Last edited 14 Nov 2016

Nominated sub-contractor

Contents

[edit] Introduction

Sub-contractors are appointed by main contractors to carry out part of the works on their behalf. As construction has become more complicated and more specialist construction techniques have been developed, it has become increasingly common for contractors to sub-contract others rather than employing a large workforce themselves.

The use of sub-contractors enables the main contractor to undertake more complex projects whilst not unacceptably increasing their risk, however, concerns have been expressed about the prevalence of sub-contractors because of a perception that the main contractor has less control over the skills and training of sub-contractor employees and so there may be a negative impact on quality and health and safety on site.

Sub-contractors can be classified as:

In addition, on management contracts the works will be carried out by 'works contractors' and on construction management contracts the works will be carried out by 'trade contractors', although technically trade contractors are not sub-contractors as they are contracted by the client, and only managed by the construction manager.

[edit] Nominated sub-contractors

A nominated sub-contractor is one that is selected by the client to carry out an element of the works. Nominated sub-contractors are imposed upon the main contractor after the main contractor has been appointed. The mechanism for nominating is an instruction in relation to a prime cost sum to which a main contractor is entitled to add its mark up and attendance costs. It allows the client to have direct separate negotiations with major suppliers of goods or services and feed their appointment and design input into the contract after works by the main contractor have commenced.

[edit] Contractual arrangements

The cost consultant values the work of the nominated sub-contractor separately and the amount due is shown on interim certificates and is notified to the nominated sub-contractor. The contract may allow the client to pay the nominated sub-contractor directly if the main contractor fails to do so.

As the contractor has no choice in the selection of the nominated sub-contractor, they cannot be held responsible for failure of the nominated sub-contractor to perform. As the contract for the nominated sub-contractor is with the main contractor, not with the client, the client should ensure that they have a direct warranty with the nominated sub-contractor to guarantee performance and to indemnify the client if any default allows a claim for loss and expense or extension of time by the main contractor. For instance delays by a nominated cladding contractor might give the main contractor entitlement to an extension of time.

The contractual arrangements allowing nomination are very complicated, attempting to cover all possible eventualities both between the client and the main contractor and also between the main contractor and the nominated sub-contractor. This may include; objections by the main contractor to the nomination, insolvency of the nominated sub-contractor, the need for re-nomination and so on.

Some forms of contract (such as Joint Contracts Tribunal (JCT) contracts) no longer include provision for the nomination of sub-contractors. The use of named sub-contractors, or named specialists is generally considered to be a simpler alternative.

[edit] Allocation of preliminaries

The allocation of preliminaries between the main contractor and sub-contractor depends on whether the the nominated sub-contractor is appointed before or after the main contractor.

Normally the main contractor is appointed first. In this case it is wise to get the main contractor to specify the general preliminaries available to the sub-contractor, such as; welfare buildings, craneage, site security, hoists, water, power and lighting and general scaffolding etc, but also to set out specific items of preliminaries to be provided by the sub-contractor, such as; site offices and stores, special scaffolding or cranes and waste disposal to a certain point. Before any order is placed the main contractor should be consulted as to whether the sub-contractor's proposals are acceptable including matters relating to preliminaries.

If the sub-contractor is appointed before the main contractor, it is wise to send them the proposed preliminaries requirements to be imposed on the main contractor and request that the sub-contractor clearly states in their tender what preliminaries are included in their bid and what preliminaries they anticipate will be provided by the main contractor.

[edit] Public projects

NB On public sector projects, a sub-contract for which the client intends to nominate a sub-contractor may be subject to the requirements of the OJEU procurement rules.

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