Domestic vs Nominated Contractors

[Nick Orina]

Domestic Contractors versus Nominated Contractors; Discuss.

• What do these terms mean?
• Whats the difference between the two?
• Advantages and Disadvantages of each.
• Implications of either on the construction project.
• Are there any other categories of contractors besides these two?

[Nina Ndichu]

Good to see that your posted questions...Kwani guys got bored lol...

In terms of the main contractor or the sub contractors??

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Nina Ndichu

B.A.S.(Hons), B.Arch(Hons)
Graduate Architect
tel: +254 775 563 525

[Nina Ndichu]

In the absence of express terms, the advantages of the “nomination” system from the contractor’s point of view, other than being relieved of the process of selection and negotiation, are hard to see.  

The contractor is often faced with the following:

• Little description of the sub-contract work other than the inclusion of a prime cost sum in the price
• Only knowing the true nature of the sub-contract work and its effect on programming and completion at the time the nomination occurs, which is often late on in the contractor’s work, certainly after the terms of the main contract have been agreed
• Liability for design of work and materials
• Liability for defects in goods and materials supplied
• Liability for latent defects
• Liability for delay in performance by the sub-contractor or for its withdrawal from the job

[Nina Ndichu]

Risks

The difficulty in any given situation is that the liability will depend upon the particular circumstances of the case. Neither the employer nor the contractor has any certainty as to the outcome.

To establish whether terms can be implied or whether they are excluded, the court will look at:

• The express terms of the main contract (the terms of the sub-contract are not generally implied into the main contract by implication)
• The circumstances of the nomination

[Nick Orina]

Guys didnt get bored, the questions became too many.

Anyway, I've come across it in relation to Sub-contractors. But if the terms apply to main contractors too, feel free to educate!

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[Nina Ndichu]

No actually the reason I asked for clarification is cos I know it refers to sub contractors.

[Nina Ndichu]

Domestic subcontractor 

A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.

Nominated subcontractor 

Certain contracts permit the architect or supervising officer to reserve the right of the final selection and approval of subcontractors. The main contractor is permitted to make a profit from the use of nominated subcontractors on site, but must provide "attendance" (usually the provision of water, power, restrooms, and other services to enable the nominated subcontractor to do his job). In effect the appointment of nominated subcontractors establishes a direct contractual relationship between the client and the subcontractor.

Named subcontractors 

Effectively the same as a domestic subcontractor - A subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed by the main contractor.

[Denis Chek]

Hi,

To answer your question will use the JBC as the basis.

WHAT THE TERMS MEAN AND THE DIFFERENCES

Domestic subcontractors are not distinguished from the main contractor in conditions of contract as they are assumed to be part of the main contractor.For the nominated sub contractors there is a difference because of the client's right of choosing the subcontractor. This arises where 

i) There is a prime cost sum in the contract bills (BQ) and this often refers to the works in breif

ii) Where an architect issues instructions regarding expenditure of provisional sums.

The contractor prices for attendance requiring preparation and arrangement for work by the contractor for the sub contractor. The main difference is in the appointment, the contractors liability remains the same.

ADVANTAGES AND DISADVANTAGES

1. With the nominated sub contractor the owner is given the authority to select the sub contractor at any time, even long after the main contract has been entered to. 

2. In such contracts there is a possibility of cost claims by the MC in delay of nominated contractors but this rarely happens because the contact is between the nominated sub contractor and the MC.

3. With the nominated sub contractor the client is able to make comparison among the subcontractor and choose the most suitable one to take over the specialist work.

Will comment on the rest later.

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