Business Construction Subcontractors: Problems and Term Paper

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If rejected, the subcontractor can at least feel that the choice was a fair one - that her or his organization was not perfectly suited to the job at hand. If selected; however, a potentially long-lasting relationship is created, one that is based on mutual trust, shared goals, and a feeling of true partnership.

Methodology

Numerous potential problems exist in the main contractor/subcontractor relationship. These problems range from subcontractors' lack of understanding of the work (or main contractor's inability to explain it) through to subcontractors' lack of skills, size necessary to take on the project, financial difficulties, and lack of feeling that there exists any kind of joint effort or partnership between the main contractor and subcontractor. Any one of these difficulties might lead to delays, cost overruns, poor workmanship, or even outright failure within the context of the project. The foregoing study is designed to discover which concepts are of most importance in creating a good and workable main contractor/subcontractor relationship. A workable relationship would be defined precisely in terms of one that leads to the successful completion of the project in accordance with project goals as set out at the beginning of the project, and which do not include unnecessary additional costs, delays, or other inefficiencies or errors. Once the primary problems have been determined, the researcher will work with the study participants in order to come up with possible solutions. In particular, the study will focus on the efficacy of a partnering arrangement between main contractor and subcontractor as an active solution to the existing problems.

Study Participants

The study's participants will consist of a group of construction industry main contractors representing major concerns that undertake significant multi-million dollar government and private contracts, and a separate group representing a cross-section of construction industry subcontractors. These subcontractors will represent the range of different trades and application currently in use in large scale projects. Following the Likert Scale method of analysis employed in Lam, Chan, and Chan, participants will be asked to rate their level of agreement in regard to questions concerning the relative impact of different factors on the main contractor/subcontractor relationship. (Lam, Chan & Chan, 2006)

Survey Instrument questionnaire was developed that attempted to measure participants' reactions to a variety of criteria believed to have the potential to adversely affect relationships between main contractors and subcontractors, which criteria would also potentially adversely affect the final outcomes of projects.

The questions included participants' reactions to such concepts as (1) subcontractor's prior work experience (2) subcontractor's ability to carry out a project of specified size and scope (3) subcontractor's skills as they related to proposed work (4) subcontractor's financial situation i.e. line of credit ability, credit worthiness, etc. (5) Ease of communication, flow of information, openness to suggestions, etc. between main contractor and subcontractor; and other related ideas. The questionnaire also endeavored to reflect concepts in regard to overall feasibility of the relationship as reflected in such statements as that by David a Drabkin, former Deputy Associate Administrator of the Office of Acquisition Policy of the Office of Government Policy of the General Services Administration to the Subcommittee on Government Management Information and Technology Committee on Government Reform on July 13, 2000. Drabkin discussed the importance of allowing main contractors the freedom to select subcontractors largely free of government interference. Drabkin's comments possess wider implications even for non-government work, as they cut to the heart of the relationship between main contractors and subcontractors, touching as they do on issues of mutual understanding, knowledge of skills and aptitudes, adaptability, and so forth. Drabkin's concern to keep undue regulation and oversight out of the main contactor / subcontractor relationship further underscores the overall complexities of the current environment as illustrated in Figure 1. An important part of the evaluation consisted, too, in discovering the extent to which subcontractors understood their full role in this comprehensive picture.

Figure 1. Overall Feedback Loop between Contractors and Outside Entities

Purpose of the Study

The purpose of this study is to better understand the factors that make for a good main contractor/subcontractor relationship. In particular, the researcher will attempt to address whether the system of partnering will help alleviate the specific complaints identified, and improve levels of cooperation thereby leading to increased cost-effectiveness, higher quality of work, and improved end-results. The results of the study will be used to make recommendations in regard to how to best improve the partnering relationship in order to achieve these goals.

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Format of Study Results

Results will be presented in the form of a discussion of the information obtained from the questionnaires, and its analysis by the researcher. Results will be analyzed in connection with the existing literature as it relates to the responses given by the study participants. Additional information may be gathered, as well, in formal and informal interviews with various participants in so far as this information contributes to the furtherance of the aims of the study. A summary of the findings and recommendations will be presented in a concluding chapter.

RESEARCH FINDINGS and DISCUSSION

Issues and Subproblems

As a result of participants' response to the survey questionnaires, supplemented also with formal and informal interviews of participants, the researcher was able to identify certain major issues considered to be impeding main contractor/subcontractor relations. Issues were not necessarily the same within each group; each group appearing to have its own perspective, though in outline, the issues were similar and tend to reflect two sides of the same argument.

Issues and Subproblems from the Main Contractor's Perspective

From the main contractor's point-of-view, the main issue appeared as the overall reliability of the subcontractor with several subproblems being identified under this heading. In the view of the main contractor, an unreliable subcontractor was one who cost the main contractor money either through shoddy workmanship, inattention to plans and specifications, or through cost overruns. The area of cost overruns further broke down into cost overruns that arose through unnecessary delays such as those that occurred through subcontractors not showing up, not showing up fully staffed, not possessing the proper equipment or materials, etc. Frame identifies cost overruns as a particular problem given that the main contractor would be liable for the additional costs incurred by the subcontractor in these cases. (Frame, 2003, p. 141-142)

Issues and Subproblems from the Subcontractor's Perspective

These issues and their associated subproblems are largely countered by the subcontractor's perspective. Subcontractors identified as a primary problem the issue of late payment, or non-payment of funds on the part of the main contractor. This main problem broke down into several subproblems namely, moneys that arrived late or not at all through no apparent fault on the part of the subcontractor, late payments that were blamed on the ultimate employer by the main contractor, funds that were supposed to be delivered incrementally but arrived lumped together or at a different stage than expected; equipment that was not forthcoming, and various other expenses that were supposed to have been covered by the main contractor, but were not, or were only reimbursed later. These expenses included equipment rental, funds (at times0 for additional personnel or transportation, etc. Insufficient or late payment, especially in large government projects, as identified by Anson, Chiang, and Raftery in their look at the situation in East Asia, is clearly a problem all over the world, and causes undue hardship for many subcontractors. (Chiang, Anson & Raftery, 2003, p. 344)

Discussion

The findings indicate that while the issues and subproblems described by the two groups - main contractors and subcontractors - are not identical, they are similar enough as to reflect two views of essentially the same issues and subproblems. The main contractor's primary concern is cost. This concern with cost has its direct counterpart in the subcontractor's concern with insufficient or late payments. The main contractor views any deviation from expected norms on the part of the subcontractor as contributing to potential cost overruns. These deviations form the norm might include purposeful, accidental, or unintended delays or work time overruns on the part of subcontractors. These might be the subcontractors' fault, the main contractor's fault, or the fault of neither i.e. The fault of a supplier, transportation provider, government regulatory body, etc., but have the potential to cause the subcontractor's work to be late, incorrect, etc., and thus the unintended result of causing the main contractor to withhold funds, or to use the occasion as an excuse to withhold funds. Such situations can create a considerable amount of resentment between subcontractors and main contractors. Further, subcontractors frequently reply to main contractors' charges of late work or shoddy work with the response that they were not either properly informed in the first place, or were not kept properly apprised of conditions as the project progressed. Conversely, the main contractor will charge that the subcontractor did not ask enough questions, or provided improper or insufficient information.....

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