MANAGEMENT OF SUB-CONTRACTORS BY CONTRACTORS .1 Sub-contractor Management Plan

21.12 IMPORTATION OF SAND FROM MAINLAND CHINA BY BARGES

For contracts where importation of sand from Mainland China by barges is required, the procedures as laid down in WBTC Nos. 10/95 & 10/95A shall be followed, particularly on the need to carry on board the original versions of a list of permits that are required by the appropriate authorities. The list of permit may change from time to time and the Engineer should remind the Contractor that the latest list is kept.

21.13 ELECTRONIC DRAWINGS

If contract drawings are available in electronic form, the Contractor may ask the Engineer for additional copies of such electronic drawings for use under the Contract.

Charges and further details regarding the supply of electronic drawings are given in WBTC No. 7/2000 and ETWB TCW No. 7/2000A.

21.14 MANAGEMENT OF SUB-CONTRACTORS BY CONTRACTORS 21.14.1 Sub-contractor Management Plan

For contract that requires the submission of Sub-contractor Management Plans (SMP), the Contractor shall, within 30 days of the acceptance of the tender, submit a detailed version of the SMP in the form and contents as prescribed in the Contract. Thereafter, the Contractor shall update and submit the SMP on a quarterly basis. Should there be any major changes in the Contractor’s sub-contracting arrangement during the period before the next quarterly reporting, the Contractor should also notify the Engineer/ER in writing immediately. Upon receipt of the SMP, the Engineer/ER may offer his comments and notify the Contractor accordingly. No approval of the SMP is required from the Engineer/ER.

(Amendment No. 6/2009)

A contractor's performance in complying with the provisions in the SCC on sub-contracting and submission of the SMP will be assessed as pursuant to Section 4 of the CMH. Regulating actions shall be taken against the contractor in accordance with Section 5 of the CMH for poor performance in complying with the above provisions, but the guidelines for monitoring of performance given in Sub-section 5.4 of the CMH should be followed prior to making a recommendation for suspension from tendering.

(Ref.: ETWB TCW No. 47/2002)

If a contractor fails to update and submit the SMP to show his latest changes to the sub-contracting arrangement within one month of the quarterly reporting as required in the SCC, the procuring department should warn the contractor in writing and urge him to submit the updated SMP, and copy the warning letter to the Secretary for Development (Attention: PAS(W)4). (Ref.: ETWB TCW No. 47/2002)

If, after expiry of the one-month period as stated in paragraph 3 above, the contractor has failed to comply with or submit the updated SMP, the procuring department should notify the Secretary for Development (Attention: PAS(W)4) with a copy to the Chairman of the relevant Managing Review Committee requesting regulating actions against the contractor in accordance with Section 5 of the CMH.

Upon receipt of the procuring department's notice, the Secretary for Development will give a further opportunity to the contractor to present his case before deciding whether to immediately suspend the contractor from tendering. Copies of all correspondence will be sent to the procuring department and the Managing Department. Uplifting of the suspension will only be considered when the contractor has submitted the updated SMP showing his latest sub-contracting arrangement. (Ref.: ETWB TCW No. 47/2002)

(Amendment No. 6/2009)

Apart from the SMP, the Contractor is also required, normally in the form of a SCC, to ensure that his contractor would not further contract the whole of the works sub-contracted to them and that his own staff would be employed to manage and supervise his sub-contractors.

In 2005, the then ETWB conducted a review on the status and effectiveness of the implementation of SMPs for contracts reported to have wages arrears problems. It is found that the measures taken in response to the SMP requirements on payments and control of wages arrears differ substantially from one contractor to another. The standard of vetting the SMP adopted by individual departments also varies to great extent. To facilitate project officers in vetting the SMP proposals submitted by the contractor, the then ETWB drew up the following list of examples of good practice in the SMP consolidated from the review exercise (Ref: SETW’s memo ref. (00VB3-01-10) in ETWB(PS)109/11/1 dated 15.11.2005):

(1) General

(a) The Contractor shall include all sub-contractors KNOWN to him in the SMP.

(SMP requirement)

(b) The Contractor shall ensure that their sub-contractors report on the further subletting of their works (to other contractors) for including those details in the SMP. (SMP requirement)

(c) The Contractor will require its subcontractors to submit monthly updates for (b) above for his updating of the SMP.

(d) Changes to the subcontracting arrangement will be discussed at monthly progress meetings with the Architects/Engineers to ensure that both the RSS staff and the Contractor's own site supervision team are well informed.

(2) Measures for monitoring early industrial dispute problems (SMP Requirements) (a) Publicity

(i) The Contractor will put up posters issued by LD and distribute LD's leaflets on the site to ensure all workers of subcontractors understand their rights and responsibilities.

(ii) The Contractor will request and encourage all workers of subcontractors to report on any wages in arrears for over 7 days.

(b) Site surveillance

(i) The Contractor will set up an industrial dispute hotline so that workers of subcontractors can report to a designated management staff on such disputes.

(ii) The Contractor will set up a lockable suggestion box for workers to report their wages arrears problems privately and confidentially.

(iii) The Contractor will remind workers at least once a week during the pre-work exercise to report on any wages arrears problems.

(iv) The Contractor will remind workers of the requirements of submitting declarations of no "unsettled salary" through their employers and carry out random check on workers to verify the declarations received.

(v) The Contractor will designate site foremen to collect intelligence from workers for advance warnings over potential wages arrears problems.

(c) Evidence of wages received by workers

(i) The Contractor will require his sub-contractors to submit evidence of wages received by their workers together with the workers' declarations of no "unsettled salary" for the previous month when making their payment applications.

(ii) The declaration forms in (i) above should also be submitted for any months the sub-contractors concerned do not apply for any payment.

(iii) Declaration forms should be in the language known to the workers.

The form should also be designed to take into account of the possibility of workers receiving dated cheque so that monitoring and if necessary, follow-up action can be made.

(d) Follow-up action

(i) Once a suspected case of wages arrears is established, the Contractor will appoint a senior management staff to investigate the incident and alert the Engineer/Architect without delay.

(3) Measures for handling complaints from workers (SMP Requirements)

(a) Upon the receipt of a complaint, the Contractor's designated investigating staff will first make an attempt to resolve it as appropriate with the relevant subcontractor and workers. Payment records, declaration of receipt of wages and site attendance records should be retrieved for investigation.

(b) Where appropriate, the investigating staff will attempt to mediate the complaint for an agreement between the subcontractor concerned and his workers. If necessary, he should witness and record any payments made to settle the case.

(c) If agreement cannot be made, the investigating staff will seek assistance from the LD to take over the mediation of the complaint.

(d) The investigation staff will at all times co-operate with LD for earlier actions in handling the complaint.

(e) The investigating staff will keep the Architect/Engineer informed of the development of the complaint.

(f) The Contractor will also report on the monthly progress report whether wages arrears dispute is identified on site.

(4) Measures for maintaining daily attendance records of all workers on the site. (SMP Requirements)

(a) System in place

(i) A smart card, site pass or logbook system should be implemented under the supervision of a designated staff. Workers should be required to log in at the normal place of assembly or a site entrance.

(ii) Names and details of all workers, their employers and the trades in which they are employed will be recorded and kept on the site.

(iii) Security guards stationed at the entrance will be responsible for managing workers' in and out discipline.

(b) Counter-check mechanism

(i) Sub-contractors will be required to submit daily attendance records (with names) of their workers for checking against the site access system's records by a designated staff.

(ii) A designated senior staff will review the attendance record periodically to identify if there is any unreported further subcontracting or changes in subcontracting arrangement.

(5) Ensuring timely payment to lower-tier subcontractors (SMP Requirements)

(a) The Contractor will require subcontractors to submit declarations stating that they have duly paid their subcontractors at a lower tier, together with copies of the relevant evidence of payment, such as receipts.

(b) The Contractor will require their subcontractors to impose the same obligation as (a) on their subcontractors at a lower tier so that it is filtered down to subcontractors at all levels.

(c) The Contractor will appoint a designated staff to encourage subcontractors at all levels to report on any overdue payments.

While the specific measures under each category cited in the above list are mere examples and might not be applicable to all contracts, project staff should exercise their

judgement in making reference to them. On the other hand, the measures proposed by the contractors as part of their SMP for monitoring individual disputes problems should fall broadly within the four categories of heading identified in the good practices, i.e. publicity, site surveillance, evidence of wages received by workers and follow-up actions. Engineer/ER should ensure that all these elements are present when checking/ reviewing SMPs.

In December 2008, DEVB promulgated the following enhancement measures to improve the enforcement of the SMP (Ref: SDEV’s memo ref. DEVB(W) 109/11/01 Pt. 9 dated 19 December 2008). These enhancement measures should be implemented in all public works contracts to be tendered on or after 1 February 2009.

(a) Payment for Sub-contractor Management Plan

To address the quality issues, separate BQ items have been introduced for submission and updating of SMP.

(b) Contractual provisions for empowerment

To empower the Engineer to obtain documentary proof from contractors, contract provisions have been introduced to require the contractor, upon request by the Engineer, to submit relevant documents.

(c) Standard checklist

To assist project officers in vetting SMP submissions and conducting site compliance checks, a standard checklist has been designed. The checklist is given in Appendix 7.49.

(d) Regular internal audit

To strengthen the monitoring of SMP submissions, the Technical Audit procedures in Appendix 7.39 have been revised to include checking of SMP compliance.

(Amendment No. 6/2009)

21.14.2 Engagement of Sub-contractors registered under the Voluntary Sub-contractor Registration Scheme (Ref: ETWB TCW No. 13/2004)

The contractors of all capital works and maintenance works contracts with tenders invited on or after 15 August 2004 are required to employ sub-contractors (whether nominated, specialist or domestic) registered under the Primary Register of the Voluntary Sub-contractor Registration Scheme (VSRS) introduced by the Provisional Construction Industry Co-ordination Board (PCICB). Where the contractor is to sub-contract/ sub-let part of the Works involving trades available under the Primary Register of the VSRS, he shall engage all sub-contractors (whether nominated, specialist or domestic), as stated in his latest updated submission of the SMP, who are registered under the relevant trades in the Primary Register of the VSRS. Should the sub-contractors further sub-contract (irrespective of any tier) any part of the part of the Works sub-contracted to them involving trades available under

the Primary Register of the VSRS, the contractor shall ensure that all sub-contractors (irrespective of any tier) as stated in the Contractor’s latest updated submission of the SMP are registered under the relevant trades in the Primary Register of the VSRS.

Should those contractors on DEVB’s List of Approved Contractors for Public Works and List of Approved Suppliers of Materials and Specialist Contractors for Public Works be engaged as sub-contractors (whether nominated, specialist or domestic) or their further sub-contractors in a public works contract, where in such cases if part of the Works involving trades available under the Primary Register of the VSRS, they are still required to register from the respective trades under the Primary Register of the VSRS.

To allow greater flexibility for the contractor’s planning of his sub-contracting at early stage, it is acceptable to allow the sub-contractors (whether nominated, specialist or domestic) and their further sub-contractors proposed in the latest updated SMP submission by the contractor to complete their registration under the VSRS before the commencement of the works under the relevant sub-contracts and further sub-contracts respectively. For the avoidance of doubt, when a contractor or further sub-contractor is suspended or in the process of an appeal against his suspension from registration under the Primary Register of the VSRS, he is still considered not having complied with the above requirements for engagement of sub-contractors unless the suspension is lifted before the commencement of the works under the relevant sub-contracts or further sub-sub-contracts respectively.

If the contractor fails to comply with any of the contractual requirements for engagement of sub-contractors, works department shall warn the contractor in writing and urge him to fulfill such contractual requirement within one month. The works department shall forward copies of all relevant correspondence to the Secretary for Development (Attention: PAS(W)4). If, after expiry of the one-month period, the contractor has still failed to comply with such contractual requirement, the works department shall notify the Secretary for Development (Attention: PAS(W)4) with a copy to the Chairman of the relevant Managing Review Committee requesting for regulating actions to be taken against the contractor in accordance with Section 5 of the latest version of the Contractor Management Handbook.

Upon receipt of the works department’s notice, the Secretary for Development will give a further opportunity to the contractor to present his case before deciding whether to immediately suspend the contractor from tendering. Regulating actions will not be taken if such non-compliance is not within the control of the contractor. Copies of all correspondence will be sent to the works department concerned and the Managing Department of the relevant category of the List and/or the Specialist List. Uplifting of the suspension will only be considered when the contractor has complied with all the relevant contractual requirements.

(Amendment No. 3/2009)