Subcontracting Strategy in Industrial Projects: Evidence from Saudi Arabia

Abstract

Subcontracting is widely employed in the construction industry owing to the variation of methods, materials, magnitude, and function of the infrastructures. However, the rapport between parties in construction are mostly adversarial and plagued with hitches, which negatively impact construction productivity. This research investigates the problems associated with subcontracting strategies of contractors in industrial projects in the Eastern Province of Saudi Arabia via questionnaire survey. The questionnaire contains a list of thirty-three likely problems affecting subcontracting strategy of contractors organised under the three categories of planning, awarding, and contracting issues. The respondents matched the likely problems with the project value drivers (quality, cost, and time) with which they impact, and rated the magnitude of the problems on project performance. The survey identified incompatibility of the subcontractor/supplier’s time schedule with the project’s time schedule as the topmost problem related to planning issues. Unethical practices is ranked highest among problems related to awarding issues, while incompatibility of subcontracts’ terms and conditions with the main contract’s terms and conditions is rated top among the topmost problems related to contracting issues. The findings revealed that the three problem categories have negative impacts on all the project value drivers in different combinations and are almost equally significant in the view of contractors while making subcontracting decisions. Contractors are therefore advised to critically evaluate the schedule, cost, and quality performance of industrial projects during the planning, awarding, and contracting phase of subcontracting in industrial projects.