CONTRACTOR’S PRACTICE FOR MANAGING SUBCONTRACTOR: A CASE STUDY OF THE EVER RICH II PROJECT IN HO CHI MINH CITY

By

 Vo Khac Kien

Abstract

             

In the recent years, in most construction projects, particularly building projects prefer to hire subcontractors. Consequently main contractor need to develop management system standard in order to manage subcontractor rather than they will undertake construction work by themselves. As a result, main contractor concentrate on management strategies in term of tender process, type of contract, schedule control, quality control, progress and payment, and subcontractor safety.

In order to understand how main contractor’s strategies manage their subcontractors, this report was conducted through contractor documentation. The result shows subcontractor control strategy in a local contractor. Major improvements are needed for the subcontractor control strategy in local contractor in order to improve the subcontractor management performance. However, there are some major points, which need to be improved in order to strengthen and continually improve the strategy performance.

Executive summary

Rationale of research

This research has been conducted to identify Main Contractor’s strategy for managing  sub-contractors within a project.

Objectives of study

To study management practices of contractors in contractor’s for managing subcontractor in The Ever Rich II Project, Dao Tri Street, District 7, HCMC. Find out strengths & weakness to propose recommendations.

Methodology  

The exploratory research method is used to study management practices in Vietnam.

Findings and conclusion

In recent years, main contractor have been trending to use subcontractor in specific area accordingly like as specialist subcontractor, skilled-labor subcontractor and expertise provided by subcontractor. Especially building project, it is common for 80 percent to 90 percent of the work to be performed by subcontractors.

However, there are many subcontractors who do not have not enough expertise or skilled resources to undertake work satisfactorily and, as a result, they are not able to bring good services to clients or not reach their requirements. In order to resolve these problems that main contractor needs to develop a strategy that allows contractor to manage subcontractor effectively and efficiently.

According to the rationale stated above, this study to conduct an investigation of main contractor’s strategy for managing the subcontractor on construction project in terms of tender, unit price contract, schedule control, quality control, progress and payment, and safety.

Criteria Contractor’s Strategy

Tender           

o   Experience is the most important factor for subcontractor tendering.

o   Capability including financial, resource and material.

o   Have a tender process and focus on long-term relationship subcontractor.

o   Time, quality of performance, and price competitive are the project success measurement.

o   Safety performance plays important role in this project.

Contract        

o   Apply unit price contract in order to save heavy cost of preparing many bills of quantity by the subcontractor.

o   Fair basis for competition between subcontractors

o   Changes in contract documents can be made easily by the contractor compare to lump sum contract.

o   Lower risk for subcontractor compare to lump sum contract.

Scheduling

o   CPM and Microsoft Project was adopted as a toll for monitoring subcontractor’s schedule

o   Using fast track schedule in order to save the time.

o   Weekly meeting and monthly meeting in order to discuss the progress of subcontractor’s work performance.

o   Penalty for subcontractor delay works.

o   No bonus or incentive for subcontractor early finish work.

Quality           

o   Developing quality checklist to inspect subcontractor’s performance of each work.

o   Materials enter in and out site would be inspect and check using material record form.

o   Weekly meeting

o   Need worker qualification standard for special works

o   Requesting subcontractor correct unacceptable works by a warming letter.

o   Progress and Payment 

o   Because of use unit price contract so monthly progress payment based on actual quantity that subcontractor done.

o   Monthly progress payment would be keep 5 percent retention that be paid on final progress payment.

Safety 

o   Apply Environment, Health and Safety requirements.

o   Standard safety policy.

o   Providing PPE is a obligatory condition during work at site.

o   Conducting Job safety analysis.

o   Daily site safety inspection by safety engineer

o   Weekly meeting would discuss safety issue and analysis site safety inspection report.

o   Arrange safety budget for safety program implementation.

Recommendations

·    Need to develop standard for tendering for specialized sub-contractor.

·    Main contractor should arrange international formally contract in order to manage subcontractor in terms of legal procedure.

·    Main contractor should use IT to monitor progress.

·    Main contractor should develop quality management process to control all of subcontractor performance.

·    Main contractor should record subcontractor database to be able to know subcontractor information. It helps main contractor to have better understanding subcontractor’s performance.

·    Main contractor should develop safety management system in order to analysis hazard and minimize risk in subcontractor performance. Subcontractors have to obey contractor’s safety policy and follow contractor’s safety program.

·    Main contractor should develop long-term relationship with subcontractors.