Subcontracting remains one of the highest-
risk areas in the construction industry. Subcontractors often bear the brunt of financial pressures, delays, and disputes—even when these issues stem from factors beyond their control. Without robust legal protections in many Middle East jurisdictions, subcontractors must proactively manage their commercial and contractual risks. Below are ten proven strategies to safeguard your interests and maximize recoveries.
1. Scrutinize "Back-to-Back" and "Pay-When-Paid" Clauses
Many subcontracts claim to mirror the terms of the main contract, but this is rarely the case. Key considerations:
- Challenge Ambiguity: If the main contractor hasn’t been paid due to reasons unrelated to your performance, demand clarity on payment obligations.
- Legal Reality vs. Commercial Pressure: Distinguish between contractual rights and the main contractor’s financial constraints. Avoid accepting blanket payment delays without justification.
2. Secure Full Visibility of the Main Contract
Subcontractors often operate without ever reviewing the main contract, leaving them vulnerable.
- Demand Access: Ensure your tender team reviews the main contract before signing.
- Retain a Copy: Many disputes hinge on discrepancies between the main contract and subcontract terms.
3. Approach Claim Cooperation Agreements with Caution
Beware of agreements that require you to waive direct claims in exchange for inclusion in the main contractor’s claim.
- Hidden Risks: Such clauses often limit your recourse while shifting liability to the employer.
- Independent Analysis: Assess delays caused by both the employer and main contractor to protect your entitlements.
4. Develop Your Own Programme
Relying solely on the main contractor’s programme is risky.
- Control Your Schedule: Draft a subcontractor-specific programme reflecting your workflow and resources.
- Avoid Unapproved Changes: Main contractor programmes may lack employer approval, exposing you to unplanned disruptions.
5. Maintain Independent Progress Records
Outsourcing progress tracking to the main contractor can backfire.
- Document Everything: Keep detailed records of milestones, delays, and disruptions.
- Dispute Resolution: Your records will be critical if disagreements arise over performance or payments.
6. Adhere Strictly to Subcontract Requirements
Minor administrative oversights can derail claims.
- Timely Notices: Submit variations, delays, and payment applications per the subcontract’s deadlines.
- Preserve Rights: Non-compliance can invalidate claims, cutting off routes to recovery.
7. Avoid Herd Mentality
On projects with multiple subcontractors, resist following others’ lead.
- Unique Terms: Your subcontract may have distinct obligations or entitlements.
- Independent Action: Focus on your contractual rights rather than peer behaviour.
8. Act Early on Claims
Delaying claims can weaken your position.
- Balance Timing: Being the first to claim may set a precedent, but waiting too long risks losing leverage.
- Support the Main Contractor: Provide detailed particulars early to strengthen their claim submissions.
9. Monitor Contractual Support / Attendance Obligations
Subcontracts often assume timely support / attendance from the main contractor (e.g., scaffolding, inspections).
- Track Shortfalls: Document failures in attendance or delays in approvals.
- Notify Promptly: Claims for breaches by the main contractor are unlikely to be passed to the employer.
10. Foster Collaborative but Cautious Relationships
A balanced relationship with the main contractor is key.
- Open Dialogue: Regular communication can pre-empt disputes.
- Protect Your Interests: If negotiations fail, your recourse will (in most cases) be against the main contractor—not the employer.
Conclusion
Successful subcontract commercial management hinges on vigilance, documentation, and strategic action. By understanding contractual nuances, maintaining independent records, and acting decisively, subcontractors can mitigate risks and secure fair outcomes. Remember: In an industry where cash flow is king, proactive commercial management isn’t just best practice—it’s survival.
davidbrodiestedman@dispute-iq.com
