Multi-level subcontracting: Negative effects on construction quality, cost, time, and safety

This paper studied the negative effects of multi-level subcontracting on construction quality, cost, time, and safety. Multi-level subcontracting is the practice wherein an activity was subcontracted multiple times that a hierarchy of contractors was formed. Works of literature have discussed the various benefits of the subcontracting system to the construction industry. However, multi-level subcontracting had been determined to cause negative effects that can nullify the benefits of the subcontracting system. This is the reason why it is important to understand the negative effects of multi-level subcontracting so that appropriate solutions can be developed. A survey was conducted to determine the most negative effect of multi-level subcontracting on construction quality, cost, time, and safety. Based on the survey, the most disadvantageous effect on construction quality is the disregard for quality due to payment-by-accomplishment scheme. Next, the most negative effect on construction cost is the increased construction cost incurred when a subcontractor defaulted and abandoned the project. Then, the most adverse effect on construction time is the extended work duration due to the high number of corrective works. Lastly, the most negative effect on construction safety is the poor safety culture among the workforce of bottom-level subcontractors. An analysis of the survey results showed that these effects have similar root causes that are vital in developing solutions against the negative effects of multi-level subcontracting. Five solutions were proposed in the study namely: the use of holistic contractor selection criteria, the increased involvement of the project owner to subcontracting issues, the removal of non-value adding contractor, the deployment of a competent construction management team, and the use of a comprehensive contract before engaging in any work