Subcontractor Selection and Management: Best Constructions Project

This report analyzes the selection and management of subcontractors for a construction project, specifically focusing on concrete and formwork packages for the Strathfield Apartment project. It evaluates quotations from four subcontractors, comparing them against the builder's original tender budget. The analysis considers factors like cost, time, and included/excluded items to determine the most suitable subcontractor. The report also includes templates and procedures for pre-award interviews, subcontractor selection, communication processes, and performance management, including strategies for dealing with poor performance and conducting performance evaluations. Additionally, it outlines essential site induction items to ensure safety and compliance.

Selection and Management of Subcontractors 1
SELECTION AND MANAGEMENT OF SUBCONTRACTORS
Name
Course
Professor
University
City/state
Date

Selection and Management of Subcontractors 2
Table of Contents
1. Part 2: Selection of subcontractors...................................................................................................3
1.1. The builder’s original estimate.................................................................................................3
1.2. Ultimate Concrete Services Pty Ltd.........................................................................................4
1.3. Professional Formwork and Concreting Services Pty Ltd......................................................5
1.4. Quality Concreting Pty Ltd.......................................................................................................8
1.5. P&W Concreting Services Pty Ltd...........................................................................................9
2. Part 3: Manage Subcontractors......................................................................................................14
2.1. Pre award interview template.................................................................................................14
2.2. Procedure and template for section of new subcontractors..................................................15
2.2.1. Selection criteria..............................................................................................................15
2.2.2. How to gather information..............................................................................................18
2.2.3. Subcontractor selection template....................................................................................18
2.3. Communication process..........................................................................................................19
2.4. Performance management of subcontractors........................................................................21
2.4.1. Dealing with poor subcontractor performance..............................................................21
2.4.2. Performance evaluation...................................................................................................25
2.5. Site induction items..................................................................................................................29
References................................................................................................................................................31

Selection and Management of Subcontractors 3
1. Part 2: Selection of subcontractors
In this task, the subcontract quotations for concrete and formwork packages submitted by
the four companies (subcontractors) are evaluated and compared so as to choose the
subcontractor to be used on the Strathfield Apartment project. The quotations are analyzed by
comparing them with the original tender budget for the concrete and formwork package prepared
by Best Constructions Pty Ltd (referred to as builder in this report). The four quotations are
analyzed so as to choose the most cost and time effective one.
Liquidated damages = $4,500 per day
O/H costs = $2,000 per day
1.1. The builder’s original estimate
Concrete and formwork costs
From the tender estimates provided, the total concrete and formwork costs are
Total concrete and formwork costs = $484,388
O/H costs
The work requires 65 days to be completed
The O/H costs are $2,000 per day
Total O/H costs = $2,000 per day x 65 days = $130,000
Total cost of the entire work package = concrete and formwork costs + O/H costs
= $484,388 + $130,000 = $614,388

Selection and Management of Subcontractors 4
1.2. Ultimate Concrete Services Pty Ltd
Assumptions:
 It is assumed that a normal working day has 8 hours
 The job will require a total of 12 concrete pump setups
Concrete works costs:
All concrete works including reinforcement but excluding formwork = $305,520
Formwork costs:
Formwork rate = $92/m2
Total contact surface areas = contact surface area of slab on ground + contact surface area of
suspended slabs and ramps from basement to level 1
= 684m2 + 1,310m2 = 1,994m2
Total cost for formwork = 1,994 m2 x $92/m2 = $183,448
Labour cost
Total number of hours = 8 hours/day x 70 days = 560 hours
Labour cost = $68/hour x 560 hours = $38,080
Extra concrete pump setup costs
Number of extra pump setups = 4
Rate = $750 per setup
Cost of additional 4 setups = $750 x 4 = $3,000

Selection and Management of Subcontractors 5
O/H costs
The rate of O/H costs = $2,000 per day
The work will take 70 days hence total O/H costs are:
= $2,000 per day x 70 days = $140,000
Liquidated damages
The estimated time required by the company is 65 days meaning that there will be liquidated
damages due to late completion. The liquidated damages are calculated as follows:
= (70 – 65) days x $4,500 per day = 5 days x $4,500 per day = $22,500
Total cost of the concrete and formwork packages = concrete cost + formwork cost + labour cost
+ extra concrete pump setup cost + O/H costs – liquidated damages
= $305,520 + $183,448 + $38,080 + $3000 + $140,000 – $22,500 = $647,548
However, the above budget estimates in the tender does not include the following items: curing
of concrete surfaces, supply of all hoisting facilities apart from those used in concrete placement,
and supply of all change, lunch and toilet facilities. These items have to be supplied by the
builder.
1.3. Professional Formwork and Concreting Services Pty Ltd
Assumptions:
 The concrete work will require 12 concrete pump setups
 The normal working hours per day is 8 hours
Concrete testing cost

Selection and Management of Subcontractors 6
Total concrete = 527 m3
Concrete testing rate = $8/m3
Concrete testing cost = $8/m3 x 527 m3 = $4,216
Cost of concrete slabs
Total concrete = 527 m3
Rate = $48/m3
Total cost = 527 m3 x $48/m3 = $25,296
Concrete pump setup cost
No. of pump setups = 12
Cost per setup = $500
Concrete pump setup cost = $500 x 12 = $6,000
Termite control cost
Termite control will only be done on slab on ground, which has a total surface area of 684 m2
Termite control rate = $6/m2
Termite control cost = $6/m2 x $684 = $4,104
50mm sand blinding cost
Contact surface area for sand blinding = 684 m2
Rate of 50mm sand blinding = $4.30/m2

Selection and Management of Subcontractors 7
50mm sand blinding cost = $4.30/m2 x 684m2 = $2,941.2
Place membrane cost
Contact surface area of membrane = 684 m2
Rate of placing the membrane = $7/m2
Total cost of placing the membrane = $7/m2 x 684m2 = $4,788
Supply, place and strip formwork cost
Contact surface area = 1,310 m2
Rate = $110/m2
Total cost = $110/m2 x 1,310 m2 = $144,100
The estimated working days for this work is 53 days hence no liquidated damages
Labour cost
Total number of hours = 8 hours/day x 53 days = 424 hours
Labour cost = $70/hour x 424 hours = $29,680
O/H costs
The rate of O/H costs = $2,000 per day
The work will take 53 days hence total O/H costs are:
= $2,000 per day x 53 days = $106,000
Total cost = $4,216 + $25,296 + $6,000 + $4,104 + $2,941.2 + $4,788+ $144,100 + $29,680 +
$160,000

Selection and Management of Subcontractors 8
= $381,125.2
However, it is important to note that the subcontractor will not provide some of the materials and
services needed in this concrete and formwork package. Some of the items not included in this
tender are: supply of concrete, supply and placement of steel reinforcement, concrete curing,
shed accommodation for workers, and supply of membrane. This means that the subcontractor
will do incomplete work at the cost estimated in his tender.
1.4. Quality Concreting Pty Ltd
Assumptions:
 Normal working day has 8 hours
 A total of 12 concrete pump setups will be required for the job
Formwork costs
Cost of all formworks = $115,800
Reinforcement and concreting works
Cost of supply, placement and finish of all reinforcement and concreting works = $305,400
Labour cost
Total number of hours = 8 hours/day x 70 days = 560 hours
Labour cost = $75/hour x 560 hours = $42,000
Extra pump setups costs
Cost of extra concrete pump setups = $750 x 4 = $3,000
O/H costs

Selection and Management of Subcontractors 9
Rate = $2,000 per day
Total O/H cost = 70 days x $2,000/day = $140,000
Liquidated damages
The company will take 70 days to complete the work, which is more than the estimated time by
the builder. It means that the subcontractor will pay liquidated damages of 5 days.
Rate = $4,500 per day
Total liquidated damages = 5 days x $4,500 per day = $22,500
Total cost = $115,800 + $305,400 + $42,000 + $3,000 + $140,000 + $22,500 = $628,700
However, this cost does not include the following items: concrete testing, curing of concrete
surfaces, hoisting facilities (except limited pumping), sand blinding, termite control, Fortecon
slab underlay and rubbish removal.
1.5. P&W Concreting Services Pty Ltd
Assumptions:
 The work will require 12 concrete pump setups
 A normal working day has 8 hours
Suspended formwork cost
Contact surface area of suspended slabs, beams and columns formwork = 1,310 m2
Rate = $95/m2
Total cost = $95/m2 x 1,310m2 = $124,450

Selection and Management of Subcontractors 10
Slabs, beams and walls steel reinforcements cost
Concrete volume of slabs, beams, columns and walls = 527 m3
Rate = $2,200/t
Total cost = 0.15tonnes/m3 x 527m3 x $2,200/tonne = $173,910
Concrete cost
Total concrete volume = 527m3
Rate = $198/m3
Total cost = $198/m3 x 527m3 = $104,346
Labour cost
Total number of hours = 8 hours/day x 72 days = 576 hours
Labour cost = $67/hour x 576 hours = $38,592
O/H costs
Rate = $2,000 per day
Total O/H cost = 72 days x $2,000/day = $144,000
Liquidated damages
The time required by the subcontractor to complete the works is 72 days. This means that the
works will be completed late thus attracting liquidated damages. The delay period is 7 days (72 –
65).
Liquidated damages rate = $4,500 per day

Selection and Management of Subcontractors 11
Total liquidated damages = 7 days x $4,500 per day = $31,500
Total cost = $124,450 + $173,910 + $104,346 + $38,592 + $144,000 + $31,500 = $616,798
However, the tender does not include the following; supply of membrane, concrete curing,
concrete testing, hoisting of materials, supply of workers sheds, and removal of rubbish
generated by the work from the site.
The summary of the total cost, number of working days required to complete the subcontract
work and items excluded by the subcontractors is provided in Table 1 below
Table 1: Summary of subcontract quotations
Subcontractor
name
Total cost No. of working days
needed to complete
the work
Items excluded
Company estimates $614,388 65
Ultimate Concrete
Services Pty Ltd
$647,548 70 Curing of concrete surfaces
Supply of all hoisting facilities apart
from those used in concrete placement
Supply of all change, lunch and toilet
facilities
Professional
Formwork and
Concreting
Services Pty Ltd
$381,125.2 53 Supply of concrete
Supply and placement of steel
reinforcement
Concrete curing
Shed accommodation for workers
Supply of membrane
Quality Concreting
Pty Ltd
$628,700 70 Concrete testing
Curing of concrete surfaces
Hoisting facilities (except limited
pumping)
Sand blinding
Termite control
Fortecon slab underlay
Rubbish removal
P&W Concreting
Services Pty Ltd
$616,798 72 Supply of membrane
Concrete curing
Concrete testing
Hoisting of materials

Selection and Management of Subcontractors 12
Supply of workers sheds
Removal of rubbish generated by the
work from the site
From the information in Table 1 above, the subcontractor with the lowest cost and
shortest time is Professional Formwork and Concreting Services Pty Ltd. The subcontractor will
complete the work 12 days ahead of schedule. However, the subcontractor has excluded several
essential items that will significantly affect the entire project because all the activities in this
subcontract are on the critical path. The subcontractor has excluded supply of concrete, supply
and placement of steel reinforcement, concrete curing, provision of shed accommodation for
workers, and supply of membrane. These items are mandatory and therefore cannot be excluded.
It implies that the company has failed to allow for all the necessary work to ensure that
subsequent works are started on time and the entire project is completed within stipulated time.
For this reason, Professional Formwork and Concreting Services Pty Ltd is not suitable for this
subcontract.
The second least expensive subcontractor is P&W Concreting Services Pty Ltd but has
the longest delay period of 7 days. The subcontractor has excluded several items including
supply of membrane, concrete curing, concrete testing, hoisting of materials, supply of workers
sheds, and removal of rubbish generated by the work from the site. Some of these items are very
essential and failure to provide them will significantly affect the entire project because the
activities in this subcontract are on the critical path. In other words, the company has not allowed
for all the work required to facilitate early or on-time completion of the project. Therefore P&W
Concreting Services Pty Ltd is also not suitable for this subcontract.