Page 102 - Civil Engineering Project Management, Fourth Edition

The contractor’s site organization
leave a sub-contractor to solve any problems he encounters, on the basis that
these are his risks under his sub-contract and it is up to him to deal with them.
But the sub-contractor may think otherwise, so a dispute arises as each consid-
ers the other responsible for any extra cost or delays caused. 87
Frequent disputes have also arisen in recent years when any default or pre-
sumed default by a sub-contractor has resulted in the contractor withholding
payment to him. Late payment by contractors to sub-contractors is another
widespread source of complaint by sub-contractors, but remedies are difficult
to devise. The sub-contracts are private contracts whose terms are unknown
to the engineer and the employer, so they cannot interfere in any such dispute.
The engineer has only power to protect nominated sub-contractors, i.e. sub-
contractors he directs the contractor to use (see Section 15.8).

7.8 Recent measures to alleviate sub-contract disputes

The problems between main and sub-contractors were one of the areas to
benefit most from Part II of the UK Government’s Housing Grants, Construction
and Regeneration Act 1996 (see Section 1.6). The introduction of adjudication
under that act to deal with disputes has at least allowed sub-contractors to
press their claims to an earlier conclusion, and to challenge any withholding
of payment by the contractor.
The Act requires payment terms to be stated and regular payments made.
It prohibits ‘pay when paid’ clauses, and requires the contractor to issue a
detailed ‘withholding notice’ if he seeks to hold back payment. These meas-
ures have eased the cash flow problems of sub-contractors. Also most stand-
ard forms of sub-contract now contain provision for payment of interest on
delayed payments, but this may not be very effective because a sub-contractor
may not claim interest for fear the contractor might not as a consequence give
him any further work.
The Civil Engineering Contractors Association (CECA) has issued a Form
of Sub-contract ‘for use in conjunction with the ICE conditions of contract.’
Contractors are, of course, not obliged to use this form and many use one of
their own devising or modify the standard form. The provisions of the CECA
sub-contract illustrate the many matters which such a sub-contract has to
cover and the difficulty of trying to provide rights to the sub-contractor with-
out putting the main contractor at risk under his contract.
Provisions of the CECA sub-contract, apart from defining the work, timing
and duration of the sub-contractor’s input, require the sub-contract to set out
the division of risks as between contractor and sub-contractor. It defines pro-
cedures and methods of valuing variations made by the engineer and con-
firmed by the contractor, or made by the contractor; and sets out procedures
for notification and payment for ‘unforeseen conditions’ or other claim mat-
ters. It also stipulates requirements for insurances and so on. Many of the pro-
visions are similar in terms to the ICE conditions applying to the contractor,