Subbies – Better the devil you know?
We have an on-site dilemma in sub-contractor management and wondering if anyone has similar experiences or tips in the management of under-performing subcontractors.
A civils works contractor was awarded the subcontract for the installation of the stormwater pits and drains across a new inner-city road scheme as a $3.5mil AUD lump-sum contract. The tender process was completed prior to my arrival on-site but I’ve been told they were awarded the contract as the cheapest tender as well as on the approved subcontractor list as an ex-employee of one of the parent companies on the JV.
Currently, 10% of the work is complete, 3 months behind on a 12-month programme. A litany of issues including formwork blow-outs and poor workmanship leading to non-conformance reports and re-works are already 3 times the value of the whole contract retention. When I posed the question if the JV should cut its losses early and find a new subbie, the response, from middle management, was to propose a site engineer manage this subbie full-time. The engineering team is already undermanned, with an extra engineer to look after this subbie at least 3 months away.
It is often easier to progress with the status-quo because it is more straightforward to deal with the problems in front of you than try and challenge the underlying issues. Everyone on site is already busy, and taking the time to re-tender would eat into project overheads, therefore the commercial management direction is to treat the known risk with supervision instead of terminating and engaging a less risky contractor. From an outside perspective, this feels very short-sighted but shows the monthly cash flow commercial drivers of the project outweigh the quality and customer satisfaction considerations at this stage of the project.
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I had similar issues on my site placement and got pretty much the same response in that the subcontractors in question were used across a number of sites and to scrap the contract was non-starter.
However, this also implies that the subbie has more people elsewhere and that the performance of the management team on your site may not be representative of the whole company. In two cases I had subcontractors replace their site management teams and saw improved results. This needed delicate engagement through the senior project managers and directors with continuous monitoring and recording of performance but was worth it in the end.
Morning Alex, firstly, I assume the subby Construction Director (the ex employee?) has been called in and read the riot act? It also occurs to me that with a significant amount of delayed and defective work this must be affecting the subbies cashflow payments from the JV, so subby insolvency maybe on the horizon. Also consider the option of getting rid of the Subby and then the JV directly employing the operatives on a labour only basis for the duration of the work all under your direct control. In my experience self employed operatives don’t care who they work for as long as they get paid!
I echo your comments about higher management seemingly being unwilling / reluctant to action changes when fundamental assumptions are proven false.
On my project we seem to be ploughing on with the status quo of strengthening and widening an existing bridge as opposed to building a new structure despite the widespread recognition that the cost of persevering with this approach will continue to delay delivery (its already 12 month behind schedule) and accumulate cost (the estimated temp works cost now exceeds the original estimated overall cost). This is all because the initial tender was submitted on the assumption that a company owned bespoke temp works solution could be used (Google FCC ‘winged traveller’ if your interested), yet detailed design showed that the existing structure is not strong enough to support it. The design team are now in a constant re-design to try and make the scheme work with more traditional temp works solutions.
To my mind as soon as any fundamental assumption in a plan is proven beyond doubt to incorrect an in depth review of the overall plan should be conducted? this is basics of not just military planning but all planning right? there seems to be no though given to cutting losses and trying an entirely new approach.
For what it’s worth
Year ago we had a job go ‘west’
The issues sound similar
The decision to b made was to
a) sack the contractor
b) sack the Site Agent
c) Sack the entire site staff ( bar the agent) and ask for replacements
The contractor persuaded us to do c) and it just got worse leading to a massive claim for residents for damage cause by subsidence….
The background problem was underpricing
So understanding this the only route was a) ( with all the problems that that would cause)
Trying to understand the root of the contractor problems hand then deciding?
Thanks for the advice, I completely agree the route cause is underpricing, along with a shortage of alternatives in a very busy construction market. After a few painful weeks, allocating the works with an extra foreman and engineer for constant supervision and being held to account for all the poor workmanship, the quality is generally increasing, but far from ideal. Unfortunately, this upturn is being seen as a good sign, therefore no consideration for replacement and even talk of giving them a variation to increase their scope on day-works. I believe this is driven by the market which could see another 3-6months before a better sub-contractor could be available to come on-site.