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How do you manage contracts with suppliers and subcontractors?

Writer's picture: BHADANIS Quantity Surveying and Construction Management Training Institute for Civil Engineers & Construction Professionals OnlineBHADANIS Quantity Surveying and Construction Management Training Institute for Civil Engineers & Construction Professionals Online

Managing contracts with suppliers and subcontractors is a crucial aspect of ensuring that your construction project runs smoothly and meets its deadlines. It involves setting clear expectations, monitoring progress, handling payments, and addressing any issues that arise along the way. Let’s walk through how you might manage these contracts using the example of constructing a 3,000 square foot villa in Dubai, UAE.


The Process of Managing Contracts


1. Setting Clear Expectations


  • What to Do: The first step in managing contracts is to ensure that all terms and expectations are clearly defined in the contract. This includes the scope of work, timelines, payment schedules, and quality standards.

  • Example: For your villa project in Dubai, you’ve contracted a supplier for high-quality marble flooring. The contract should specify the type, quantity, and grade of marble, the delivery date, and the payment terms.

  • Action: Review the contract with the supplier and ensure that both parties fully understand and agree to the terms.


2. Regular Communication


  • What to Do: Maintain open lines of communication with your suppliers and subcontractors throughout the project. Regular updates help in addressing issues before they become bigger problems.

  • Example: During the villa construction, you might have weekly check-ins with your subcontractor responsible for electrical work. These meetings can help you stay updated on progress and catch any potential delays early.

  • Action: Set up a communication schedule and stick to it, whether it’s through meetings, calls, or emails.


3. Monitoring Progress


  • What to Do: Keep track of the work being done to ensure it aligns with the contract terms. This involves site inspections, progress reports, and quality checks.

  • Example: If the marble supplier is supposed to deliver on a certain date, you’ll want to inspect the materials upon arrival to ensure they meet the specified quality standards.

  • Action: Document the progress and any issues you encounter, keeping records of all communications and inspections.


4. Handling Payments


  • What to Do: Payments should be made according to the terms outlined in the contract. Often, payments are tied to specific milestones or deliverables.

  • Example: For the villa’s electrical work, you might have agreed to pay the subcontractor in installments—25% upfront, 50% upon completion of wiring, and the remaining 25% after final inspection.

  • Action: Ensure that payments are made on time and that they correspond with the completion of milestones.


5. Addressing Issues and Disputes


  • What to Do: If issues arise, address them promptly by referring to the contract. This could involve negotiating changes, applying penalties for delays, or resolving disputes through agreed-upon methods.

  • Example: Suppose the marble flooring arrives late, causing a delay in the overall project. You could enforce a penalty clause in the contract or negotiate a discount with the supplier.

  • Action: Keep a record of all issues and how they were resolved, ensuring that any changes are formally documented.


6. Contract Closeout


  • What to Do: Once the work is completed, conduct a final inspection to ensure everything meets the contract’s requirements. Finalize payments, resolve any outstanding issues, and formally close out the contract.

  • Example: After the villa is completed, you do a walkthrough with each subcontractor to ensure that all work is up to standard before making the final payments and closing the contracts.

  • Action: Complete a contract closeout checklist and ensure all documentation is filed properly.


Template for Contract Management


Here’s a template in tabular format that you can use to manage contracts for your 3,000 sqft villa project in Dubai:

Contract ID

Supplier/Subcontractor

Scope of Work

Milestones

Payment Schedule

Status

Issues/Disputes

Final Inspection Date

Comments/Notes

001

XYZ Marble Suppliers

Marble Flooring Supply

Delivery by 01-Oct-2024

50% on order, 50% on delivery

In Progress

Delivery delayed by 1 week

Pending

Discussing penalty for delay

002

ABC Electrical Contractors

Electrical Installation

Wiring completion by 15-Oct-2024

25% upfront, 50% mid-project, 25% on completion

In Progress

None

Scheduled for 20-Oct-2024

Weekly check-ins maintained

003

DEF Plumbing Services

Plumbing Installation

Completion by 10-Oct-2024

30% upfront, 40% mid-project, 30% on completion

Completed

None

12-Oct-2024

Work completed to standard

This table helps you keep track of each contract, monitor progress, and address any issues that come up during the project.

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