When receiving an order to carry out work (construction, creating a computer program, providing a wide range of advertising services, etc.), the contractor does not always fulfill it on his own. Applying to third parties or organizations is a standard practice in which two parties are necessarily involved: the customer and the contractor, who, in turn, can delegate part of the work to several subcontractors.
We will deal with terminology
To understand who the contractor and subcontractor are, you need to understand the conditions under which contracting and subcontracting relationships arise, as well as who the customer is.
- Customer is a legal entity or an individual who has placed an order to perform certain work / services, purchase goods, etc. performer.
- A contractor is a legal entity or an individual (contractor) who has received a contract from a customer to perform work, provide services, deliver goods, etc.
- Subcontractors are companies or individuals (co-contractors) that have received a certain amount of work from the contractor to fulfill the accepted order.
Contractor and Subcontractor Roles
The customer-contractor-subcontractor relationship is regulated upon conclusion of a contract and subcontract. According to the legislation of the Russian Federation, the contractor has the right to contact third parties to execute the received order, unless other conditions are specified in the contract. Subcontractors can be involved in an unlimited number, all working conditions, terms and quality are fixed by the contract.
Contractors and subcontractors are organizations or individuals with the ability to perform work on one order. With respect to the subcontractor, the contractor acts as the customer or general contractor. Fundamentally, these contractor roles differ only on paper; in fact, the subcontractor is responsible for the implementation of its part of the work to the contractor. Only in rare cases, if provided for by the contract, the customer takes part in the control of the subcontractor.
How the subcontracting scheme works
A simplified version of the system of work of the contractor and subcontractor can be described by the example of the work of an advertising agency (RA). The agency (contractor) received an order from the organization for the implementation of an advertising campaign, which provides for the drawing of prizes, the issue of leaflets, and the placement of advertising materials in the media.
Of the entire list of works, the contractor can only do a prize draw on his own, develop the design of leaflet layouts and advertisements for print media. The remaining stages of the work are transferred to other organizations, in this case the subcontractors are a printing house and a newspaper. The contractor (advertising agency) will accept and control the work of the newspaper and the printing house, and the customer of the agency will accept the execution of the entire complex of the order, it is she who is responsible for the quality, timing, coordinates all the nuances. Often the customer does not even know about the involvement of third-party organizations.
Government and subcontracting
If we are talking about state or construction orders, the customer appoints a general contractor with the right to attract organizations specializing in certain types of activities. For example, Metrostoy, in order to ensure high-quality construction of the metro line, should involve geodetic, design, and tunneling organizations. And each of the involved subcontractors in this case reports to the general contractor and the customer.
What is the difference between a contractor and a subcontractor - a measure of responsibility to the customer. The contractor is responsible for the entire order, and the subcontractor only for part of the work on the entire complex of the order.
How to get a subcontract
There are three common ways to subcontract:
- Tender. The contracting organization carries out the selection of performers by means of a tender. The conditions describe the list of works, implementation, deadlines, estimated payment, etc. The tender is won by the organization most corresponding to the declared conditions, having sufficiently qualified personnel, guaranteeing quality. By cons include the often underestimated, against the market, the cost of work performed. Too tight deadlines, the inability to maneuver with proposals for improving or modernizing the order. The pros is complete technical task, the availability of all documentation, which allows you to fully evaluate your capabilities.
- Get subcontracted in place. Quite often, the general contractor refuses to cooperate with any organization, and in this case, you can get a subcontract order directly on the spot. It is also not uncommon for small jobs to remain outside the scope of subcontracts, and this is also an opportunity to find work in a large order, especially if there is extensive acquaintance with the middle management in the general contractor structure. The advantages of this approach are the speed of receipt of the order, the speed of decision-making on private issues, quite often an advance is paid before the start of work on the site. Cons, as practice suggests, are reduced to a financial issue: the final settlement occurs only after the completion of the entire volume of work on the order. And it sometimes takes several months.
- Subcontractor work. Since the business is always striving for optimization, often the customer - contractor - subcontractor - these are links of one holding company group of companies and so on. So it turns out that taking an order from a subcontractor, in fact, you are doing the work for the customer. The main organization is simply an intermediary. The pluses are the understanding by the customer of all the nuances of their requirements, therefore, the terms of reference will be extremely clear. The disadvantage is the customer’s desire to get more than agreed upon receipt of the order, and red tape with payment may also occur.
When engaging in your professional activities, you should think about new opportunities for expanding your business or starting your project, subcontractors are people or organizations taking a step towards new opportunities.
