If in your project you have a major contractor and he hires a sub-contractor how can you as a project manager resolve their payment conflict. You paid the major contractor and now he faills to pay th
Wakayi ManziProject Manager| Government EntityEast London, Eastern Cape, South Africa
The su-contractor comes to you to complain that he has not been paid by the contractor though you do not have a contract with him you only contracted the major contractor. How do you as a project manager intervene? Saving Changes...
When both of them choose you as an arbitrator before escalating the disagreement to other conflict resolution mechanisms, then you can probably get involved-otherwise in my view it is between two parties and resolution mainly will depend on their contract . Is your project negatively being impacted by this ? If yes, then you can look at contract clauses within your own agreement with the big contractor for a possible intervention.
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1 reply by Wakayi Manzi
May 13, 2018 12:26 PM
Wakayi Manzi
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No the contract is not affected the sub contractor has done a very good job.
The sub-contractor is not the project manager's responsibility, only the major contractor. If the latter doesn't deliver, due to a sub-contractor's failure or any other reason, then they (major contractor) are in breach of contract. If the sub-contractor doesn't deliver, then they are in breach of their contract/agreement with the major contractor. Saving Changes...
Drew CraigSr. Agile & Product Coach| VanguardPhiladelphia, Pa, United States
Agree with Sante. Additionally, without any contract specific to the sub-contractor, you hold no responsibility to them. Surprised they (the sub-contractor) would even think this is a viable ask. Seems like this major contractor has a nice little gig going. Would be interesting if able to learn further details on past contracts. Saving Changes...
Wakayi ManziProject Manager| Government EntityEast London, Eastern Cape, South Africa
May 13, 2018 5:45 AM
Replying to William Ouso
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When both of them choose you as an arbitrator before escalating the disagreement to other conflict resolution mechanisms, then you can probably get involved-otherwise in my view it is between two parties and resolution mainly will depend on their contract . Is your project negatively being impacted by this ? If yes, then you can look at contract clauses within your own agreement with the big contractor for a possible intervention.
No the contract is not affected the sub contractor has done a very good job. Saving Changes...
Adam YusufOther| Knowledgebased Services LimitedAbuja, Federal Capital Territory, Nigeria
Professionally and officially, the Project manager does not recognize the subcontractor except as a member of the main contractors team. You deal with the main contractor to deliver.
On the other hand, if they both seek your intervention, then you look at the legal relationship between the two to know who is in breach of their agreement before you make any input Saving Changes...
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
I might have to disagree with a way with some of the opinion here as in construction, things run differently. It is the project’s manager responsibility to ensure all payments are settled.
In our contracts, we have a section for holdback where we retain 10% from each monthly invoice that is submitted by the contractor and this is paid as follows:
At substantial competion of the project (This is decided by the project Architect), the architect issues a Notice of Completion to the General Contractor and he posts this notice on the project for 55 days. If after 55 days no one claimed that they have any outstanding amounts then the holdback is released by the owner to the contractor.
This is the law in Canada and called BC Lien Builders Act.
Why this is done ?
Because anyone can put a lean on the property or project if they have any outstanding payments and this will delays the closure and occupancy a lot so if this happened the holdback will be used to settle such payments.
Hope this makes sense.
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1 reply by Kevin Drake
May 13, 2018 6:05 PM
Kevin Drake
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Yes very much indeed...it is type of 10 % retention amount and it is different to the performance bond.
Back in 2000s, We had that once and the client (Canadian company) started to pay the subcontractor directly because all deliverables were on time and acceptable, but unfortunately it is not a law, it was within the contract between the client and the main contractor.
On the other hand I agree with Sante and Andrew if it is not there written in contract or law it is not there. We need that law in Australia with all the issues going on with building companies, thousands of subcontractors are suffering from builders.
I might have to disagree with a way with some of the opinion here as in construction, things run differently. It is the project’s manager responsibility to ensure all payments are settled.
In our contracts, we have a section for holdback where we retain 10% from each monthly invoice that is submitted by the contractor and this is paid as follows:
At substantial competion of the project (This is decided by the project Architect), the architect issues a Notice of Completion to the General Contractor and he posts this notice on the project for 55 days. If after 55 days no one claimed that they have any outstanding amounts then the holdback is released by the owner to the contractor.
This is the law in Canada and called BC Lien Builders Act.
Why this is done ?
Because anyone can put a lean on the property or project if they have any outstanding payments and this will delays the closure and occupancy a lot so if this happened the holdback will be used to settle such payments.
Hope this makes sense.
Yes very much indeed...it is type of 10 % retention amount and it is different to the performance bond.
Back in 2000s, We had that once and the client (Canadian company) started to pay the subcontractor directly because all deliverables were on time and acceptable, but unfortunately it is not a law, it was within the contract between the client and the main contractor.
On the other hand I agree with Sante and Andrew if it is not there written in contract or law it is not there. We need that law in Australia with all the issues going on with building companies, thousands of subcontractors are suffering from builders. Saving Changes...
What happens in this situation: a PM is managing a construction project for his/her company, and some of the resources the PM hires are major contractors, and one of these major contractors will pour the foundation. If that major contractor has 30 workers onsite, and 1 of those 30 workers who is a subcontractor to the major contractor decides not to show up for work one day because the major contractor didn't pay him, what happens? Does the PM hold back 10% based on the subcontractor not being paid, or do they pay the sub-contractor directly? Both options could be a legal minefield. I would have thought the PM will just say to the major contractor "Sought out your own mess but just make sure the job is done according to the contract." The sub contractor can always go to court to get their money from the major contractor. It's a tricky one. I did a few small construction projects in the Philippines, and the contractors there are notorious for non or late payments. But we as PM or the client never paid the sub contractors directly or held back payments for that reason (for other reasons like late completion yes of course). Saving Changes...
Brajesh MishraHead- Project Management| Bayaweaver LimitedNew Delhi, Delhi, India
If the subcontractors has approached the client for settlement of the dues, the client can only ask the Main contractor for settlement of the dues....but it is not enforceable by law! Main contractors indemnify the client against any such issues w.r.t. non payments to their subcontractors, workers, etc... Saving Changes...
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