SPECIALTY CONTRACTORS IN CIVIL ENGINEERING PROJECTS BASIC INFORMATION AND TUTORIALS

A specialty contractor or subcontractor is a separate contractor hired by the prime contractor to perform certain portions of the work. The amount of work that the prime contractor will subcontract varies from project to project.

Some federal and state regulations limit the proportion of a project that may be subcontracted, but this is rarely the case in private work. There are advantages and disadvantages to using specialty contractors.

Trades such as plumbing, electrical, and heating and air-conditioning have a tradition of being performed by specialty contractors, due to their specialized nature and licensing requirements. However, specialty contractors can now be found who are capable of performing every aspect of the construction project.

Contractors today can construct entire projects without having any direct-hire craft personnel. The use of specialty contractors has gained popularity as a means to reduce risk and overhead; however, the contractor gives up a substantial amount of control when subcontracting the entire project.

If specialty contractors are to be used, the contractor must be certain to notify them early in the bidding period so that they have time to prepare a complete, accurate proposal. If rushed, the specialty contractor tends to bid high just for protection against what might have been missed.

The use of specialty contractors can be economical, but estimates still must be done for each portion of work. Even if the estimator intends to subcontract the work, an estimate of the work should be prepared. It is possible that the estimator will not receive proposals for a project before the bid date and will have to use an estimated cost of the work in totaling the proposal.

All subcontractors’ proposals are compared with the estimator’s price; it is important that a subcontractor’s price is neither too high nor too low. If either situation exists, the estimator should call the subcontractor and discuss the proposal with him.

The specialty contractor’s proposal is often phoned, faxed, or e-mailed into the general contractor’s office at the last minute because of the subcontractor’s fear that the contractor will tell other subcontractors the proposal price and encourage lower bids. This practice is commonly referred to as bid peddling or bid shopping and is highly unethical and should be discouraged.

To prevent bid shopping, specialty contractors submit their final price only minutes before the bids close, which leads to confusion and makes it difficult for the estimator to analyze all bids carefully. This confusion is compounded by specialty contractors who submit unsolicited bids. These bids come from specialty contractors who were not contacted or invited to submit a bid, but who find out which contractors are bidding the project and submit a bid.

Since these companies are not prequalified, there is an element of risk associated with accepting one of these bids. On the other hand, not using low bids from unsolicited subcontractors places the contractor at a price disadvantage.

In checking subcontractor proposals, note especially what is included and what is left out. Each subsequent proposal may add or delete items. Often the proposals set up certain conditions, such as use of water, heat, or hoisting facilities. The estimator must compare each proposal and select the one that is the most economical.

All costs must be included somewhere. If the subcontractor does not include an item in the proposal, it must be considered elsewhere. A tricky task for the prime contractor is the comparison of the individual subcontractor’s price quotes.

Throughout the estimating process, the prime contractor should be communicating with the specific subcontractors concerning the fact that they will submit a price quote and what scope of work is to be included within that quote. However, subcontractors will include items that they were not asked to bid and will exclude items that they were asked to bid.

A “bid tabulation” or “bid tab” is used to equalize the scope between subcontractors so that the most advantageous subcontractor’s bid can be included in the prime contractor’s bid.

SUB CONTRACTING ON CIVIL CIVIL ENGINEERING PROJECTS BASIC INFORMATION

What Is Sub Contracting?

Many civil engineering contractors now use sub-contractors to do much of their work. Most conditions of contract permit a contractor to sub-let work of a specialist nature; but the ICE conditions of contract have gone further and permit the contractor to sub-contract any part of the work (but not the whole of the work), subject only to notifying the engineer of the work sub-contracted and the name of the sub-contractor appointed to undertake it.

The contractor does not have to notify any labour-only sub-contracts he uses. The engineer can object, with reasons, to the appointment of a sub-contractor, but otherwise has no rights in connection with such sub-contracts, except that he can require removal of a sub-contractor who proves incompetent or negligent, or does not conform to safety requirements.

Under FIDIC conditions for overseas work, sub-contracting requires the engineer’s prior sanction. In building work there has long been a trend to pass the majority of work to sub-contractors who specialize in various trades, and the same has now occurred in civil engineering where many operations are ‘packaged up’ and sub-let.

Thus sub-contracts may be let for excavation, formwork, reinforcement supplied and erected, and concreting. The advantage to the contractor is that this reduces the staff he needs on site and his capital outlay on plant and equipment. He can use sub-contractors with proven experience and does not have to take on a range of temporary labour whose quality may be variable.

The contractor retains responsibility for the quality and correctness of work and, of course, has to plan and co-ordinate the sub-contract inputs, and often supply any necessary materials.

But if much of the work is sub-contracted, the contractor’s or agent’s main input to a project may be that of dealing with the sub-contracts and controlling their financial outcome, so these matters may take priority over dealing with any engineering problems which arise.

The contractor may therefore tend to leave a sub-contractor to solve any problems he encounters, on the basis that these are his risks under his sub-contract and it is up to him to deal with them. But the sub-contractor may think otherwise, so a dispute arises as each considers the other responsible for any extra cost or delays caused.

Frequent disputes have also arisen in recent years when any default or presumed default by a sub contractor has resulted in the contractor withholding payment to him. Late payment by contractors to sub-contractors is another widespread source of complaint by sub-contractors, but remedies are difficult to devise.

The sub-contracts are private contracts whose terms are unknown to the engineer and the employer, so they cannot interfere in any such dispute. The engineer has only power to protect nominated sub contractors, i.e. subcontractors he directs the contractor to use.

CONSTRUCTION CONTRACT BASIC DEFINITION AND TUTORIALS

Construction projects are done under a variety of contract arrangements for each of the parties involved. They range from a single contract for a single element of the project to a single contract for the whole project, including the financing, design, construction, and operation of the facility. Typical contract types include lump sum, unit price, cost plus, and construction management.

These contract systems can be used with either the competitive bidding process or with negotiated processes. A contract system becoming more popular with owners is design-build, in which all of the responsibilities can be placed with one party for the owner to deal with.

Each type of contract impacts the roles and responsibilities of each of the parties on a project. It also impacts the management functions to be carried out by the contractor on the project, especially the cost engineering function.

A major development in business relationships in the construction industry is partnering. Partnering is an approach to conducting business that confronts the economic and technological challenges in industry in the 21st century.

This new approach focuses on making long-term commitments with mutual goals for all parties involved to achieve mutual success. It requires changing traditional relationships to a shared culture without regard to normal organizational boundaries.

Participants seek to avoid the adversarial problems typical for many business ventures. Most of all, a relationship must be based upon trust. Although partnering in its pure form relates to a long-term business relationship for multiple projects, many single project partnering relationships have been developed, primarily for public owner projects.

Partnering is an excellent vehicle to attain improved quality on construction projects and to avoid serious conflicts. Partnering is not to be construed as a legal partnership with the associated joint liability. Great care should be taken to make this point clear to all parties involved in a partnering relationship.

Partnering is not a quick fix or panacea to be applied to all relationships. It requires total commitment, proper conditions, and the right chemistry between organizations for it to thrive and prosper.

The relationship is based upon trust, dedication to common goals, and an understanding of each other’s individual expectations and values. The partnering concept is intended to accentuate the strength of each partner and will be unable to overcome fundamental company weaknesses; in fact, weaknesses may be
magnified.

Expected benefits include improved efficiency and cost effectiveness, increased opportunity for innovation, and the continuous improvement of quality products and services. It can be used by either large or small businesses, and it can be used for either large or small projects.

Relationships can develop among all participants in construction: owner-contractor, owner-supplier, contractor-supplier, contractor-contractor. (Contractor refers to either a design firm or a construction company.)