Subcontracting Practices in Construction Industry of Pakistan

Abstract

Subcontracting on construction projects is a common and well-established practice. Contractors enlist the services of subcontractors to achieve certain objectives, including obtaining cost reductions, securing access to specialized services, and risk sharing. Nonetheless, subcontracting on a project can introduce certain associated problems which can affect construction management and construction quality. This research explored the subcontracting practices in the construction industry of Pakistan, identified the main problem areas, examined the overall satisfaction with the quality of service provided by subcontractors, and focused on ways to improve the quality of construction affected by subcontracting. A questionnaire survey was conducted to investigate the extent and involvement of construction firms in subcontracting, reasons for subcontracting, and the selection criteria of subcontractors. The survey also sought information on forms and terms of subcontracts, associated problems with remedies, and the overall satisfaction with subcontracting. Additionally, interviews were conducted with researchers, professionals and experts of the industry. The results reveal a widespread use of subcontracting and sub-subcontracting in the construction industry, primarily done to save time and money. The results reveal that the selection of subcontractors is made from a list developed by each company on performance based on the experiences that they had with the subcontractors on previous projects. Results show that substandard quality of work of some subcontractors is the main problem area. Conversely, the use of direct labor was found to be an unprofitable proposition because of the high degree of uncertainty, fluctuations in construction workload and higher administrative overhead costs. Results show that 53% of the respondents are satisfied with their current subcontracting experiences, whereas 47% of the respondents want positive changes to be made in subcontracting arrangements. To rectify flaws in the existing subcontracting system, the following remedies were noted: 1) reduction in number of layers or tiers of subcontracting to effectively manage the communication gap between prime contractor and subcontractor; 2) to establish mandatory subcontractor registration, prequalification and performance evaluation; 3) adopt a standardized form of contract between contractors and subcontractors, and ; 4) develop the infrastructure for the technical training of subcontractors to improve construction quality. Further insights and discussions are given in the paper. The findings of this research will help subcontractors to improve their performance and assist all stakeholders in the successful execution of a quality project by making judicious employment of subcontracting.