This video defines the various types of Subcontractors and how they are assessed and utilized in the performance of ADB projects.
What is subcontracting?
Subcontracting is the use of a third party, or subcontractor, by the main contractor to help fulfil the overall obligations of the contract.
It enables the borrower to access highly specialized skills and equipment that the main contractors cannot provide, which may help lower costs, enhance project quality and efficiency, and can contribute towards value for money.
What are the different types of subcontractors?
There are three types of subcontractors under ADB-funded projects: (i) those nominated by the borrower that all bidders must work with, (ii) those nominated by bidders to deliver highly specialized equipment or services, or (iii) those nominated by bidders for other purposes.
In all cases, it is the responsibility of the main contractor to contract with and manage its subcontractors.
How can borrowers mitigate risks in subcontracting?
Prequalification of subcontractors and evaluation of bidders’ previous experience in managing subcontractors can help avoid risks during contract implementation.
The borrower can also mandate main contractors to replicate contract requirements and standards on subcontractors to ensure performance and quality of outputs.
Finally, a well-prepared contract management plan by the borrower can help reduce risks such as underperformance, potential integrity violations, and negligence by subcontractors.
ADB’s Guidance Note highlights the benefits of subcontracting and the actions borrowers can take to mitigate its various risks.