Most of the general
contractors are not paying attention with explanation on interfaced scopes
between sub-contractors, selection contractors, and setting the agreement with
sub-contractors.
Based
on the contract type, contractor for projects managed by PMC-PV Gas is divided into some types such as:
1. General
contractor for Engineering, procurement and construction.
2. General
contractor for engineering and construction and sub-contractor for supplying equipments and commissioning.
3. General
contractor for construction, sub-contractor for engineering, supplying
equipments and commissioning.
Therefore, sub-contractor
management in Projects is the challenge of project management board for
on-scheduling, on-quality, safety and in budget.
If management board does
not pay attention with sub-contractor management, it will be caused the chain
of effects in delaying schedule, poor quality and cost impact for the whole
project.
One research revealed that
the cost of rework and change of sub-contractor is 12 times higher of previous
cost.
Therefore,
pre-qualification and monitoring performance of sub-contractor is the most
important in success of General Contractor and Projects.
Phan Thi Hai Giang
made a research to study the management method applied
for sub-contractor in engineering, supplying equipments and commissioning. His
study started from pre-qualification and monitoring performance of
sub-contractor.
The purpose of this study was to quantify the importance of
sub-contractor management in construction management especially in EPC contract, its effectiveness with general
contractor in schedule, quality and cost.
This research started from bidding stage, performing project
of sub-contractor in pipeline projects. The objectives of this study were to:
1. Evaluate the relationship between the subcontractor and
general contractor in scheduling management, quality control and cost control
in EPC Contract.
2)
Identify some problems in subcontractor management that can be improved by the
general contractor.
3)
Investigate the effect of implementation subcontractor management in early
stage of construction management.
With the strict management
and good coordination between Owner, general contract and sub-contractor, the
Project is completed on schedule for first gas from Nam Con Son pipeline that
is the best benefit for Owner. With on-time schedule, any Parties from General
contractor to sub-contractor/Vendor also have their own benefits from their construction
works.
The key factor of project
shall be identified in the beginning of Project and general
contractor/sub-contractor must be followed and tried to archive this goals. In
this case study, the key factor of Project was scheduled. The success of
project is good co-ordination with general contractor/Owner such as:
1. For quality management:
- All agreement between general
contractor and sub-contract will be submitted and approved by Owner
because Subcontracts should be made to conform with the prime contract
between the contractor and the project owner, and must be revised in
accordance with the changes made to the prime contract throughout the
course of the project
- Tight and clear specification
- Dedicated QA/QC Manager
- On-site Vendor Inspection
- Continuous improvement quality
management system
- Rigid control change order in design
stage and in Site
2.
For the cost management:
- General Contractors prefer to
structure subcontracts so that the contractor pays the subcontractor only
if the contractor receives payment from the owner, arguing that they
should not be stuck with paying bills that the owner doesn’t pay them for.
- Accurate cost tracking, analysis
and forecast
- QA/QC to prevent and detect
defects earlier
3. For schedule management:
- The good planner and updated
schedule for all Site work and procurement work that will affected with
on-time schedule of Project.
- Tight project control system and
dedicated project controller.
- Given appropriated solution for
long-lead item.
4. For safety
management:
- Good safety procedures with
appointed safety manager will be monitored all construction works at Site.
- Risk response plan, emergency
response plan and risk assessment applied for safety management of
Project.
Benefit of
project sub-contractor management
In
almost all projects, general contractor cannot perform their construction works
with their own force, they tried to share responsibilities and risks with their
sub-contractor/Vendor.
From
the above case-study, the good communication between general contractor and sub-contractor
had distributed to the success of Project. It can be described in the beginning
of the contract. The content of the service which sub-contractor is to provide
for the general contractor must be described; and it also articulates the
general contractor's procedure of awarding the subcontractor.
The general contractor assumes their role and
contracts out the construction work, some detail design works to various
specialty subcontractors in order to control risk and transfer construction
risks. Through sub-contracting, the general contractor can minimize its capital
investment and reduce the size of permanent staff.
The
general contractor did not understand clearly the local regulation, work permission
with existing gas facilities. So they use local sub-contractor to transfer
their risks.
With
good management of sub-contractors, the general contractors will have a successful
project in manner of quality, safety, schedule and cost. And local
sub-contractor can become more professional through tight control from general
manager.
General
Conclusion
This project is successful in the manner of subcontractor's
management. According to discussion from the previous chapter, it can be
concluded that subcontractor control management in terms of procurement and
cost from local contractor has been aligned and organized, but, in terms of
schedule, quality and safety aspects, it has been yet organized. Major
improvements are needed for the subcontractor control strategy in order to
improve the subcontractor management performance. In contrast, it can be
concluded that subcontractor control strategy has been aligned and organized in
all aspects. However, there are some major points, which need to be improved in
order to strengthen and continually improve the strategy performance.
1. Recommendation for sub-contractor
management improvement
After learning on how main
contractors managed their subcontractors together with the strength and
weaknesses of each strategy, recommendation for improvement can be reliably proposed
as follows:
i) It is important to have formal
procurement standard for subcontractors. It helps main contractors to make
decision easier and faster whether the subcontractors are qualified with the
main contractor’s commitment.
ii) Always have two-way lead times
built into subcontract agreements. Two-way means that the main contractor and
subcontractors agree on an appropriate time for the main contractor to notify
the subcontractor when to begin work and an appropriate amount of time for the
subcontractors to inform the main contractor of any conflict. Main contractor
should monitor subcontractor’s schedule by developing a system or adopting
advanced technology software that allows main contractor to track causes of
schedule variance.
iii) Top management should take a
leader role in commitment toward quality. There should be quality policy and
activities performed in an effort to implement the quality policy.
Subcontractor should understand the quality policy and follow it as a quality
standard of the work. The problems related with low quality can be prevented.
iv) By establishing a
subcontractor database, main contractors are able to know the information about
subcontractors. It helps main contractors to have better understanding
subcontractors’ performance.
v) Main contractor should develop
comprehensive project safety policy and safety programs which make provisions
for subcontractor safety. Subcontractor has to obey the main contractor’s
safety policy and follow the main contractor’s safety programs by the inclusion
of specific language to that effect in their contracts.
vi) Main contractor may consider
employing subcontract coordinator in order to improve coordination and
communication with subcontractors.
2.
Recommendation for further study
i) This research was concentrated
on main contractors’ behavior in managing subcontractor. However, there are
owner, consultant, and subcontractors whose self involving in the construction
project. Further study should be carried out to find the influence of owner,
consultant, and subcontractor itself for subcontractor management improvement.
ii) Due to time limitation, only
one international contractor was included in this study. Further study should
include more contractors in order to get better result.
iii) It is highly recommended for
further study to investigate the effectiveness of each strategy by quantitative
data.
Abstract
Because of the increased project complexity and the
highly competitive nature of the construction industry, a construction project
often is executed by several subcontractors. Hence, effectively managing the
numerous subcontractors involved in a construction project becomes a crucial
challenge for the general contractor in ensuring timely project completion with
acceptable quality.
Managing subcontractors does not simply involve asking
them to allocate resources (labor, material, and machinery/equipment) into the
jobsite whenever an activity is scheduled, and then pushing them to speed up the
work without a clear consciousness of schedule risk. Factors (or uncertainties)
such as weather, labor, site conditions, material delivery, and equipment
breakdown can influence the time performance of subcontractors, affecting total
project duration.
But almost General Contractor is lack of management
sub-contractor and it caused many difficulties and conflicts during
performance, management of projects.
The most difficulty of sub-contractor management is
deviation scope of work between sub-contractors, controlling schedule and
interfacing between subcontractors.
In managing project subcontractors, a general
contractor must determine the items of work to be subcontracted, select
subcontractors, set subcontract agreements, and control the subcontractors
during construction.
