Payments to nominated sub-contractors
A nominated sub-contractor is one that is selected by the client to carry out an element of the works and then imposed on the main contractor after the main contractor has been appointed. This 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.
There is no direct contractual relationship between the client and the nominated sub-contractor.
The main contractor is instructed by the client to use a nominated sub-contractor for a particular element of the works through the inclusion of a prime cost sum (based on the nominated sub-contractor’s accepted quotation) to which the main contractor is entitled to add mark up and attendance costs (such as material handling, use of site facilities, scaffolding, and so on).
The main contractor should specify the general preliminaries available to the nominated sub-contractor, and specific items of preliminaries to be provided by the sub-contractor.
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.
When the nominated sub-contractor works are being carried out, the client’s cost consultant will periodically value their work and the amount properly due is then shown as a separate amount on interim certificates. This amount is also notified to the nominated sub-contractor.
The contractor must then pay the nominated sub-contractor the certified amount. 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. However, 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.
[edit] Related articles on Designing Buildings Wiki
- Construction supply chain payment charter.
- Domestic sub-contractor.
- Fair payment practices.
- Interim certificates.
- Main contractor’s discount.
- Named sub-contractor.
- Nominated sub-contractor.
- Nominated subcontractor v named subcontractor.
- Nominated supplier.
- Payment period.
- Prime cost sum.
- Procurement route.
- Remedies for late payment.
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