If someone is overseeing building works under a formal contract, one of their key roles is to make sure that the works are properly valued. This ensures that the contractor has suitable cash flow and is being paid fairly for the works they’ve done, as well as making sure the client isn’t being asked to pay more than the value of the works, being asked to pay an unreasonable amount of money, or pay too far in advance, since this would leave them exposed if any unexpected events were to happen.
The important role of valuing the work falls under Contract Administration, and is a critical responsibility of the contract administrator and highlights the importance of them undertaking their job diligently. Not only that, but it assures that any risks (which all projects carry to some degree) are properly managed and controlled. But did you know that there are different options for valuations, changing the processes in which they are assessed under a standard form contract?
Getting It Right In The Beginning
One of the most important things in making sure the whole valuation process happens smoothly and fairly is making sure the documents and figures you’re using for the valuation process are as accurate and fair as possible. This document is usually called the ‘Contract Sum Analysis’, and it breaks down the cost of the works into clearly identifiable areas, with the relevant costs for the materials and labour etc attached to them. When the relevant works are complete, either partially or fully, an accurate assessment can then be made against these figures.
Getting this document right also means the contractor’s figures can be gone over with a fine-toothed comb when assessing their estimates of the cost of works, so the contract administrator can make sure they haven’t over-valued the initial works at the beginning of the project. This would leave the client exposed if the contractors didn’t finish the work, or if they went bust halfway through the project.
