for Subcontracting the Work in a Project
ADVISORY ARTICLE
By Anil Seth
Gurugram, India
There is an objective reality out there, but we view it through the spectacles of our beliefs, attitudes, and values. This is one reason our beliefs are so important; they shape our interpretation of everything else.
~David G. Myers, Social Psychology, 2005
Once companies are awarded the Project (or are in the process of preparing a proposal for it), they will contract with suppliers and contractors for the construction of certain work or services. This is in general the practice in almost all E-P-C-type companies. The challenge is to determine how to evaluate the interest of such partners in participating in the project and how to evaluate their capabilities.
Some companies issue questionnaires to establish general information on the partner’s overall capabilities. They seldom do further screening as per specific scopes and schedule requirements as determined later.
These selections predominantly follow companies’ procedures, however, the criteria become difficult when the following clauses start governing the contract:
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- Contractor to take up detailed engineering and procurement activities without any delay.
- The scope of the contractor shall be reviewed & finalized by PMC.
- The consultant will also scrutinize any project scope changes and will vet the contractor’s change order proposals in line with the Conditions of the Contract.
- Assist the owner in all disputes arising during the execution of the various contracts for amicable settlement.
- Feedback, if any, on the performance of Contractors/ Vendors involved in the project.
And the subcontracting decision is more difficult if the following are the governing clauses:
1 CONTRACTOR GROUP has the experience, capabilities, competent personnel, financial security, and other means and facilities available to efficiently and in a timely manner perform SCOPE.
2 In the event that COMPANY notifies CONTRACTOR of any DEFECTS in any part of SCOPE during the DEFECTS CORRECTION PERIOD and requests correction, CONTRACTOR will promptly and diligently, within the period set by COMPANY and in a manner so as to minimize any downtime or delay to OTHER CONTRACTORS’ work or COMPANY’s operations, correct and remedy such DEFECTS by performing the following:
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- At COMPANY’s discretion re-design, re-engineer, make good, re-do, replace, or amend any item of SCOPE, including any related reopening, removal, uncovering, and restoration; and
- Deliver any item of SCOPE not already provided.
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3 CONTRACTOR will be responsible for the cost of all investigations and all work required to rectify any DEFECT, except for the cost of correcting any DEFECT during the DEFECTS CORRECTION PERIOD, to the extent that CONTRACTOR can demonstrate is solely due to incorrect RELY UPON INFORMATION, where CONTRACTOR fulfilled all its obligations in connection with such RELY UPON INFORMATION unless COMPANY has issued a VARIATION ORDER or instruction to CONTRACTOR to correct the relevant RELY UPON INFORMATION.
4 COMPANY may suspend the CONTRACT or part of SCOPE for cause by written notice with immediate effect pending COMPANY’s decision on termination where COMPANY concludes it has grounds to terminate the CONTRACT for the cause. When suspended for cause, CONTRACTOR will not be entitled to any VARIATION nor be entitled to other compensation or relief for the suspension. COMPANY may recover from CONTRACTOR any costs incurred in connection with securing items related to SCOPE or obtaining alternate sources of supply upon suspension.
The task is not as difficult as it seems, the whole world of the project revolves around three phases:
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How to cite this article: Seth, A. (2024). Pre-Qualification and Resource Selection for Subcontracting the Work in a Project, PM World Journal, Vol. XIII, Issue II, February. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/02/pmwj138-Feb2024-Seth-Pre-Qualification-and-Resource-Selection-for-Subcontracting.pdf
About the Author
Anil Seth
Gurugram, India
Mr. Anil Seth is working as Project Manager in Fluor’s India office at Gurugram. Fluor Daniel India Private Limited (Fluor India) provides a full range of engineering, design, procurement, and construction management services to Indian and overseas Clients. Fluor India is an established quality provider of engineering, procurement, construction management (EPC) and project management services for Fluor’s energy and chemicals, power, mining, and industrial projects, and is a key support office for Fluor facilities located in North America, Africa, the Middle East, Europe, and Asia Pacific
Earlier to Fluor, was in Larsen & Toubro Ltd. at Faridabad, India and managing the Project Engineering Manager Portfolio for hydrocarbon projects. Before joining Larsen & Toubro Engineering and construction division he has worked for polymer division in the Indian Petrochemicals Corporation Limited (now part of Reliance Industries)
He holds B.E. degree with Honors in CHEMICAL Engineering from Panjab University Chandigarh India and has also done Diploma in Environmental Management. He is certified for Harvard Manage Mentor and specializes in Building High Performance cross functional Task Force as well as Converting Breakeven Projects to Profitable scenario. He can be reached at anilshivani99@gmail.com or anil.seth@fluor.com
To see other works by Anil Seth, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/mr-anil-seth/
About the Company
Fluor Corporation (NYSE: FLR) is a global engineering and construction firm that designs and builds some of the world’s most complex projects. The company creates and delivers innovative solutions for its clients in engineering, procurement, fabrication, construction, maintenance, and project management on a global basis. For more than a century, Fluor has served Clients in the energy, chemicals, government, industrial, infrastructure, mining, and power market sectors. Headquartered in Irving, Texas, Fluor ranks 110 on the FORTUNE 500 list. With more than 40,000 employees worldwide, the company’s revenue for 2013 was $27.4 billion. For more information, visit www.Fluor.com
