Subcontract procurement - Revision history

Designing Buildings at 08:43, 27 December 2020

2020-12-27T08:43:47Z

← Older revision		Revision as of 08:43, 27 December 2020
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	* Sub contractor.		* Sub contractor.

−	[[Category:Construction_management]] [[Category:Procurement]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Construction_management]] [[Category:Procurement]]

Designing Buildings at 09:52, 8 October 2019

2019-10-08T09:52:24Z

← Older revision		Revision as of 09:52, 8 October 2019
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−	~~In construction,~~ a ~~subcontract~~ is a ~~contract that involves undertaking part~~ of ~~a main contract~~. ~~Subcontracts normally involve work~~ of ~~a specialist nature carried out by subcontractors – specialists who undertake part~~ of ~~a main building contract for~~ the ~~main contractor~~.	+	The classic 19th-century definition of a contract is 'a promise or set of promises which the law will enforce' (ref. Pollock, Principles of Contract 13th edition). That is, there is reciprocity of undertaking passing between the promisor and the promisee.

−	~~Typical subcontractors on a project can encompass many trades but may include:~~	+	In the construction industry, the main contract is typically the tier 1 contract between the client and the main contractor.

−	* Bricklayers	+	A subcontract is a contract that involves a subcontractor undertaking part of the main contract on behalf of the main contractor. This is generally a tier 2 contract.
−	* Cladding installers	+
−	* Concrete installers	+
−	* Drainlayers	+
−	* Electricians	+
−	* Joiners	+
−	* Scaffolders	+
−	* Steel erectors	+

−	~~Procuring~~ subcontractors ~~is about how these various specialist trades can be brought into~~ a project. Nowadays main contractors employ very few key subcontractors directly – known as ordinary subcontractors (or non-nominated or domestic subcontractors). When they do employ directly, the client is unlikely to have any influence over the subcontractors chosen. This may have quality implications unless the subcontractors employed are renowned for their work.	+	Subcontracts normally involve work of a specialist nature carried out by specialist subcontractors Subcontracts on a project can encompass many trades but commonly include:

−	~~= Nominated subcontractors =~~	+	* Bricklayers.
		+	* Cladding installers.
		+	* Concrete installers.
		+	* Drainlayers.
		+	* Electricians.
		+	* Joiners.
		+	* Scaffolders.
		+	* Steel erectors.
		+	* ICT installers.
		+	* Building services.

−	~~Instead, it~~ is ~~usually~~ the ~~case that most~~ specialist trades are ~~employed as ‘nominated subcontractors’ – nominated either by the client or the principal designer (on behalf of the client). The nominated subcontractor may be required to undertake~~ a ~~portion of the contract which may involve design and installation to performance requirements~~.	+	Procurement is the process of purchasing goods or services. Procuring subcontractors is the process by which these various specialist trades are brought into a project.

−	~~Examples~~ of ~~situations where sub-contractors might be nominated can include~~:	+	Traditionally there have been three main types of subcontractor:

−	* ~~Long delivery items where ordering is necessary before~~ the ~~appointment of a~~ main contractor~~, e~~.~~g lifts, switchgear or refrigeration plant;~~	+	* Domestic subcontractor. A subcontractor selected and appointed by the main contractor.
−	* ~~Where specialist design input is required in~~ the ~~early stages~~ of ~~design development (and therefore before~~ the ~~main contractor is appointed) e~~.~~g for a cladding system;~~	+	* Nominated subcontractor. A subcontractor selected by the client to carry out an element of the works.
−	* ~~Where~~ the client ~~directly orders a preferred item on which design is to be based, e.g complex or specialist industrial plant or equipment~~.	+	* Named subcontractor. A subcontractor selected from a list of acceptable sub-contractors provided by the client.

−	However, ~~even though nominated subcontractors are generally imposed~~ on ~~the main contractor~~, the ~~main contractor~~ will ~~still be responsible for ensuring~~ the ~~work is completed satisfactorily. Furthermore, the client or principal designer may employ ‘nominated suppliers’ for the installation~~ of ~~specialist materials~~, ~~components or equipment that will be installed by the main contractor~~.	+	However, on large or complex projects, the work will cascade down the supply chain to a plethora of subcontractors, sub-subcontractors, and so on.

−	~~The system~~ of ~~procurement described above tends to be popular with many small~~ and ~~medium-sized companies. However, it has become increasingly common for~~ the ~~larger main contractors~~ to ~~use only nominated subcontractors or suppliers. In such cases~~, the ~~main contractor becomes a manager responsible for~~ the ~~overall coordination and completion~~ of the ~~project~~.	+	One of the problems in the construction industry is that the first and second tier of the supply chain sign up to fairly onerous agreements but as the chain develops, so the contractual liabilities decrease until suppliers at the end of the chain are often not locked in at all.

−	~~The benefit of such a situation is that~~ in ~~hiring the skills when needed, the main contractor does not~~ have ~~to keep skilled workers~~ in ~~continuous paid employment – which is particularly important during downturns~~. ~~Also~~, ~~nominated subcontracting allows~~ the ~~main contractor to undertake more complex~~ projects ~~without an unacceptable increase in their risk~~.	+	In recent years larger companies offering continuity in construction have taken an increasing interest in establishing relationships beyond direct, first tier suppliers. Framework contracts and partnering agreements have pioneered this approach, encouraging the involvement of selected suppliers at relatively early stages of projects while offering continuity of work.

−	~~There are mutual benefits to~~ the ~~client and sub-contractor using~~ the ~~nomination route. The client can choose~~ the ~~specialist contractor it wants, obtain design and value engineering input and have direct access during the progress~~ of ~~works~~. ~~The sub-contractor benefits by having much greater certainty of payment~~.	+	An integrated supply team is one that involves the integration of the complete supply chain involved in the delivery of a project. Under this route, the entire supply team may be appointed after the project brief has been prepared, often under just one contract rather than separate contracts with each individual company.

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

Editor: Created page with "In construction, a subcontract is a contract that involves undertaking part of a main contract. Subcontracts normally involve work of a specialist nature carried out by subcontra..."

2019-07-12T16:14:04Z

Created page with "In construction, a subcontract is a contract that involves undertaking part of a main contract. Subcontracts normally involve work of a specialist nature carried out by subcontra..."

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In construction, a subcontract is a contract that involves undertaking part of a main contract. Subcontracts normally involve work of a specialist nature carried out by subcontractors – specialists who undertake part of a main building contract for the main contractor.

Typical subcontractors on a project can encompass many trades but may include:

* Bricklayers
* Cladding installers
* Concrete installers
* Drainlayers
* Electricians
* Joiners
* Scaffolders
* Steel erectors

Procuring subcontractors is about how these various specialist trades can be brought into a project. Nowadays main contractors employ very few key subcontractors directly – known as ordinary subcontractors (or non-nominated or domestic subcontractors). When they do employ directly, the client is unlikely to have any influence over the subcontractors chosen. This may have quality implications unless the subcontractors employed are renowned for their work.

= Nominated subcontractors =

Instead, it is usually the case that most specialist trades are employed as ‘nominated subcontractors’ – nominated either by the client or the principal designer (on behalf of the client). The nominated subcontractor may be required to undertake a portion of the contract which may involve design and installation to performance requirements.

Examples of situations where sub-contractors might be nominated can include:

* Long delivery items where ordering is necessary before the appointment of a main contractor, e.g lifts, switchgear or refrigeration plant;
* Where specialist design input is required in the early stages of design development (and therefore before the main contractor is appointed) e.g for a cladding system;
* Where the client directly orders a preferred item on which design is to be based, e.g complex or specialist industrial plant or equipment.

However, even though nominated subcontractors are generally imposed on the main contractor, the main contractor will still be responsible for ensuring the work is completed satisfactorily. Furthermore, the client or principal designer may employ ‘nominated suppliers’ for the installation of specialist materials, components or equipment that will be installed by the main contractor.

The system of procurement described above tends to be popular with many small and medium-sized companies. However, it has become increasingly common for the larger main contractors to use only nominated subcontractors or suppliers. In such cases, the main contractor becomes a manager responsible for the overall coordination and completion of the project.

The benefit of such a situation is that in hiring the skills when needed, the main contractor does not have to keep skilled workers in continuous paid employment – which is particularly important during downturns. Also, nominated subcontracting allows the main contractor to undertake more complex projects without an unacceptable increase in their risk.

There are mutual benefits to the client and sub-contractor using the nomination route. The client can choose the specialist contractor it wants, obtain design and value engineering input and have direct access during the progress of works. The sub-contractor benefits by having much greater certainty of payment.

= Related articles on Designing Buildings Wiki =

* Collaborative practices.
* Construction supply chain payment charter.
* Contract sum.
* Contractor.
* Domestic sub-contractor.
* Named specialist work.
* Named sub-contractor.
* Nominated subcontractor v named subcontractor.
* Nominated supplier.
* OJEU.
* Payments to nominated sub-contractors.
* Preliminaries.
* Prime cost sum.
* Procurement route.
* Selected subcontractor.
* Sub contractor.

[[Category:Construction_management]] [[Category:Procurement]]