The Contractor‐Subcontractor Relationship: The Subcontractor's View

Abstract

In the construction of most projects, a significant role is played by specialty contractors, also commonly referred to as subcontractors. Despite the importance of subcontractors, little is publicized about the actual process by which subcontracts are initiated, how award arrangements are made, or how subcontracts are managed. An exploratory study was conducted that focused on this subject. Information was obtained on bidding practices, subcontracting arrangements, administrative practices, payment procedures, and project closeout. The results provide information on various methods used by general contractors to place subcontractors at risk. Bid shopping appears to be a continuing practice in the construction industry, with little recourse for subcontractors. Subcontractors are often contractually required to assume risks that they would not otherwise assume. They are often required to assume all the obligations as stipulated in the contract between the owner and the general contractor, but are not afforded the opportunity to examine it. Payment problems continue for subcontractors, with the practice essentially accepted by subcontractors as being a part of doing business. Suggestions are offered for improving the relationship between subcontractors and general contractors.