SUBCONTRACTING PRACTICES– CONTRACTUAL RELATIONSHIP AND DISPUTE RESOLUTION

Abstract

Disputes are found to be very common in the construction industry. It has been reported that the amount spent in resolving disputes through litigation is US $5 billion annually in the United States. This study is focused on the causes of disputes in the construction industry with special emphasis on those between the contractor and subcontractor in the local and the international construction industry. For identifying the causes of disputes in literature a three step content analysis approach was used to analyze the data from the research papers retrieved from selected journals and conference papers. The top five causes of disputes identified through literature review include delays in payments, change orders, quality of works, delays in work and contractual anomalies. A survey conducted in the local market indicated that delays in payments, poor quality of works, delays in works, poor contractor selection and change orders are the critical cause of disputes in the local construction industry. A second survey was conducted globally to determine the causes of disputes between the general contractor and the subcontractor. A similar trend has been observed in Developed countries, Middle East and South Asia subcontractor’s relationship where delays in payments, delays in work and poor quality of works are the critical causes of disputes. Afterwards a third survey was carried out to determine the recommendations for the general conditions of subcontract in Pakistan. The questionnaire was developed on the basis of conditions of subcontract proposed by various international organizations. The conditions selected by most of the respondents were carried forward to the legal experts for which semi structured interviews were conducted. Based upon these interviews 36 suggestions were made. Through these suggestions 19/20 disputes can be addressed