Administration of building contracts with particular reference to the builder's financial control

The aim of this research was to investigate the administration of building contracts with particular reference to the builder's financial control, and thereby develop a flow chart together with those factors which are essential for the financial control of major building contracts. Particular attention was paid to those aspects of administration which are effective in averting increased costs, in particular when one or more of the parties to the contract has a financial crisis, such as being placed in receivership. The method used in the research was to develop a standard flow chart for the administration of building contracts, which flow chart illustrated the builder's system of financial control. This flow chart was then tested against the case studies of two contracts which were contrasts in cost, location and design viz. The Islander Hotel in Port Moresby and the QANTAS Centre in Sydney. Then, other case studies of building contracts in Sydney were used as a check on the foregoing tests. To further develop the aim of the research an examination was made of the trend of methods by which a contractor may evaluate his own liquidity and profitability as well as the financial viability of other parties to a contract. These methods of evaluation were then compared with those used in the actual administration of the contracts for the construction of the Islander Hotel and the QANTAS Centre, together with the five other case studies. At this stage of the research it was apparent that the flow chart developed as "The Standard Administrative System of Building Contracts" is viable but that there are occasions when some variations are required to optimise the builder's financial control of particular contracts. In addition, other factors, had been developed in the research to be used by the builder for the financial control of his contracts, in particular to maximise his profits and liquidity. With a view to verifying the research, a questionnaire was sent to a sample of building contractors. The questionnaire sought confirmation of the flow chart as well as the use made of techniques to evaluate clients and subcontractors as well as the contractors' control of their own profitability and liquidity. There was a strong correlation between the results of the survey and the hypothesis developed from the literary research and the seven case studies. Hence, the conclusions of the thesis present a flow chart which is able to be used as a model of "The Administrative System for Building Contracts". In addition, the conclusions summarise those factors which are critical for the financial control of building contracts.