Sub-contractor

[edit] Introduction

As buildings become increasingly complicated, so it becomes less and less likely that any one contractor will have the required skills to carry out all of the works necessary to construct them, and it may not make good commercial sense to take on new employees for one project that would then have to be laid off for the next.

Increasingly therefore, contractors will use sub-contractors to carry out particular elements of the works. Sub-contractors (or subcontractors) are sometimes referred to as 'subbies', or increasingly, simply as 'suppliers'.

Elements of the works that might be awarded to sub-contractors might include; piling, roofing, cladding, civil engineering, steelwork, plumbing, electrical services, and so on.

[edit] Types of sub-contractor

There are three main types of sub-contractor:

[edit] Domestic sub-contractor

A sub-contractor selected and appointed by the main contractor.

[edit] Nominated sub-contractor

A sub-contractor selected by the client to carry out an element of the works. The client negotiates a price with the nominated sub-contractor and then instructs the main contractor to appoint them for those works.

The main contractor will include the sub-contractors price as a prime cost sum in the contract sum for the main contract, to which they add overheads, profit and attendance. Some forms of contract (such as Joint Contracts Tribunal (JCT) contracts) no longer include provision for the nomination of sub-contractors.

[edit] Named sub-contractor

A sub-contractor for a particular package selected from a list of acceptable sub-contractors provided by the client. Named sub-contractors are allowed for in the tender documents for the main contract in the form of a provisional sum for which the main contractor makes allowances for mark up, attendance and programme within it’s tender offer.

Once appointed, the main contractor seeks tenders for the package from the named sub-contractors, places a sub-contract with the successful tenderer, and the provisional sum is replaced with the tendered figure.

NB According to NRM1: Order of cost estimating and cost planning for capital building work, the term ‘subcontractor' means; ‘…a contractor who undertakes specific work within the building project; known as specialist, works, trade, work package, and labour only subcontractors.’

[edit] Use of sub-contractors

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 might be managed by the contractors' sub-agent or package manager.

Increasingly, sub-contractors will themselves sub-contract elements of their package of works to other suppliers. This has resulted in the development of complex supply chains, with different tiers of suppliers, some of whom may be entirely unknown to the client. For more information see: Suppliers.

'Attendance' is the main contractor’s mark up for specific services it has to provide for individual sub-contractors. This might include items such as material handling, scaffolding and rubbish clearance. Attendance can be 'general attendance' describing items available site wide to all subcontractors, or 'special attendance' where items are specific to a particular contractor/subcontractor.