DEVELOPING GUIDELINES FOR MANAGING SUBCONTRACTORS WITHIN THE CONSTRAINTS OF COST AND TIME

ABSTRACT
Subcontractors have been found to execute significant portion of construction works, hence their contribution to the overall project cannot be under-estimated. A construction subcontractor is that organisation that enters into a contract with a client or a general contractor to execute some portions of work for the main contractor. The main contractor and the consultant‘s ability to achieve a project within the stipulated time and within cost, is contingent largely on the subcontractor‘s performance. In most construction projects, the onus lies on the main contractors to manage the project with respect to tasks including procurement of material and equipment, contract administration, project financing and progress monitoring. While subcontractor management has the opportunity to produce quality results, it also has the potential to disrupt a project if performed incorrectly. To overcome the challenges faced by Main Contractors in managing subcontractors, this research aimed to develop guidelines for use by main contractor in managing sub-contracts to help improve the performance of projects in terms of time and cost. In order to achieve the aim stated above, the study adopted a quantitative approach with the aid of structured survey questionnaire as the key tool for data collection, with a response rate of 67%. The data collected was processed using the statistical package for social science (SPSS) and later conveyed into the Microsoft Excel 2010 for analysis using descriptive statistical tools and measures namely tables; mean and standard deviation and Relative Importance Index (RII). The findings revealed that subcontracting is a common occurrence in building projects in Ghana and that significant portions (as much as 40 percent) of projects/works are outsourced to subcontractors. Again, the study identified topmost challenges of subcontract management as Non-Adherence to schedule, Site coordination challenges, Lack of proper communication, Lack of safety and Contractor's financial challenges. Furthermore, the showed that the factors affecting the cost and time performance of subcontractors include: Extent of subcontractor‘s commitment to schedule, Practical and technical ability of Main Contractors, Project Manager‘s recognition of the other construction activities related to subcontractors tasks, Efficiency of project staff, Clear understanding of the contract conditions, requirements and project objectives and Many project execution obstacles. Finally, study established that the cost and time related factors most affected by subcontractor management are: Waste rate of materials, Planned time for project construction, Time needed to implement variation orders and Time required in rectifying defects. The study therefore recommended that Project managers must not adopt ‗brick and mortar‘ approach to subcontractor management; the management approach adopted must be tailored to suit the job at hand. Main contractors should also pay attention to helping build the technical capacity of subcontractors in relation to project planning, scope management and project cost and time management.


CHAPTER ONE 
GENERAL INTRODUCTION 
1.1 BACKGROUND
Construction as an industry has played and continues to play extremely dominant and salient part in the economy of every nation. The pursuits of the industry are also vibrant towards the attainment of the socio-economic growth such as the provision of shelter, infrastructure and employment (Anaman and Amponsah, 2007). Thousands of different construction projects are realize every year. Projects take various forms and magnitudes, and range from relatively minor and simple to very huge and multifarious ones.

Most construction projects involve Consultants, Main Contractors (MC) and Subcontractors(SC) ranging from Specialist sub-contractor, Trade sub-contractor and Labour-only sub-contractor. Several studies have confirmed that the involvement of subcontractors in executing a significant portion of construction work, cannot be under-estimated (Abbasianjahromi et al., 2013; Hartmann, 2009; Arditi and Chotibhongs, 2005; Ng et al., 2008a and 2008b; and Wang and Liu, 2005). On many building construction projects, it is common for subcontractors to perform significant portions of the works (Hinze and Tracey 1994). Many general contractors sublet some or all of their work attributable to their lack of capacity to execute specialized jobs in a project, such as electric, plumbing and insulation. As stated by Arditi and Chotibhongs(2005), ―day-to-day economic facts have long-established the efficiency of subcontracting practice in the economical usage of available resources‖.

Many large engineering projects are faced with late completion dates, budget overruns and technical difficulties (Koppenjan et al., 2011). Among the reasons given for such project failures include, increasing complexity of projects and the underestimation of this project complexity (Chang and Ive, 2007; Williams, 2005). Many clients have enjoyed good experiences with contractors, but conversely, many have been subject to extended project durations and cost overruns. Interestingly, research has shown that ninety percent (90%) of construction projects have miscalculated project costs, and sixty percent (60%) of projects culminate in time delays (Flyvbjerg et al., 2010). According to Flyvbjerg (2005), the Sydney Opera House, for example, was completed ten years late and cost 15 times more than it was originally projected. In most construction projects, the onus lies on the main contractors to manage the project with respect to tasks including procurement of material and equipment, contract administration, project financing and progress monitoring (Benjaoran, 2009).

Kumaraswamy and Matthews (2000) describe Subcontractors as those who have specialize in the undertaking of a specific work, who may also play the role of representatives of the production system of the contractor organisation in providing services in the areas of materials supply, human resource, equipment hiring, tools and designs . A construction subcontractor is that organisation that enters into a contract with the prime contractor to execute portions of work for the main contractor. In many instances, subcontractors who are hired to carry out specific tasks in construction projects, play a vital role. Usually, the general contractor undertakes the core tasks and engages various specialty subcontractors to execute what is left. Benjaoran (2009) has observed that subcontracting is prevalent in housing and building construction projects than is the case of industrial and engineering projects. This can be attributed to the increasingly complex and specialized nature of buildings and the need for the provision of special services. Contemporary buildings embrace an extensive diversity of facilities installations. Gargets such as those for heating, ventilation and air-conditioning, electricity supply, elevators, fire detection and guards, water supply and drainage, and the like have become orthodox types of facilities installations in buildings. Furthermore, the use intelligence systems such as those for optimizing performance, sensing and making diagnosis for faults and adapt to changes in working situations. The use of subcontracting therefore helps to maximize the advantage of specialization.

According to Albino and Garavelli (1998), the performance of the main contractor is strongly linked to that of the subcontractors. This concurs with the observation of Mbachu (2008) who asserted that the main contractor and the consultant‘s ability to achieve a project within the stipulated time, at the quality prescribed and within cost, is contingent, to a large extent, on the subcontractor‘s performance.

Although it is certainly a benefit for a company to spread work among experts, many problems do tend to arise when combining the efforts of varying subcontractors. As project sizes amplify, the number of hired subcontractors usually increases as well, leading to problems in subcontractor management (Thomas and Flynn, 2011).

Most of the past studies on subcontractors have focused on selection of subcontractor (Fagbende et al., 2011), evaluating/monitoring subcontractor‘ performance (Chamara et al., 2015; Yik, 2006; Al-Otaibi and Price, 2010) and Contractor-Subcontractor Relationship (Okunlola, 2015; Obafemi and Roy, 2013). However, developing a subcontractor selection model, monitoring subcontractor‘s performance or enhanced main contractor-subcontractor relationship would not necessary translate into a successful subcontract works.

This study therefore seeks to develop guidelines for use by main contractor in managing sub-contracts to help improve the time and cost performance of projects.

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Item Type: Ghanaian Project Material  |  Attribute: 141 pages  |  Chapters: 1-5
Format: MS Word  |  Price: GH50  |  Delivery: Within 30Mins.
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