RISK STUDY OF THE RELATIONSHIP

BETWEEN CONTRACTOR AND

SUBCONTRACTOR AS THE FACTOR OF
DELAY IN CONSTRUCTION PROJECTS

Muhammad Iqbal Prasojo1), Caroline Maretha Sujana2)

1)
Civil Engineering, Faculy of Engineering, BINUS University, Jl. K.H. Syahdan No. 9,
Kemanggisan, Palmerah, Jakarta Barat 11480, 082122261811, muhammad.prasojo@binus.ac.id
2)
Civil Engineering, Faculty of Engineering, BINUS University, Jl. K.H. Syahdan No. 9,
Kemanggisan, Palmerah, Jakarta Barat 11480, caroline.sujana@binus.edu

ABSTRACT
During the past years there has been a major interest in improving the ability to deal with bad quality
of relationship between contractor and subcontractors, and especially with its negative impact at many
leves of project construction target, in this case, project delays. The purpose of this study was to find
out the factors that continuously arise and cause an impact of delay along with the procedure in order
to minimize the risk which is caused by problems in the relationship between the contractor and
subcontractor which have an impact on not achieving the project’s target. This work used Desk Study
method for data collecting and proceeded by interviewing the experts to validate the required data.
This research has resulted in 22 variables that were divided into two main factors which are internal
factor and external factor. The most dominant factors found are communication, financial and
procurement which affect the project construction and cause delays most of the time. Preventive
measures for factors that caused delay that could be carried out are in the form of creating a suitable
communication path that works for both parties, creating a perfect payment system, strengthening the
existing supply strategy and inputting risk values on cost estimation.

Key Word: Contractor, Subcontractor, Project Delays Factor, Desk Study, Preventive Measure.

INTRODUCTION
In the implementation of a construction project, the main contractor has the responsibility of
basically preparing a plan for the construction phase (Ashworth, 2012). Project constructions contain
many specific works that require special skills as well. Regarding the cause, contractors hire
subcontractors to execute few or most of the works. Hence why the relationship between general
contractors and subcontractors is one of the keys to the success of a construction project. While
important, little information is available about the actual employment relationship that exists between
general contractors and subcontractors.
According to Supriyadi (2014), it is explained that a harmonious relationship is something
that is dreamed of by all construction parties because it has a big share in the stability, peace, balance,
and sustainability of these parties. But in fact, the relationship between the whole organization and
everyone is not always on the same path because there are several circumstances that show many
different goals and interests. According to Enshassi et al., (2012), disharmony in the construction
implementation team resulted from disputes between contractors and subcontractors.
Depart from that, this research aims to determine problem factors & dominant factors that
mostly found & often occur that cause delay on project construction. This research also compares
project constructions from domestic & overseas which will provide the results of which factors that
are mostly found between countries. By examining the resulted data, this research generates the
preventive measures from each dominant factor that has been determined.

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RESEARCH METHODS
Figure 1 Research Flowchart

This research begins with a literature study or literature review which can be found in
Chapter 2, namely Literature Review. Literature study covering several topics according to the title in
this study. Among other things, there is a theory of the relationship between contractors and
subcontractors, construction implementers that explain the basic theory of contractors and
subcontractors, common problems that are commonly encountered and their impacts, general control
of these problems and previous research which is a reference for research being carried out.
Furthermore, namely the Desk Study or determining the influence factor variables in the study. In
researching problems in the relationship between contractors and subcontractors as the cause of delays
in construction projects, primary data are used and secondary data are used. The first data comes from
a desk study by analyzing previous research for both national and international construction projects.
The second data comes from validation from expert contractors and subcontractors. Next, determine
the variables in the influence factor using the scoring method taken from 50 journals and presented in
the form of a matrix. The data is processed using graphs which will produce comparison results
between national and international construction projects. Furthermore, primary data collection in the
form of expert interviews to get suggestions and validation of the results of the research being carried
out, if according to the expert the results obtained are not suitable, it is necessary to do another Desk
Study in determining the dominant factors. Then, from this data can produce conclusions and
suggestions that can answer the research objectives.

RESULTS AND DISCUSSION

Desk Study:
1. Data Collecting
This research develops the methodology from the previous chapter and begins the stages
starting from the desk study by identifying the data that will be used in accordance with the topic of
the Study on the Risk of Relationship Between Contractors and Subcontractors as a Factor for Delay

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in Construction Projects. This study uses the scoring method as a tool to determine the determining
factor variables that will be analyzed.
All data that is required is collected by Desk Study that starts with collecting 50 journals that
contain national & international journals 25 each. All comes with a general description that contains
research title, researcher, year of research, origin, type of research & method. The following examples
are presented:

Table 1 Desk Study

Title Researcher Year Origin Research Type Research

Method

Analisis Faktor Listanto & 2018 Indonesia Thesis Quantitative

Penyebab Hardjomuljadi Descriptive
Keterlambatan
Pembayaran Kontraktor
Kepada Subkontraktor
pada Proyek Gedung
Bertingkat

Permasalahan Ajik Susoko 2019 Indonesia Administrative Descriptive

Subkontrak pada Law Analysis
Pekerjaan Konstruksi di
Pemerintah

Improving the Mudzvokorwa, 2019 Zambia Construction Qualitative

Contractor- Mwiya & Engineering
Subcontractor Mwanaumo Journal
Relationship Through
Partnering on
Construction Project in
Zambia

Since 50 journals that are required are collected, this research’s process moves on to Desk
Study Data Description which completes the previous table by adding the details of each journal such
as research objectives, research data, research variable, results & research factors. The following
examples are presented:

Table 2 Desk Study Data Description

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 Data Description

Researcher Adnan Enshassi, Faisal Arain & Bassam Tayeh

Title Major Causes of Problems Between Contractor & Subcontractors

in the Gaza Strip

Research Type Qualitative

Research Objectives The main objective of this study is to identify and analyze the main
problems that exist between contractors and subcontractors in the
construction industry in the Gaza Strip.

Research Data Literature Study & Questionnaire

Research Method The literature review resulted in 53 problem factors which were
divided into 5 groups. 150 questionnaires to contractors and
subcontractors with an average work experience of 20 years. The
questionnaire was validated with a reliability test related to the set
criteria and then tested the validity of the structure. (Spearman
Test)

Research Variable Financials and non-compliance with construction schedules

Results The survey results show that, partially assigning work to new
subcontractors without notifying the original subcontractor,
contractor financial problems, late payment of contracts, non-
compliance with contract terms, subcontractor non-compliance
with time and lack of quality construction work are the most
important causes of employment relationship problems.

Factors Internal factors that cause relationships in the project organization

2. Data Normalization
The data grouping was adjusted from previous research and obtained 23 variables and divided into
two groups of Problem Factors in the Relationship Between Contracts and Subcontractors, namely as
follows:
● Internal factors
Namely Communication, Finance, Coordination, Procurement, Prolonged Dispute, Non-compliance
with Construction schedules, Revisions, Design Changes, Multilayer Subcontracting, Management
and Supervision, Planning, Quality of Work, Lack of Trust, Lack of Experience, Transfer of Work,
Scheduling, Cheating Practices, Number of Workers, Worker Professionalism, Work Contract Issues
● External Factors

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Namely Unexpected Changes in Prices for Equipment and Materials, Environment and Changes in
Rules and Regulations
The grouping presents in matrix table and scoring method applied to determine how many factors that
are found in each journal. The following examples are presented:

Table 3 Problem Factors between Contractor & Subcontractors

Data Analysis:
After analyzing 50 recognized literature reviews, the process of determining the dominant
factor in the relationship problem between contractors and subcontractors was carried out. In this
stage, the author provides a graph of the internal and external factors that have been grouped in order
to provide a concise and clear visualization so that it is easy to understand.
1. Combined Graph of Variable Appearance
Graphs of the overall internal factors will be presented in first figure Combined Graph of
Variable Appearance in Internal Factors and second figure Combined Graph of Variable Appearance
in External Factors which will be explained one by one.

Figure 2 Combined Graph of Variable Appearance - Internal Factor

Figure 3 Combined Graph of Variable Appearance - External Factor

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 According to the Combined Graph of Variable Appearance in Internal Factors found the
Communication variable 19 times, followed by the financial variable found 14 times then the
procurement variable found 11 times in 50 reference journals causing delays. Thus, the order of the
variables found in the internal factors is as follows:
● Communication
● Financial
● Procurement
In the accordance of Combined Graph of Variable Appearance in External Factors, from the
results of the study of 50 reference journals, it was found that the variables of Changes in Equipment,
Material and Labor Prices were found 3 times, followed by the Environmental variable which was
found 2 times then the variables of Changes in Government Regulations and Laws were found as
many 1 time. Thus, the dominant factor for the group of external factors is the Unexpected Change in
Prices for Tools and Materials.
2. Comparison of Problem Factors Relationship Between Contractors and Subcontractors in
Domestic and Foreign Project Construction

Figure 4 Graph of Variable Appearance in Internal Factors in Indonesia

Construction projects in Indonesia produce the Procurement variable as the highest problem
factor with 10 findings followed by financial and communication problems with 8 and 6 findings
respectively.
So, the following is a sequence of problem factors that are found to occur most frequently in
internal factors in Indonesia:
● Procurement
● Financial
● Communication

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 Figure 5 Graph of Variable Appearance in Internal Factors in Foreign Countries

According to the figure above, it shows slightly different results from Indonesia.
Construction projects in Overseas produce the Communication variable as the highest problem factor
with 13 findings followed by Procurement and Lack of Trust with 6 and 5 findings respectively.
So, the following is the sequence of problem factors that are found to occur most often in
internal factors abroad:
● Communication
● Financial
● Lack of Trust

Figure 6 Graph of Variable Appearance in External Factors in Indonesia

Figure 6 shows that the variables of Changes in Government Regulations and Laws are the
dominant external problem factors found from a literature review in Indonesia. Changes to the laws
and regulations of the government are made with the aim of creating a balance and smooth running of
construction projects.

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 Figure 7 Graph of Variable Appearance in External Factors in Foreign Countries

Figure 7 shows a very different result from external factors in Indonesia. Based on the
attached graph, the Unexpected Change in Price of Equipment and Material variables was found 3
times then followed by the Environment variable which was found 2 times. This concludes that the
Unexpected Change in Prices for Equipment and Materials is the most dominant problem factor.

Comparison Results of Relationship Problem Factors Between Domestic and Foreign Contractors and
Subcontractors

Table 3 Comparison Results

Faktor Permasalahan

Kelompok

Internal Eksternal

Perubahan Harga Alat

Komunikasi, Finansial,
Gabungan dan Material yang Tak
Procurement
Terduga

Perubahan Peraturan dan

Dalam Procurement,
Perundang-undangan
Negeri Finansial, Komunikasi
Pemerintah

Perubahan Harga Alat

Komunikasi, Finansial,
Luar Negeri dan Material yang Tak
Lack of Trust
Terduga

In accordance with Table 3 above, the results are generated by 3 groups of journals which are
combined journal, domestic journal & overseas journal. Each group has internal & external factors
that show the factors that are dominant & mostly occur.

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Preventive Measure

Table 4 Preventive Measures

Factors Preventive Measures Settlement

Arranging regular meeting using two ways

communication.

The act of communication in a

Only delegated staff that responsibles to
Communication construction project is obliged to
communicate.
fulfill both parties' needs

All involved parties are obligated to receive

Minutes of Meeting (MoM).

Adjusting a suitable paying system.

Implementing the paying system

Financial & schedule that suits the whole
project Paying parties are obligated to create a
paying schedule that has been written on
contract.

Strengthening operations and logistics

department.

Creating a procurement strategy

Procurement that accommodates detailed Creating financial & risk forecasting to be
construction project needs applied in project construction.

Inputting risk value to each unit price value.

Based on the results of the above research, efforts to prevent and resolve problems in the
relationship between contractors and subcontractors require efforts that can be applied simply but can
have a large effect on the entire project.

Data Validation

After the list of interview questions has been compiled, the interview process is carried out to
selected sources who are in accordance with expert qualifications. The first interviewee was Mr. Aulia
Rachman who has the position of Project Manager at PT. Marga Maju Mapan. From the main
questions given, Mr. Aulia Rachman explained that the problem factor that he and the team often
encountered was communication followed by financial problems from subcontractors. He stated that
financial problems are rarely found, but when these problems arise, they have a large influence on the
ongoing project. The effort he and his team made to overcome communication problems was to invite
all responsible personnel to attend predetermined meetings. The obstacle encountered was the
difficulty of the contractor in contacting the subcontractor because the subcontractor's person in
charge could not be contacted. The effort he made for financial problems was to inject the funds
needed but this effort had a big effect as well, such as changing the total cash flow plan that had been

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made. The tendency of external factors that he often finds in the field is unexpected changes in the
prices of tools and materials.

The second resource person interviewed was Mr. Sugiarto in the position of Deputy General
Superintendent. The answers he gave to the main questions were communication, coordination and
procurement. But what he also often finds in the field is the poor quality of work produced by
executors such as work that does not match the picture. He also mentioned that communication,
coordination and procurement were factors he also frequently encountered in the field. But the most
dominant factor based on the statement from him is the poor quality of work by the executor, such as
work that does not match the picture. The effort he made to this problem was by asking the person in
charge of the design drawing to revise the image. Mr. Sugiarto also stated that he also found problems
with external factors, namely unexpected changes in prices for tools and materials. He said that each
team discovered price escalation, management also adjusted pricing and cost estimates with these
prices.

CONCLUSIONS AND SUGGESTIONS

According to the results, this research has generated a conclusion that answered the problem
identifications that have been built in the beginning. The factors of relationship problems between
contractors and subcontractors that caused delays in the construction project were found to be divided
into two main factors, namely internal factors and external factors. Variables found in internal factors
include Communication, Finance, Coordination, Procurement, Prolonged Dispute, Non-compliance
with Construction schedules, Revisions, Design Changes, Multilayer Subcontracting, Management
and Supervision, Planning, Quality of Work, Lack of Trust, Lack of Experience, Job Transferring,
Scheduling, Cheating Practices, Number of Workers, Worker Professionalism, Work Contract Issues.
The second factor is external factors with three variables found, namely, Unexpected Changes in
Prices for Equipment and Materials, Environment and Changes in Government Regulations and
Legislation. The most dominant factors affecting the relationship between domestic and foreign
contractors and subcontractors are internal factors with communication, financial and procurement
variables as well as unexpected changes in equipment and material prices for external factors.
Comparison of relationship problems between contractors and subcontractors found
domestically and abroad is the finding of dominant variables which have similarities. On internal
factors, Communication and Finance are the variable problem factors that are most found domestically
and abroad. In Indonesia, the communication variable is in the third domination order, while abroad,
the communication variable is in the number one dominance order. From the results of literature
reviews from within the country and abroad, the financial factor is always in the second dominant
order and this gives an answer that the financial factor is a problem factor that is always found to be
the cause of problems between contractors and subcontractors. For the comparison of external factors,
there is a very clear difference between domestic and foreign because each area has different
dominant factors. For domestic, the dominant factor found is the Changes in Government Regulations
and Legislation. For the dominant external factors abroad, there were 3 times the findings on
unexpected changes in prices for tools and materials.
Efforts to prevent relationship problems between contractors and subcontractors based on the
above research are:

● The need to hold regular meetings at the right frequency using two-way
communication lines.
● All communication between the two parties needs to be recorded and made Minutes
of Meeting which will be sent to all participants who attend the meeting,
● Only responsible staff delegated by the contractor may communicate with the
subcontractor to prevent the subcontractor from receiving conflicting instructions.
● The payer needs to make a neat payment schedule and system.
● The contractor needs to implement a good procurement strategy.
● Enter the risk value into the unit price value for each work item.

Based on the results of the research above, there are several suggestions, namely as follows:

● For institution
- Strengthening the project organization system and creating success principles for
workers.
- Implementing proper lines of communication between construction implementers.

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 - Implementing a system and an appropriate payment time to the implementing party
in each construction project
- Strengthening the supply chain sector as the heart of construction projects to
regulate the procurement of tools and materials.
- Creating the right program to set clear expectations for the constructor to avoid a
lack of trust.
- Improve management and supervision in the field by management.
● For Upcoming Research
- To expand and multiply the literature review needed for the variation of the required
variables.
- To further deepen further research by making simple procedures that can be used by
project executors to avoid problem factors that cause project delays.

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THE HISTORY OF THE AUTHOR

Muhammad Iqbal Prasojo was born in the city of Jakarta, on June 25, 1995. The author completed his
undergraduate education at Bina Nusantara University in the field of Civil Engineering in 2021.

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