lecture 12 Flashcards
Since the only ________ is with the GC,Performance is expected only from the latter.
construction contract
GC is an independent contractor hired by the ____ He must communicate any subcontractor concerns to the Owner as if they were the GC’s.
Owner
Third tier subs generally do not have the right to file __________when working as a sub to a subcontractor
Mechanic’s lien
Sub-subcontractors, suppliers, and/or manufacturers are independently hired by the subcontractors. They have no direct contractual obligation or relationship with the ____.
GC
is an agent of the GC that does not have a direct contractual relationship with the Owner.
A subcontractor (second tier)
_________ might be an agent of the subcontractor (supplier or manufacturer)
A third tier subcontractor
Subcontractors are essential to the construction process, as ______ of the works are usually subcontracted.
20-80%
- Partial source of project financing for the GC.
- Might be indirectly linked to the owner through liens.
- Used primarily for their skill, and to offset some of the risk from the GC. (Though the GC is still liable for their work).
subcontractors
________ helps improve efficiency, quality, and productivity.
Specialization
The owner might limit the amount ($ value) or percentage of works to be subcontracted
(GC is not a CM).
is charged for risk reallocation.
Markup
Contract with GC might use ______ from the prime contract.
flow-down language
Owner might determine a percentage of works for “set-asides” [Usually
SBE, MBE, and WBE]
What Work is Subcontracted?
- GC will subcontract portions of work for which no in-house capabilities exist.
- GC may subcontract works with in-house capabilities if beyond in-house capacity. (Large volume)
- GC might subcontract work in foreign or unfamiliar markets.
- Equipment warranty validity may be tied to installation by vendor.
- Proprietary types of work or works with high levels of specialization have to be subcontracted.
GC’s responsibilities to Subs.
- Award subcontract to lowest responsible bidder, or following pre-set, pre-announced criteria for selection.
- Provide competent and responsible coordination and supervision.
- Pay approved statements under subcontract in a timely manner.
- Serve as advocate of the subcontractor in disputes with other contract parties (Owner, A/E, and other subs).
- Establish mechanism for information exchange between different parties.
Sub’s responsibility to GC
- Perform in a timely manner.
- Follow GC’s instructions within contract.Offer best competitive price.
- Fulfill oral agreements (Promissory Estoppel)
- May be required to present a performance bond to GC.
- Indemnify GC against sub’s own faults. (Limited form)
- Resolve disputes in a timely manner.
also known as bid chiseling, is usually regarded as unethical, and it squeezes the subcontractor’s price to get a better deal.
Pre-bid bid shopping
is illegal, and occurs when the GC intentionally divulges the bid of a sub to another sub to get a better deal.
Bid rigging
occurs when a group of specialty subs conspire to fix prices to distribute work among a limited pool.
Bid fixing or collusion
GC has the right of postbidbid shopping, whereas sub is bound by_______.
promissory estoppel
secure the same information for all GCs.
Bid repositories
__________ have exactly the same significance as they do for prime contracts and purchase orders.
The payment and retention provisions
________ issue arises in the same way as for purchase orders and is generally treated by the courts similarly.
The “no pay until paid”
The clause will hold up except in cases where the owner never pays the prime contractor. Then, the prime will normally have to pay the subcontractor even though payment has not been received from the owner.
The “no paid till paid”