Develop Phase: Other Business Relationships - Prime/subcontractor agreement

4 important questions on Develop Phase: Other Business Relationships - Prime/subcontractor agreement

What are the relationships in a prime/subcontractor agreement?

The contractor has the direct relationship with the customer. The subcontractor has a contractual relationship only with the prime contractor.

Which contractor is entirely responsible in a prime/subcontractor agreement?

A prime contractor is responsible to the customer for the entire scope of the project. It stands behind not only its own work but also that of its subcontractors. The project risk is managed differently from the consortium mode.

What is the cause of contract failure within a prime/subcontractor agreement?

Entering into obligations without 'back-to-back' commitments from subcontractors is a common source contract failure.
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Questions about a prime/subcontractor agreement?

  • Is my company the only company that has a direct relationship with the customer?
  • Is my company performing the majority of the work on this project?
  • Does the contract with the subcontractor reflect all of the requirements of the prime contract?
  • If i have a responsibility to the customer does the subcontractor have a similar obligation me?
  • Does the subcontractor have liability to me for its performance?    

The question on the page originate from the summary of the following study material:

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