Production system instability and subcontracted labor

Th ere is an inherent mutually dependent relationship between the degree of plan stability for any construction project, on the one hand, and subcontractors’ reliability in providing resources, on the other hand. Th e dependence of the project plan on subcontractors providing the necessary resources at the right time, in the right quantity, and with the right skills, and equipment is obvious to all who have managed projects. Construction project managers oft en lament that their projects were late and/or overbudget because subcontractors failed to perform as expected. Unfortunately, the culture of managing projects by subcontracting their parts oft en leads to construction engineers and managers ignoring the fundamentals of production planning, analysis, and control. Th e result is that they are not aware of the strength of the reverse relationship, which is that subcontractors are highly dependent on the predictability of construction plans in assigning resources. Th e less reliable the plan, the less reliable resource assignments are likely to be, and vice versa, creating a seeming vicious circle of unreliability. Th is chapter sheds light on this relationship, with the goal of helping project managers1 understand the motivations of subcontractors, and thus helping encourage supply chain management approaches that strive for stability, especially when subcontracting is unavoidable