Subcontracting and Its Benefits Research Paper Example | Topics and Well Written Essays - 3000 words

Subcontracting and Its Benefits - Research Paper Example As the paper outlines, a work contract which seeks to outsource certain types of jobs is called subcontracting. This occurs when a contractor does not have the desired skills to fulfill certain tasks. Subcontracting is considered important for manufacturers as it allows a number of products to be made through complex components. The concept of subcontracting is prevalent in a number of industries, with special regards to the construction industry. Subcontracting can either be permanent, situation-based or simply on one time basis-this, in turn, depends on the company as well as the subcontractor. (Jones, 2005)  There are three-fold benefits of subcontracting. The first benefit is that it encourages quicker completion as numerous aspects of a single project can be fulfilled at the same time. The second advantage is the cost-effectiveness of a subcontracting procedure. As a subcontractor has the required expertise, he/she has the benefit of getting the job done through the means of a n expert institution. Lastly, a long term relationship is in the making as the manufacturer has the advantage of fulfilling his/her requirement through the means of a subcontractor. This way, the manufacturer not only saves money, he/she also has the benefit of executing his/her task to perfection at a lowered cost.   Listed below are reasons why manufacturers choose subcontractors on a regular basis.  It Is Mandatory By The Government. One of the main reasons why the subcontracting rates are on the rise is because of the mandate. Unless and until a prime contractor parts a share of his/her assignment to a subcontractor, he/she is not eligible for a contract through the government. An ideal subcontracting plan, as per the government rules, must include and involve small disadvantaged business, historically underutilized business zones, women run small businesses and a business which is owned and run by disabled veterans.  2) Sub Contractors Can Now Bid On Large Projects With A reas Outside Their Expertise.  Prime contractors are by and large massive organizations which fail to understand the concept of systematic work utilization. Regardless, they take on numerous assignments and in order to fulfill the additional areas of work, they involve subcontractors as well. 3) It Leads To Specialized Skill Sets.  If a manufacturer wishes to improve his/her design and manufacturing procedures, he/she needs to utilize the specialized knowledge of subcontractors. For example, Lockheed Martin, a leading jet engine manufacturer, regardless of possessing a suitable in-house designing staff, prefers to subcontract his work to various third parties in the hope of getting the best design.