Wong, W F and Cheah, C Y J (2004) Issues of contractual chain and sub-contracting in the construction industry. In: Khosrowshahi, F (ed.) Proceedings of 20th Annual ARCOM Conference, 1-3 September 2004, Edinburgh, UK.
Abstract
Issues and implementation difficulties relating to sub-contracting such as payment matter are not uncommon in the construction industry. Recently, this situation is made worse by the decline in the growth of Singapore domestic construction sector. Theoretically, many problems of sub-contracting can be traced back to the main source rooted in the concept of contractual chain of liability which largely dictates the legal basis of contractual relations among parties. Characteristically, the chain of liability binds the three main project parties by two separate links: one exists between project owner & main contractor and the other between main contractor & sub-contractor. Notably, the absence of a direct link between owner & sub-contractor in this chain gives rise to much of the implementation difficulties. This paper presents a review of the legal basis of this contractual arrangement, examines the current state of development in the local building and construction industry, and summarized the industrial efforts and attempts made in the bid of resolving these problems and alleviating the potential adverse impact. Drawing cases from building construction industry, this paper reviews and addresses the common problems faced by project parties, the contractual issues in sub-contracting, and the acute payment issues relating sub-contractor. The study reveals that certain measures on payment such as having an appointed authority for independent adjudication can be considered for implementation so as to enhance the cash flow and financial security of sub-contractors and help to establish a more stable sub-contracting system.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | arbitration; adjudication; chain of liability; payment; sub-contracting |
| Index terms: | project party, domestic construction, sub-contracting, drawing, owner, building construction, liability, adjudication, main contractor, Singapore, cash flow, arbitration, contractual relations, implementation, construction industry, sub-contractor |
| Subjects: | financial management, contract law, Geography, building construction, sociology, industry analysis, liability law, construction type, organization, dispute resolution, practitioner, technical documentation, contractual arrangements |
| Topics: | Design Practice, Legal Issues, Supply Chain Management, Roles and Professions, Stakeholder Management, Construction Technology, Procurement, Cost Management, Geographical Context, Research Practice |
| Descriptive scope: | 3 PCT |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here