RICS draft guidance note - Subcontracting (1st edition)

General principles (level 1 - knowing)

What this guidance note covers

As this guidance note forms part of the RICS quantity surveying and construction standards (the Black Book), it follows the standard structure, dividing the guidance into three chapters:

  • General principles (level 1 - knowing)
  • Practical application (level 2 - doing) and
  • Practical considerations (level 3 - doing/advising).

This guidance note covers most issues that can arise as a result of subcontracting on a major project, but some of these issues will not arise on most smaller projects. It is necessarily limited in its content and focuses on subcontracting in the context of building and civil engineering projects in the UK, but not private finance initiative (PFI) projects. It does not cover the management of subcontractors on site, or the role of suppliers of materials or goods.

What is a subcontractor and what is subcontracting?

In the context of a construction contract, a subcontractor is a person who agrees to perform some or all of the obligations that the main contractor is obliged to perform under a separate main contract with the employer. Subcontracting is therefore the sub-letting, by the main contractor to the subcontractor, of the performance of some or all of the main contractor's obligations under the main contract.

In many cases, the subcontract works will include supplying materials and carrying out work, and in some cases the subcontractor will also be obliged to carry out design work. In other cases, the subcontract works will only consist of carrying out work.

Almost all construction work involves subcontracting. It is not uncommon for the majority of the main contract works to be carried out by subcontractors, with the main contractor taking a role in managing and controlling the subcontractors. Therefore, the number of subcontractors involved in the main contract works may be very high - sometimes up to 100. This can include subcontractors who carry out a significant part of the main contract works (e.g. the structural works, the mechanical and electrical works or the cladding) and subcontractors who carry out other related works (e.g. the site hoarding works or site cleaning activities). The value of works carried out by subcontractors can be a very high proportion of the value of the main contract works, and could be as high as 85-90%.

Subcontracting of contractual obligations is permitted under law. The exception is that subcontracting is not generally permitted if the obligations that are subcontracted can only be carried out by the person who is obliged to perform the obligations in the first place. It is also generally the case that the main contractor will remain responsible to the employer for the completion of the subcontract works. The general rule may not apply if the employer selects the subcontractor and requires the main contractor to employ them; such a situation can alter the contractual responsibility of the main contractor for any failure to perform on the part of the subcontractor selected by the employer.

The main contract may expressly prohibit the main contractor from subcontracting any or all of its obligations under the main contract. Such a prohibition would be unusual, but it is common for main contracts to contain a term that prohibits the main contractor from subcontracting the whole or any part of the main contract without the employer's written consent (usually this consent must not be unreasonably delayed or withheld). In many cases, each subcontractor will be an essential member of the team that will carry out and complete the main contract works. The main contractor will usually view subcontractors in that way, and will work closely with them. In some cases the main contractor and subcontractor may have an arm's length relationship, for example where the subcontract works are not critical and form only a very small part of the main contract works.

This chapter covers the following information concerning subcontracting:

  • historical background
  • key subcontractor bodies in the UK construction industry
  • pros and cons of subcontracting
  • types of subcontractors
  • procurement and tendering overview
  • post-tender changes
  • key features of a subcontract
  • providers of standard forms of subcontract
  • amending standard forms of subcontract, and
  • bespoke/in-house forms of subcontract.

Historical background

Since the 1960s there has been a general increase in subcontracting as a result of economic, cultural and technological factors.

In 1966, the UK government introduced selective employment tax (SET), a tax on a firm's payroll. To reduce their tax liability, contractors therefore sought to reduce the percentage of their labour force that was directly employed. This increased the amount of work that was subcontracted. In 1972, a strike affected much of the UK construction industry. This acted as a disincentive for contractors to employ their own labour, which might be influenced by trade unions, causing a further increase in the amount of work that was subcontracted. Although SET was repealed in 1972, the trend was not reversed.

In addition, construction technology has become more complex. This gave rise to the need for highly developed skills and expertise, resulting in an increase in specialist trades. For example, mechanical and electrical services have become increasingly complex, with much of the work having to be subcontracted to specialists in particular disciplines, such as building management systems, electronic controls and data installations. The market drives the requirement to adopt the latest technologies; it follows that specialist subcontractors are essential to the success of a project.

Key subcontractor bodies in the UK construction industry

Build UK was formed in September 2015 by a merger of the UK Contractors' Group and the National Specialists Contractors' Council (NSCC). The merger was in response to calls from the government for a single voice for the construction industry. Build UK represents over 30 specialist trade associations, as well as some main contractors and client organisations.

SEC Group represents the interests of specialist contractors across the UK and is made up of the British Constructional Steelwork Association, Electrical Contractors' Association, Building Engineering Services Association, Lift and Escalator Industry Association, SELECT (Electrical Contractors' Association for Scotland) and the Scottish and Northern Ireland Plumbing Employers' Federation (SNIPEF). The focus of SEC Group is on providing high-level, coordinated representation for engineering specialists and support trades working in the construction industry.

Pros and cons of subcontracting

Pros

The key reasons for subcontracting fall into project-related and business-related categories. Project-related reasons include:

  • The main contractor does not have the necessary skills to carry out the works to be subcontracted, such as specialist design and/or construction works.
  • The main contractor requires additional resources for a particular project.

Business-related reasons include:

  • The main contractor is able to respond to increases and decreases in workload without substantially increasing or decreasing its own resources, such as labour and plant; this provides them with additional flexibility.
  • The main contractor might wish to transfer contractual risks and/or liabilities to subcontractors, for example in relation to failure to complete work on time or defective work.
  • The main contractor is better able to forecast and manage its cash flow, as money generally flows down a contractual chain: the employer pays the main contractor and the main contractor then pays the subcontractor.
  • The main contractor can reduce the cost of training, research and development.
  • Governments often seek to encourage enterprise and initiative, including by way of tax incentives, so that there is a larger pool of self-employed potential subcontractors available.

Cons

Although subcontracting is commonplace, it is not without potential drawbacks. This guidance note does not describe such drawbacks in detail, but some examples are set out below:

  • Subcontracting might restrain the development of skills and innovation. Where an industry subcontracts a lot of work, a potential consequence is that specialists become the focal point for training, research and development. However, where specialists in a particular trade sit at a lower tier of the supply chain, they might lack the resources to provide the training, research and development required to improve skill levels and innovation. Main contractors might also decide that it is no longer business critical for them to develop skills and innovation in certain specialist trades, to the disadvantage of the main contractors, the specialists and the construction industry as a whole.
  • Main contractors lose a degree of management and control over specialist work, which, coupled with the potential reduction in skill level of the main contractor's staff, may lead to a reduction in quality.
  • Main contractors might form the view that subcontracting is a key part of their risk management strategy on the premise that if risks are passed down a contractual chain to subcontractors, the risks have been adequately managed. However, a better view is that passing risks to subcontractors is not a complete approach to risk management. At best, subcontracting might reduce - but will not eliminate - the impact of a risk on the main contractor if it occurs.
  • Where risk is passed down the supply chain, it may go too far and become inappropriate 'risk dumping', for example where the risk is passed to a subcontractor who has no hope of managing the risk. The potential for the risk to be improperly managed increases, and this can give rise to collateral problems and costly disputes.
  • Subcontracting can lead to the industry operating by way of one-off (or project-specific) teams, which are disbanded at the end of the project with a consequent loss of learning, experience and know-how.

Some of these potential drawbacks can be overcome or mitigated through vertical integration, which involves a business operating at various stages of the project. In a construction setting, this can involve the main contractor using its own resources to carry out several elements of construction work, for example the substructure, superstructure frame, cladding and mechanical and electrical services. Other work elements can be carried out by subcontractors the main contractor employs regularly and with whom it has strong business relationships.

Types of subcontractors

There are seven categories in the construction industry that are usually considered subcontractors or akin to subcontractors:

  • nominated subcontractors
  • named subcontractors
  • domestic subcontractors
  • works contractors
  • trade contractors
  • labour-only subcontractors, and
  • design consultants as subcontractors.

Nominated subcontractors

A nominated subcontractor is selected by the employer to carry out part of the main contract works. Subject to certain conditions, the main contractor is required to enter into a subcontract with the nominated subcontractor. Nomination provisions were common in UK standard form main contracts until 2005 but is not common now, and the standard form construction contracts reflected this change in the market. Therefore, the nomination of subcontractors is outside the scope of this guidance note.

Named subcontractors

A named subcontractor is named by the employer in the main contract, and is employed by the main contractor to carry out part of the main contract works. Naming subcontractors enables the employer to steer the main contractor's choice of a subcontractor for particular works. The way in which naming is dealt with in modern contracts varies; for example, although the naming provisions included in certain JCT contracts (JCT Design and Build Contract 2016, JCT Intermediate Building Contract 2016 (JCT IC 2016) and JCT Major Project Construction Contract 2016) contain similar features, the details of the provisions are different. Therefore, when considering or using naming provisions, check and understand the provisions that apply.

Perhaps the most common instance where naming is used is where the main contract is JCT IC 2016. In that case, the 'Named Sub-Contractor' may be named in one of two ways: 'Procedure One' and 'Procedure Two'.

Key features of Procedure One include:

  • The subcontractor is named at the tender stage, in the tender documents, and the tenderer prices the subcontract works to be carried out by the named subcontractor.
  • The subcontractor is also named in the main contract.
  • If the main contractor is unable to enter into a subcontract with the named subcontractor, in accordance with the main contract and the particulars given in the contract documents, it must inform the CA, specifying which of the particulars prevent the execution of the subcontract. If the CA accepts the main contractor's position, it must issue an instruction that changes the particulars to remove the impediment to execution, omit the work, or omit the work and substitute a provisional sum; such an instruction is treated as a variation.

Key features of Procedure Two include:

  • The subcontractor is named in an instruction concerning the expenditure of a provisional sum for work identified in the main contract.
  • The main contractor has 14 days in which to make a reasonable objection to the named subcontractor identified in the instruction.
  • If the main contractor is unable to enter into a subcontract with the named subcontractor, the CA may issue another instruction concerning the expenditure of the provisional sum.

If the named subcontractor's employment is terminated as a result of their default, insolvency or corrupt act, the CA may, by way of instructions, name another subcontractor, require the main contractor to carry out the work or omit the work. The main contractor may be entitled to an extension of time in such circumstances, but not loss and/or expense.

One of the purposes of the 'Named Sub-Contractor' provisions in JCT IC 2016 is to enable the employer to procure a specialist's design input. However, the main contractor is not responsible for defects in the named subcontractor's design (although the main contractor is responsible for the named subcontractor's quality in terms of materials and workmanship). So that the employer has adequate contractual recourse against the named subcontractor for defects in the named subcontractor's design, the employer should obtain a warranty from the named subcontractor. The JCT Intermediate Named Sub-Contractor/Employer Agreement (ICSub/NAM/E) can be used for this purpose.

Domestic subcontractors

A domestic subcontractor is selected and employed by the main contractor. Generally speaking, a domestic subcontractor is any subcontractor other than a nominated subcontractor. The employer will have an interest in the domestic subcontractors the main contractor wishes to appoint. Therefore, the main contractor must usually obtain the employer's consent to subcontract part of the main contract works. The main contractor is generally responsible for the proper performance of the domestic subcontractor.

Works contractors

A works contractor is not a subcontractor in the normal sense of the word. A works contractor is a contractor employed by a management contractor to carry out part of the main contract works that is the subject of the management contract.

The management contractor is contracted by the employer to manage the main contract works but does not itself carry out construction work. The management contractor directly employs specialist contractors (i.e. works contractors) to carry out the construction work under works contracts. The works contractors are liable to the management contractor. The management contractor is responsible for the administration of its contract with the works contractor, but the management contractor is usually not liable for the consequences of any default by the works contractor. Therefore, the employer will usually require adequate contractual recourse against the works contractor; this is normally achieved by way of a collateral warranty provided by the works contractor in favour of the employer.

The selection of works contractors is usually required to be agreed between the employer and the management contractor, and confirmed in an instruction given under the management contract.

Trade contractors

A trade contractor is not a subcontractor in the normal sense of the word, but is contracted by the employer to carry out part of the main contract works that is the subject of a construction management contract.

The construction manager is contracted by the employer to manage the procurement of the main contract works but does not itself carry out construction work. The essential function of the construction manager is to provide a consultancy and management service without the direct contractor role that a management contractor would have. The construction manager is also responsible for the overall management of the site. The construction work is carried out by trade contractors employed by the employer. The construction manager is not a party to a trade contract. However, the construction manager will assist the employer with the selection of trade contractors and the negotiation of trade contracts. The employer is obliged to appoint trade contractors to carry out the main contract works, after giving due consideration to any recommendations made by the construction manager. The construction manager acts as the employer's agent and as a certifier in administrating the trade contract.

Labour-only subcontractors

A labour-only subcontractor carries out subcontract works, but does not supply materials. The main contractor might decide that subcontracting on a labour-only basis has commercial advantages, for example if the main contractor believes that it can purchase materials more cost-effectively than the subcontractor. The extent and type of labour-only subcontracting varies. However, it is not uncommon for the main contractor to subcontract trades such as groundworks, brickwork and carpentry on a labour-only basis.

Design consultants as subcontractors

Where the main contractor is responsible for the design of some or all of the main contract works, it may decide to subcontract design work to design consultants (such as architects and engineers). In those circumstances the design consultants become subcontractors, although they are somewhat different from other subcontractors in that they do not supply construction materials or carry out construction work. The industry often refers to such consultants as sub-consultants.

The main contractor might employ its design consultants through appointments entered into directly between the main contractor and the consultant. However, in some cases the employer will have appointed design consultants prior to appointing the main contractor and, as part of the contractual matrix for the main contract, the employer might require that its consultants' appointments are novated to the main contractor. Once the consultant's appointment is novated from the employer to the main contractor, the consultant becomes in effect a subcontractor to the main contractor.

Procurement and tendering overview

Procurement

Procurement is the obtaining of services or goods from external sources. Therefore, the procurement of subcontract works is the obtaining of such works from external sources; for example, the main contractor procures the subcontract works from the subcontractor. Procurement involves deciding the strategy for how the subcontract works are to be obtained. A procurement strategy involves reviewing and setting the requirements for the subcontract works (for example, the division of the main contract works into various subcontract works, scope, quality, time and cost), and assessing such requirements against associated risks.

Tendering

Tendering is the bidding process phase of the procurement strategy, in which potential subcontractors (tenderers) submit offers (tenders) to carry out the subcontract works. The tenderer's price for the subcontract works is an important component of the tender, but other aspects that may not have been fixed in the ITT (e.g. the programme for the subcontract works) may also be important. Tendering can be a sophisticated process; a 'one size fits all' approach may not be appropriate. Therefore, the procurement strategy may state that different tendering procedures should be adopted for different subcontract works. The current edition of Tendering strategies, RICS guidance note, and the JCT Tendering Practice Note (2017) contain further guidance on tendering, including information about the main approaches, including single-stage tendering, two-stage tendering and negotiated tendering.

A tender bond - sometimes called a bid bond - is designed to act as security by reimbursing the main contractor for losses incurred if a tenderer does not complete, or abuses, the tender process. The use of tender bonds is rare in the UK. However, they are sometimes used in the procurement process for international construction and engineering contracts.

Key features of a subcontract

The structure and content of a subcontract are not fixed, and so can vary from subcontract to subcontract. However, subcontracts tend to contain some common features, the most significant of which are identified in this section.

Agreement

In many cases, the subcontract agreement forms the base of the subcontract and is of central importance. As a minimum, it should set out:

  • the date on which the agreement is entered into
  • the names and addresses of the main contractor and the subcontractor, and
  • the attestation or execution of the subcontract, whether as a deed or under hand.

The subcontract agreement may also contain a description of the subcontract works, as well as recitals and articles of agreement (see section 4.8.4).

Conditions

The subcontract conditions set out the main operative provisions of the subcontract, which are usually numbered and referred to as 'clauses', or in some cases 'paragraphs'. The subcontract conditions may be a standard form (e.g. JCT or NEC), based on a standard form or bespoke. They may be relatively simple or very sophisticated. The subcontract conditions will typically deal with:

  • interpretation and definitions
  • compliance with the main contract
  • discrepancies in documents
  • carrying out the subcontract works:
    • design responsibility
    • quality
    • time for commencement of the subcontract works
    • time for completion of the subcontract works
    • extension of time
    • completion, and
    • defects.
  • control of the subcontract works:
    • instructions
    • health and safety, and
    • suspension.
  • attendances
  • collateral warranties and third-party rights
  • payment:
    • interim payments
    • final payment
    • retention
    • fluctuations
    • claims, loss and expense, and
    • VAT.
  • variations, including the valuation of variations
  • injury, damage and insurance
  • termination
  • notices
  • dispute resolution
  • governing law and jurisdiction, and
  • forms of guarantee, bonds, collateral warranties and third-party rights.

Particulars

Each subcontract will contain details that are specific to the subcontract and the subcontract works, and reflect part of the bargain struck between the main contractor and the subcontractor. They are often referred to as 'particulars' or 'data'. Such particulars or data are usually set out in a document that is agreed by the main contractor and the subcontractor, and which forms part of the subcontract.

Scope

The subcontract must identify the subcontract works. This is often called the scope. It is common for the scope of the subcontract works to be identified in a short description set out in the recitals, articles or particulars/data, and also set out at length in a scope document included in the subcontract. In the end, the work that the subcontractor is obliged to do should be shown and described clearly and unambiguously.

Technical documents

The technical documents will include drawings and specifications that show or describe the requirements for the subcontract works. Such documents will usually mirror the technical documents included in the main contract. However, if the subcontract is entered into some time after the main contract is entered into, the technical documents in the main contract may have been altered (for instance due to design development or variations), and so the technical documents to be included in the subcontract may be revised versions of the documents included in the main contract. In addition, the technical documents in the subcontract might not be included in the main contract at all, for example where the subcontractor has prepared design proposals for the subcontract works prior to entering into the subcontract and it is agreed that such proposals should be included in the subcontract.

Attendances

In the absence of anything to the contrary, the subcontractor will usually be required to provide everything necessary to carry out and complete the subcontract works. However, it is often appropriate for the main contractor to provide certain attendances, which often include facilities and services such as scaffolding, fuel and skips.

Security

The subcontract should set out the type of security, and the specific wording of that security, that the subcontractor is obliged to provide in favour of the main contractor, which is generally a parent company guarantee, bonds or a letter of credit.

Collateral warranties and third-party rights

The latest edition of Construction security and performance documents, RICS guidance note, contains helpful guidance in respect of collateral warranties and third-party rights.

In the context of a subcontract, a collateral warranty is a contract between the subcontractor (as warrantor) and a third party (as beneficiary) under which the subcontractor warrants to the beneficiary that it has complied with the subcontract. A third-party right is a right that allows a person who is not a party to the subcontract (a third party or a beneficiary) to enforce the benefit of a term of the subcontract.

In many cases, the form of collateral warranty that the subcontractor will be required to enter into, and the form of third-party rights that the subcontractor will be required to grant, will be set out in the main contract and included by the main contractor in the subcontract. It is commonplace for such forms to be drafted by solicitors acting on behalf of the employer and so are often bespoke.

However, standard forms do exist; for example, JCT publishes a range of collateral warranties and third-party rights for use with its various forms of contract.

Special requirements

It is likely that the main contractor will have its own special requirements for the subcontractor to comply with. These will not be requirements of the main contract, but will reflect the main contractor's way of doing business. For example, they may relate to the main contractor's policies or procedures concerning health and safety, pollution, noise, waste, site security, the environment, sustainability or modern slavery.

Providers of standard forms of subcontract

The construction industry has for a long time recognised the benefit of using standard forms of contract, which contain conditions that are applicable to a wide range of construction projects. Some of the standard forms of subcontract are described in section 4.7. Organisations that publish standard forms of subcontract include:

  • JCT: This organisation consists of seven member bodies, one of which is Build UK, which is a key participant (i.e. a signatory) in the contract process. The JCT Council contains 47 representatives from its member bodies, who comprise the company's five colleges. New forms of contract and amendments to existing contracts are produced through the colleges, which include specialists and subcontractors. JCT publishes many forms of contract, including subcontracts.
  • Construction Industry Publications (CIP): CIP are publishers and mail-order booksellers for the construction industry. Prior to 2002, the two most commonly used subcontracts in the UK construction industry were the domestic subcontracts DOM/1 and DOM/2. These were published by the Construction Confederation, which was wound up in 2009. In 2011, CIP published updated editions of DOM/1 and DOM/2, and new editions were published in 2018. DOM/1 and DOM/2 are not commonly used, mainly because they are intended for use where the main contract is a JCT contract and main contractors prefer to use JCT subcontracts, which form part of the family of JCT contracts and are consistent with the relevant JCT main contract.
  • New Engineering Contract (NEC): NEC is a division of Thomas Telford Limited, which is a wholly owned subsidiary of the Institution of Civil Engineers (ICE), the owner and developer of the NEC suite of contracts. Much of the guidance used in the industry refers to the third edition of the Engineering and Construction Contract (NEC3). However, in 2017 a fourth edition was published (NEC4), so this guidance note refers to NEC4. NEC publishes two key standard forms of subcontract.
  • Civil Engineering Contractor's Association (CECA)/Association for Consultancy and Engineering (ACE): Prior to the introduction of NEC, civil engineering works were generally carried out under an ICE form of contract, i.e. one of the versions of civil engineering contract (known as the ICE Conditions) published by ICE, ACE and CECA. In 2009 ICE formally endorsed NEC, and in 2010 it withdrew as a sponsoring body of the ICE Conditions, leaving ownership with ACE and CECA. In 2011, ACE and CECA published new main contracts under a new title, Infrastructure Conditions of Contract (ICC). ICC was based on the ICE Conditions. CECA had for a long time published forms of subcontract for use with the ICE Conditions, and it decided to publish subcontracts for use with ICC. It appears that ICC is not often used, primarily because NEC is frequently used in relation to civil engineering and infrastructure works. Therefore, the subcontracts for use with ICC are also not often used.
  • Association of Consultant Architects (ACA): ACA publishes a main contract - the ACA Form of Building Agreement, Third Edition 1998 (2003 Revision) - and a standard form of specialist contract for project partnering (SPC 2000). ACA also publishes the ACA Form of Subcontract Third Edition 1998 (2003 Revision) for use with the ACA main contract. Neither the ACA main contract nor the subcontract are used often.
  • FIDIC: FIDIC is an international federation of associations of consulting engineers, representing the profession in their respective countries. It is known for its rainbow suite of contracts. FIDIC also publishes two standard forms of subcontract.

Some standard forms of subcontract form part of a family of standard forms of contract, which may also include the associated main contract(s) and sub-subcontract(s). The benefits of using a standard form of subcontract, including a subcontract that forms part of a family, are:

  • The cost and time involved in entering into the subcontract should be reduced.
  • The likelihood that the contractual allocation of responsibility and risk is properly understood by the parties should increase.
  • Issues that often arise in relation to subcontract works can be dealt with expressly.
  • The generally acceptable market position can be reflected.
  • Lessons learned from the adoption of the standard form and judicial guidance can be used to good effect.

Copies of the various standard forms of subcontract can be obtained from specialist bookshops (including the RICS bookshop), and from the websites of the relevant publishers. Some publishers also provide guidance notes for their standard forms of subcontract. Check the publisher's website for any available guidance notes.

Amending standard forms of subcontract

Although the benefits of using standard forms of subcontract is widely recognised, they are frequently amended by the parties to the subcontract. In most cases, the main contractor will draft the amendments and include them in the invitation to tender, and then in the eventual subcontract.

There are two main reasons why the main contractor would wish to amend the standard form:

  • to reflect relevant project-specific amendments included in the main contract (e.g. an obligation to comply with third-party agreements such as an agreement for lease), and
  • to reflect the main contractor's business needs (e.g. regarding performance security).

There is nothing inherently wrong with the parties to the subcontract agreeing amendments to the standard form subcontract that they have chosen to use. However, there are five main considerations to bear in mind:

  • The amendments should not lead to discrepancies or ambiguities in the subcontract.
  • The amendments should accurately reflect the commercial intention of the parties to the subcontract.
  • The amendments should be drafted in the same style as the standard form (e.g. terminology and tense).
  • The amendments should be lawful.
  • The amendments should be properly incorporated into the subcontract, generally through an enabling article or clause.

Bespoke/in-house forms of subcontract

Although standard forms of subcontract are often used, unless the main contract requires the main contractor to employ a subcontractor under a standard form of subcontract, the main contractor and the subcontractor are generally free to agree the form of the subcontract. For example, the main contractor or the subcontractor might have its own bespoke/in-house form of subcontract that it wishes to use. However, this is much more likely to be proposed by the main contractor than the subcontractor.

A bespoke/in-house form can benefit the party proposing it because it can be tailored to suit that party's own particular circumstances (e.g. regarding risk allocation, payment terms, policies and procedures). Therefore, a bespoke/in-house form is likely to favour the party that proposes it. As that party is likely to be the main contractor, the subcontractor should review the form in detail, and where applicable seek professional advice on the terms and contractual allocation of risk. This is particularly important because the allocation of risk in a bespoke/in-house form (e.g. for site/physical ground conditions, adverse weather, etc.) might be different from the allocation of risk in the standard forms a party is familiar with.

At some levels of the market, the commercial leverage that can be exercised by the main contractor can lead to a bespoke/in-house form being used with little room for negotiation by the subcontractor. However, at other levels that position can be reversed and the subcontractor might have the upper hand (e.g. where a particular - perhaps commercially strong - specialist subcontractor has been named in the main contract, with the result that the main contractor has little or no option but to employ that particular subcontractor).