Tier
Functional Standards Common Glossary, published by the Cabinet Office, defines a tier as: ‘The level a contract is assigned to in the organisation’s hierarchy of criticality, as defined by its risk assumptions.’
BIS Research paper No. 145, Supply Chain Analysis into the Construction Industry, A Report for the Construction Industrial Strategy, published by the Department for Business Innovation and Skills in October 2013 assessed five projects ranging in value from £1 million to £25 million.
It defined suppliers as:
The report suggests that, ‘Tier 1 contractors are typically termed main contractors, and many tier 2 contractors are described as specialist contractors. Labour-only sub-contractors typically operate at the third tier.’
It found that it was not uncommon to have 50 to 70 tier 2 suppliers and sub-contractors and suggested that the, ‘…duplication of multiple layers of profit, overhead and risk could represent a source of non-value added cost and waste.’
For more information see: Suppliers for design and construction.
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