By Vasanth Kumar
As Qatar seems set finally to award raft of contract awards with highly compressed time limits, one of the key challenges will be “teamwork” amongst various stakeholders involved in the construction industry.
These mega project awards will modernise the country in line with the ambitious National Vision 2030 and the FIFA world cup in 2022 but Doha can’t afford any project delays which will be a fertile breeding ground for disputes ,penalties and lawsuits between the various parties involved in construction.
As the work is expected to be shared between the international main contractors and various domestic general contractors and sub- contractors, who may be working together for the first time in most of the cases , this article focuses on the urgent need for a healthy contractor – subcontractor relationship.
In any construction projects, it is estimated that over two-thirds of works is performed by specialist trade sub-contractors, who are considered to be a very important link in a project supply chain.
They are crucial pieces of the project puzzle and their performance is largely dependent on how they are supported , treated and paid by main contractors. Any unreasonable and inequitable risk shifting by main contractor on the subcontractor will work unfavourably and will be a detriment to overall project performance.
There are good number of reputable main contractors who understand this , but there have been several unfortunate cases where the subcontractor is treated as a dispensable toy by showing disrespect, arbitrarily deciding and imposing delay damages, unilaterally recovering contra-charges, delaying progress payments, withholding retention monies and invoking bank guarantees.
A main contractor should be to treat the subcontractor in the same way it expects to be treated by clients.
One area of increasing interest and dispute involves project delays. Blame game is endemic in construction industry. While the subcontractor is often held liable for delays the main contractor has no liability to the subcontractor for delays.
There are many cases where subcontractor’s contractual right for financial compensation for legitimate extension of time claims is nullified by threat of liquidated damages.
Another area of concern is failure to adhere to contractual payment schedules . Even though there is no direct contractual link between the developer and subcontractor and a responsible main contractor should not apply “pay-when-paid” (or even worse: “pay-if-paid”) clauses on a subcontractor who will incur the cost of carrying the debt, thereby eroding the thin profit margin.
Any good subcontractor will align only with good main contractors that treat them fairly and pay them on time and also reward their good behaviour by offering better prices and timely support during bidding stages.
If a subcontractor invests time and resources to competitively price a tender to main contractor, in case of award the main contractor should give preferential treatment and also to provide a level playing field to compete rather than asking them to match the unrealistic offers received from new entrants.
So, partnering with reputed subcontractors by building good relationship helps main contractors to win more profitable work and deliver high standards of project safety, quality and service.
Perhaps “Trust & Teamwork” is the first step towards accomplishing a more healthy business atmosphere, which will hopefully produce much greater economic rewards for all stakeholders associated in the construction industry and will eventually help to successfully accomplish the mission of transforming the landscape of Qatar.
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