Subcontractor
Encyclopedia
A subcontractor is an individual or in many cases a business
that signs a contract
to perform part or all of the obligations of another's contract.
A subcontractor is hired by a general contractor (or prime contractor, or main contractor)
to perform a specific task as part of the overall project and is normally paid for services provided to the project by the originating general contractor. While the most common concept of a subcontractor is in building
works and civil engineer
ing, the range of opportunities for subcontractor is much wider and it is possible that the greatest number now operate in the information technology
and information sectors of business.
The incentive to hire subcontractors is either to reduce cost
s or to mitigate project
risks. In this way the general contractor receives the same or better service than the general contractor could have provided by itself, at lower overall risk. Many subcontractors do work for the same companies rather than different ones. This allows subcontractors to further specialize their skills.
In the United Kingdom
economy
, the need to respond to a rapidly changing environment and service a diverse infrastructure has encouraged flexibility and diversity in its subcontractor community with the majority of subcontractors now providing specialised skills to a wide range of companies.
building industry contract law, particularly when using JCT standard form contracts
, three subcontractor types are identified:
Domestic subcontractor : A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.
Nominated subcontractor : Certain contracts permit the architect or supervising officer to reserve the right of the final selection and approval of subcontractors. The main contractor is permitted to make a profit from the use of nominated subcontractors on site, but must provide attendance (usually provision of water, power, etc. to enable the nominated subcontractor to do his job). In effect the appointment of nominated subcontractors establishes a direct contractual relationship between the client and the subcontractor.
Named subcontractors : Effectively the same as a domestic subcontractor - A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
that signs a contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
to perform part or all of the obligations of another's contract.
A subcontractor is hired by a general contractor (or prime contractor, or main contractor)
General contractor
A general contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and communication of information to involved parties throughout the course of a building project.-Description:...
to perform a specific task as part of the overall project and is normally paid for services provided to the project by the originating general contractor. While the most common concept of a subcontractor is in building
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
works and civil engineer
Civil engineer
A civil engineer is a person who practices civil engineering; the application of planning, designing, constructing, maintaining, and operating infrastructures while protecting the public and environmental health, as well as improving existing infrastructures that have been neglected.Originally, a...
ing, the range of opportunities for subcontractor is much wider and it is possible that the greatest number now operate in the information technology
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
and information sectors of business.
The incentive to hire subcontractors is either to reduce cost
Cost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...
s or to mitigate project
Project
A project in business and science is typically defined as a collaborative enterprise, frequently involving research or design, that is carefully planned to achieve a particular aim. Projects can be further defined as temporary rather than permanent social systems that are constituted by teams...
risks. In this way the general contractor receives the same or better service than the general contractor could have provided by itself, at lower overall risk. Many subcontractors do work for the same companies rather than different ones. This allows subcontractors to further specialize their skills.
In the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
economy
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, the need to respond to a rapidly changing environment and service a diverse infrastructure has encouraged flexibility and diversity in its subcontractor community with the majority of subcontractors now providing specialised skills to a wide range of companies.
Types of subcontractor
In United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
building industry contract law, particularly when using JCT standard form contracts
Joint Contracts Tribunal
The Joint Contracts Tribunal, also known as the JCT, produces standard forms of contract for construction, guidance notes and other standard documentation for use in the construction industry. From its establishment in 1931, JCT has expanded the number of contributing organisations...
, three subcontractor types are identified:
Domestic subcontractor : A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.
Nominated subcontractor : Certain contracts permit the architect or supervising officer to reserve the right of the final selection and approval of subcontractors. The main contractor is permitted to make a profit from the use of nominated subcontractors on site, but must provide attendance (usually provision of water, power, etc. to enable the nominated subcontractor to do his job). In effect the appointment of nominated subcontractors establishes a direct contractual relationship between the client and the subcontractor.
Named subcontractors : Effectively the same as a domestic subcontractor - A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.