Civil Engineering Reference
In-Depth Information
Project/Programme Buying Organisation
Client
Main Project Contractor
Tier 1
Groundwork Subcontractor
Tier 2
Plant Provider
Tier 3
Plant Maintenance
Tier 4
Parts Supplier
Tier 5
Figure 2.2
Example of a supply chain hierarchy.
as integrator. These specialist firms are tier 2 suppliers and they in turn
may subcontract or be supplied by other firms, namely, the tier 3 con-
tractors. Taken together, the tiers of organisations comprise the supply
chain. Figure 2.2 illustrates the supply chain hierarchy, beginning with
the client or buying organisation. The client creates an opportunity for
tier 1 contractors, who may be major contractors with the financial
strength and capability to undertake the management of the project.
They assume overall responsibility for the delivery of a project or pro-
gramme element. The tier 1 contractor then subcontracts to tier 2 spe-
cialist firms, who possess the required skills and experience and are of
sufficient size to accept responsibility for their specialist area, with the
knowledge and contacts to further sublet certain elements of their work
to tier 3 contractors, who have the expertise and skills to carry out the
work. These lower-tier firms are often small or medium-sized enter-
prises (SME), who in turn may further subcontract to others further
down the supply chain. The number of firms at each tier increases until
as many as 40 to 80 firms may be involved on any one project, depend-
ing on its size and the nature of the tier 2 works, as some supply chains
are more technically complex than others. In this way the delivery,
capability and financial capacity risks are spread over many participat-
ing firms, while accessing the specialist labour, plant and materials
required for the works.
