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🤝 Subcontractor Management Guide

Your subs make or break your projects. Build a system to find good ones, manage them effectively, and protect yourself when things go wrong.

Quality Over Price

The cheapest sub often costs the most. Factor in risk, not just bid price.

The Subcontractor Lifecycle​

  1. Prequalification — Vet before you bid
  2. Bidding — Get competitive pricing
  3. Award & Contract — Lock in scope and terms
  4. Coordination — Manage day-to-day
  5. Payment — Pay fairly and timely
  6. Evaluation — Document performance

Prequalification​

Do not run one process for every sub or prequalify after bids come in. Tier requirements by your exposure, set award limits, and use conditional approval when the answer is not a clean yes.

Deep dive: Subcontractor Prequalification — the full pillar guide.

Tools:

For certificates and endorsements, see Certificates of Insurance — limits vary by job; set them with your broker, not from a generic checklist.

Bidding & Selection​

Getting Competitive Bids​

  • Invite 3-5 qualified subs per trade
  • Provide complete bid packages
  • Set clear scope boundaries
  • Allow adequate time to bid
  • Be available for questions

Bid Evaluation​

Don't just take the low bid. Consider:

FactorQuestions
PriceIs it realistic? Too low = problems
ScopeDid they include everything?
ExclusionsWhat's NOT included?
ScheduleCan they meet your dates?
CapacityDo they have the manpower?
HistoryHow did they perform before?

Bid Leveling​

Compare apples to apples:

  • Clarify scope differences
  • Add back exclusions at fair prices
  • Verify unit prices are consistent
  • Document assumptions

Subcontract Execution​

Key Contract Provisions​

Scope of Work

  • Detailed written scope
  • Reference drawings and specs
  • Include/exclude list
  • Interface points with other trades

Schedule

  • Specific milestones
  • Coordination requirements
  • Delay provisions
  • Liquidated damages (if applicable)

Payment Terms

  • Progress payment schedule
  • Retention percentage
  • Lien waiver requirements
  • Pay-when-paid provisions

Insurance & Bonding

  • Required coverage amounts
  • Additional insured requirements
  • Bond requirements (if any)

Change Order Procedures

  • Markup percentages allowed
  • Documentation requirements
  • Approval process

Default & Termination

  • Cure periods
  • Termination for cause
  • Termination for convenience

Flow-Down Provisions​

Ensure your subcontract includes:

  • All requirements from prime contract
  • Same dispute resolution process
  • Matching insurance requirements
  • Schedule obligations

Day-to-Day Coordination​

Pre-Construction Meeting​

Before work starts:

  • Review scope and schedule
  • Establish communication protocols
  • Identify key contacts
  • Review safety requirements
  • Discuss coordination points

Weekly Coordination​

  • Schedule coordination meetings
  • Review 3-week lookahead
  • Identify conflicts early
  • Document action items
  • Follow up on commitments

Field Coordination​

  • Daily contact with foremen
  • Coordinate access and staging
  • Manage shared resources
  • Address issues immediately
  • Document everything

Payment Management​

Pay Application Review​

  • Verify work is complete
  • Check quantities
  • Review stored materials
  • Collect lien waivers
  • Process timely

Lien Waiver Tracking​

For each payment:

  • Conditional waiver for current payment
  • Unconditional waiver for previous payment
  • Lower-tier waivers (if required)

Retention​

  • Standard: 10% until 50%, then 5%
  • Release at substantial completion
  • Hold until punch complete
  • Require final waivers

Performance Issues​

Early Warning Signs​

See Warning Signs a Subcontractor Is in Trouble for the full signal list and staged response. In the field, watch for:

  • Manpower below plan
  • Quality issues appearing
  • Missing coordination meetings
  • Slow response to RFIs
  • Material delivery delays
  • Safety violations

Addressing Problems​

Step 1: Document

  • Note specific issues
  • Take photos
  • Record dates and details

Step 2: Communicate

  • Discuss with sub's PM
  • Put concerns in writing
  • Request corrective action plan

Step 3: Escalate

  • Formal written notice
  • Meet with sub's management
  • Set specific deadlines

Step 4: Enforce

  • Backcharges for deficient work
  • Supplemental labor if needed
  • Termination as last resort

Backcharges​

When sub's work is deficient:

  1. Provide written notice
  2. Give reasonable time to correct
  3. If not corrected, perform or hire others
  4. Document all costs
  5. Deduct from payment or retain

Performance Evaluation​

Track Throughout Project​

  • Schedule compliance
  • Quality of work
  • Safety record
  • Responsiveness
  • Punch list performance
  • Documentation quality

Post-Project Rating​

After each project, rate the sub:

  • Would you use them again?
  • For what project types?
  • Any concerns for future?
  • Update prequalified list

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