In mid-big sized projects, it is a crucial to understand how to subcontract part of the works especially in an international construction project. The various issues involved in subcontracting part of the works can determine the success or the failure of a project and/or can massively increase the financial risks and/or losses for either the Employer or the Contractor.
The reasons why a Contractor subcontracts part of the works can be various such as that the project is a large one or that a specific part of the scope of works requires specific skills and expertise that the Contractor does not have.
There are also cases where it is the Employer which requires that part of the scope of works be carried out by Subcontractors with specific and 'proved' experience.
Generally the contract between Employer and Contractor provides if and to what extent the Contractor is entitled to subcontract part of the works and this will mainly depend on the type of contract.
In this respect there are various scenarios and the main contract between the Employer and the Contractor might provide that:
- the Contractor can freely subcontract part of the works; or
- the Contractor can subcontract only specific part of the scope of works (for instance the electrical or mechanical part of the works); or
- the Contractor cannot subcontract certain specific part of the works (for instance those in respect of which the Employer has provided detailed design).
In all the cases one of the main points to be considered is the liability of contractor for subcontractor works in respect of tha part of the scope of works that has been subcontracted.
The main risks for the Contractor arise in all those circumstances in which the Employer has had a role in the subcontractor selection process.
The Contracator can in fact either subcontract:
- with the prior consent of the Employer; or
- to companies included in a list agreed in advance with the Employer; or
- to companies selected directly by the Employer.
While the Employer will seek to excmailto:email@example.com any liability that may arise as a consequence of the subcontractor selection process the Contractor might face liabilities for subcontractor underperformance especially if the latter has been 'imposed' (directly or indireclty) by the Employer.
Below you can dowload the full Guide on How to Subcontract in International Projects.Download here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.