Construction is engaged in the production process but without the manufacturing mentality.
Supply chain s encourage integration of the skills, equipment and materials required in the process. This should lead to greater efficiency, shortened delivery times, reduced costs and increased quality of projects.
The problem is standard forms of contract and procurement methods remain ad-hoc and cost-centric, with extreme imbalances in risk.
Given that disproportionate levels of risk are borne by the subcontractors lower down the chain, what steps must they take to prosper?
First, they must assess contractual relationship before entering them. Understanding the T&Cs is a crucial first step. Though subcontractors are less cautious in recession than recovery, there is never an excuse for inadequate understanding of risk.
Subcontractors must also ascertain main contractors’ ability to deliver the project, then price into the tender their level of tolerable of risk. They must also identify the thresholds below which they cannot operate and obtain proper advice on how to legally exit a subcontract that can no longer be performed.
Collaborative relationships with main contractors are essential. Thus, the onus is on both parties to form a relationship based on trust and shared outcomes.
It is imperative to eschew the blame culture; nothing destroys contractual relationships more than apportioning blame once a difficulty arises.
Solve the problem first, then the reckoning can follow. This minimises the impact of the initial problem on the overall project.
“The onus is on both parties to form a relationship based on trust and shared outcomes”
Relationships with other subcontractors are also vital. Programme pressures could require work to start before the site is ready, or to hand over areas before work has been completed. Several firms often need to work at the same time in confined areas.
A co-operative approach in managing boundaries is therefore essential. Promptly noting any adverse impacts, lest you are left having to implement remedial measures, also becomes important.
Free and timely flow of information, whether by drawings, schedules or specs, breeds success.
Production information is, however, rarely perfected before operatives arrive on site, so managing information flow becomes a very important task.
Inadequate information affects ordering of materials and could adversely impact profits.
The subcontractor must have an internal template for promptly requesting information as well as recording its timely receipt, and should have no hesitation in highlighting possible delays late information could cause.
Taking these essential precautionary steps should assist the subcontractor’s prosperity within the supply chain.
Samuel Okoronkwo is a practicing barrister. He specialises in planning, construction and engineering law and can be found at www.samuelokoronkwo.com
or contact his clerk at firstname.lastname@example.org