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What is today's blog about?
Property Elite consultant, Abigail Blumzon BArch (Hons) MSc, MRICS MAPM discusses what the Black Book is and gives an update on one of the latest Guidance Notes published by the RICS.
This is part 2 of a 2 part blog exploring the Black Book, and is essential reading for RICS APC and AssocRICS candidates on the Quantity Surveying & Construction and Project Management pathways.
Abigail is a Chartered Surveyor and Senior Project Manager. She has a wide range of professional expertise in a variety of roles within the construction sector.
Part 1 looked at the Black Book and why it is important, plus the Change Control and Management Guidance Note.
This week’s blog will explore:
What is the ‘Subcontracting’ RICS Guidance Note?
What are the pros and cons of subcontracting?
What is a subcontract?
How does this link back to the APC?
In last week’s blog, we explained that the Black Book' is a suite of Guidance Notes that define good technical standards for quantity surveying and construction professionals. Many are also relevant to other pathways, especially project management and building surveying.
Examples of Black Book Guidance Notes include Change Control and Management, Acceleration, Retention E-tendering and Subcontracting.
We will explore the last of these in more detail in this blog.
What is the Subcontracting Guidance Note?
This Guidance Note was published in April 2021 and effective from 1 July 2021. It covers most issues that can arise as a result of subcontracting on major projects.
Almost all construction work involves 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. Subcontract works may include one or more of supplying materials, carrying out work, and design work. In other cases, the subcontract works will only consist of carrying out work.
The Guidance Note covers topics including:
The history of subcontracting
Some of the pros and cons of subcontracting
Details of the seven categories in the construction industry that are usually considered subcontractors, including named, domestic, and design consultants
Information about how subcontractors may be procured, tender procedures, and the types of subcontract they may work under
What are the Pros and Cons of Subcontracting?
Some of the pros and cons are discussed in the Guidance Note include:
Facilitation where the main contractor does not have the necessary skills to carry out work elements, e.g. specialist design
Enables the main contractor to acquire additional resources for a particular project
Main contractors lose a degree of management and control over specialist work
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
What is a Subcontract?
A subcontract is a contract between a firm which is being employed to do a job and another firm which agrees to do part of that job.
The starting point in drafting any subcontract is to choose from the range of subcontracts that are available.
The Guidance Note covers factors to consider including:
Whether a particular form of subcontract is available for use with the main contract. For example, if the main contract is JCT DB 2016, the associated JCT DBSub 2016 is available for use with that main contract.
Whether a simple form of subcontract may be more appropriate
What is needed with regard to Collateral warranties. In the context of a subcontract, a collateral warranty is a contract between the subcontractor and a third party beneficiary under which the subcontractor warrants to the beneficiary that it has complied with the subcontract
How to deal with a failure by the subcontractor to perform in accordance with the subcontract (most subcontracts contain a clause that enables the main contractor to omit work from the subcontractor, enabling the contractor to make alternative arrangements)
Where the subcontractor becomes insolvent, the consequences for the main contractor can be very serious: delays and increased costs in completing the main contract works, financial losses and damage to reputation. Appendix D of the GN contains detailed advice for insolvency risk mitigation, and Appendix E covers signs of potential subcontractor insolvency such as rumours regarding the subcontractor’s financial stability, an unusually high turnover of staff, or inflated applications for payment and claims.
How Does this Link Back to the APC?
The Black Book standards are essential development tools for younger professionals working through their APC and useful guides to best practice for more experienced professionals.
It is important to make use of this valuable body of advice when preparing to sit your APC.
The process I found helpful when going through my APC journey, and which I teach to those I mentor, is below:
No matter which pathway you’re on, run through the list of Black Book Guidance Notes
Make a list of those that are relevant to the competencies you’re taking
Read through each Guidance Note, making notes digitally on key points as you go through
Tidy up your notes to form a ‘cheat sheet’
Make yourself a set of 10-15 question and answer flashcards based on your notes (the Quizlet app is great for this)
Use your notes and flashcards regularly to help you retain the information
Conclusion and Key Points
In summary of the key points within this blog, a project brief:
The 'Black Book' is a suite of Guidance Notes that define good technical standards
These are invaluable as a source of knowledge for your APC revision
The Subcontracting Guidance Note is important as almost all construction work involves subcontracting
There are many pros and cons which should be carefully considered and detailed in a risk register
Give consideration to the lost appropriate form of subcontract
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Stay tuned for our next blog post to help build a better you.
N.b. Nothing in this article constitutes legal, professional or financial advice.