A Case Study of Construction Subcontract Management in the Middle-East EPC Plant Project

Abstract

Construction subcontract management, especially in the Middle-East engineering, procurement & construction―EPC―plant project, has its high degrees of uncertainty to general contractor. We have studied a project case completed with good performance results by mapping competitive relationship model and partnership relationship model to identify success factors. There were 10% of cost saving, no subcontractors terminated early, zero critical accident and no project schedule delayed in the project. In initial stage, there were combination of competitive bidding process with project team’s T.B.E. and sourcing strategy; in implementation stage, project team’s efforts to establish partnership relationship and their enhancement of monitoring mechanism; in closing stage, dispute resolution contractually but with amicable position. They focussed on minimizing transaction cost and striving for survival through co-evolution with subcontractors. The results indicates that proper and effective balancing of competitive relationship and partnership relationship, and the enhancement of monitoring mechanism and execution strategy, could improve the performance of the construction works both to general contractor and subcontractors. In addition, the success factors of this study can be applicable to similar projects as a practical guideline.