Subcontracting has greatly increased in the construction industry. It helps shift risk from the main contractor to the subcontractor and promotes specialization. Inadequate subcontracting management, however, may result in an adversarial relationship between main contractors and their subcontractors, uncoordinated on-site execution, and disappointing quality and schedule fulfillment. New subcontractor management methods and tools are being developed and tested as part of a collaborative research project led by the Catholic University Production Management Center with the participation of the Chilean Construction Chamber and several construction companies. The experience gained by testing prototype tools and methods on selected projects enabled us to develop an on-site evaluation method based on lean principles and partnering practices. This method allows main contractors to help subcontractors improve their performance by providing them with periodic feedback. It also supports subcontractor selection based on their previous performance, which helps foster collaborative relationships with those that consistently perform well. The results of the application of the method in two case studies are discussed. The Subcontractor is free to use any work method, subject to the following:
The Subcontractor is solely responsible for all work methods, whether specified in the Subcontract or not.
The Subcontractor warrants that it has undertaken all necessary investigation and inquiry to satisfy itself that all work methods specified in the Subcontract or which the Subcontractor otherwise proposes to use are appropriate for the purposes of the Subcontract.
If a particular work method is specified in the Subcontract, the Subcontractor must use it.
If a particular work method is specified in the Subcontract but it is not possible to use that method, the Subcontractor must use another method without entitlement to extra cost or an extension of time.
If a particular work method for which the Subcontractor is responsible is impractical and the Subcontractor, with or without the instruction of the Contractor, uses another work method by necessity to complete the Subcontract Works, the Subcontractor is not entitled to an extension of time or extra cost.
The Contractor may instruct the Subcontractor at any time to use a particular work method.
Subject to clauses 10.5.4 and 10.5.5, if the Contractor's instruction directly causes the Subcontractor to incur necessarily and unavoidably any extra costs when compared with the costs the Subcontractor would have incurred had the Contractor not given the instruction, the Subcontractor is entitled to those extra costs (if it demonstrates to the reasonable satisfaction of the Contractor that it has incurred such extra costs) and may be entitled to an extension of time under clause 54 (if applicable).
There are a handful of existing articles that incorporate subcontracting into detailed scheduling decisions. Bertrand and Sridharan (2001) considered a make-to-order manufacturing environment where orders arrive over time randomly, and can be either processed in-house on a single machine or subcontracted. The objective is to maximize the utilization of in-house capacity while minimizing tardiness in fulfilling orders. Simple heuristic rules are proposed and computational results are reported. Lee et al. (2002) proposed a multi-stage scheduling model where each order requires multiple ...