reasonable rates if no applicable rate exists. The contractor submits a variation quote and the engineer assesses it. A QS can independently price variations from first principles to test whether the contractor's quote is reasonable, giving the owner a strong basis for negotiation.
What is the difference between practical completion and final completion?
Practical completion is reached when the works are substantially complete and suitable for occupation, with only minor defects remaining. Final completion occurs at the end of the defects liability period (typically 12 months under NZS 3910) once all defects are remedied. The final payment certificate is typically issued at final completion, releasing retention held by the owner.