A contractor awarded a construction project may hire another person or company who will report directly to him, to perform some aspects of the work listed in the construction specification. This is similar to outsourcing, where a business hires an external party (company or individual) to perform general tasks like typing. On many projects, particularly building projects, it is common for work to be performed by subcontractors. Common reasons for doing so are:
- It costs the contractor less money than if he were to perform the work in-house
- He requires specialist advice or expertise e.g environmental specialist
- His team is not able to perform the job as well as a specialized workman
- The contractor may need to focus on other crucial aspects of the project
- He may require additional resources e.g. if he is working on a multi-site construction project
- To avoid problems in construction – specialized workers tend to have more knowledge and training in their field and will most likely perform the work better.
A typical example of subcontracting is a contractor who builds a house and hires a painter to perform the painting aspect.
If the subcontractor finishes his part of the job as specified or better yet if he performs above expectation, the contractor can hand over the completed project within allotted time and budget. Efficient subcontractors can also build a reputation of being reliable which means increased possibility and opportunity to be hired for other projects.
Once the contractor and subcontractor form a good and reliable working relationship, and recognize the importance and contribution of each other and the importance of team work, this will no doubt be beneficial to them both. One benefit of sub-contracting is that it contributes to economic sustainability. Subcontracting spreads work among companies and persons. For example, revenue is generated into smaller companies if a larger company, probably dominating the market, sub-contracts one or a few smaller companies. This keeps a flow of money.
The influence a subcontractor has on the project may be crucial in terms of productivity. The contractor remains accountable for successful completion of the project even though he has assigned or contracted external parties to perform part. The legal agreement between the contractor and sub-contractor and between the contractor and project owner will govern their relationships, but usually the project owner is not involved in co-operation between the contractor and subcontractor.
Although problems may occur, say, for faulty work or late delivery, efficient subcontractors operation will benefit all parties to the project including the project owner. Subcontractors or subcontracting plays a vital role in the construction industry.
