Implementation of an NCR System for Subcontractor Control

The General Contractor was regularly exposed to findings and financial penalties resulting from labor-related violations committed by smaller subcontractors engaged on the project. The key issues included inadequate working conditions, delayed wage payments, and non-compliance with Personal Protective Equipment (PPE) requirements. Although the violations occurred at the subcontractor level, responsibility for compliance with EBRD PR2 extended across the project, creating significant risks for the General Contractor.

Our team developed and integrated a formal Non-Compliance Report (NCR) mechanism into construction subcontracting agreements. A legally enforceable accountability matrix was established for different categories of violations, including financial penalties and contractual deductions imposed on subcontractors. A transparent procedure was also introduced for recording violations, issuing NCRs, monitoring corrective actions, and verifying their effective closure.

As a result, an effective Supply Chain Control mechanism was established, creating direct accountability for subcontractors’ compliance with EBRD PR2 requirements. During the first quarter following implementation, the number of subcontractor violations decreased by 85%. The results were presented to EBRD auditors and recognized as sufficient evidence of the effectiveness of the corrective measures implemented.