Subcontractor Risk Scorecard

Score a subcontractor before you award. Seven capacity tests, a suggested award limit from three independent caps, and the specific conditions worth attaching if you want to say yes with controls rather than no.

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Interactive Scorecard

Enter what you know about a subcontractor and the scope you are about to award. You get the seven tests a good prequalification review runs, a suggested award limit, and the specific conditions worth attaching. Nothing you type leaves your browser.

The award you are considering

Your contract value with them

Your existing open work with them

Across all your jobs, remaining value

Critical path or sole-source?NoYes

Your history with themNever worked with themTwo or more good jobsMixed resultsA bad job

Their business

Annual revenue

Years in business

Largest project ever completed

Working capital

Current assets less current liabilities

Current backlog

Cost to complete, excluding your job

Compliance and safety

EMR

Financial statementsCPA auditCPA reviewCPA compilationTax return onlyNone provided

InsuranceMeets limits, endorsements providedMeets limits, endorsements missingBelow required limitsNot provided

License current and correct classYesNo or unverified

BondingHas a bonding capacity letterBondable, no letter yetUnknownCannot be bonded

References checkedChecked, all positiveChecked, some concernsChecked, payment concernsNot checked yet

Liens, judgments or tax liens in 3 yearsNone disclosed or foundOne, explained and resolvedOpen or unexplained

Ever failed to complete a contractNoYes, disclosed and explainedYes, or a surety paid a claim

Overall read

Moderate risk

11 of 15 checks clean

Suggested single award limit

$1,200,000

Governed by 20% of their annual revenue

Your scope

$1,400,000

Above the suggested limit

Share of their revenue

23.3%

Their most important job

Step up from their largest

1.56×

vs $900,000

Your total open work with them

$1,700,000

28.3% of their revenue

The scope you are considering is above the suggested limit. That is not automatically a no — it deserves a deliberate decision and is a strong candidate for a phased award or a bond.

The seven tests

Test	Value	Target	Status
Your scope ÷ their annual revenue Over 40%, this job can take the company down even if they are profitable.	23.3%	< 20%	!Elevated
Your scope ÷ their largest completed job A job more than twice their largest is a different business, not a bigger one.	1.56×	< 2.0×	✓Low risk
Their backlog incl. your job ÷ working capital The same capacity test a surety runs. Above 15× they are financing more than they can carry.	10.00×	< 10×	✓Low risk
Their working capital ÷ your scope Rough read on whether they can float your job through a slow payment cycle.	0.30×	> 0.20×	✓Low risk
EMR Many GCs screen at 1.0 and cut at 1.2. Ask for the explanation before you act on it.	0.94	< 1.00	✓Low risk
Years in business Under three years there is not enough history to read.	9 years	> 5	✓Low risk
Your total open work with them ÷ their revenue Concentration runs both ways. If you are most of their book, you are most of their risk.	28.3%	< 25%	!Elevated

The file

Item	Status	Read
Financial statements	!Watch	No assurance. Read it, but weight it lightly.
Insurance	✓Low risk	Certificate and endorsement forms on file.
License	✓Low risk	Current and correctly classified.
Bonding	✓Low risk	A third-party underwriter has stated a number on them. This is worth more than the statements.
References	✓Low risk	Suppliers confirm they pay.
Liens and judgments	✓Low risk	Nothing disclosed or found.
Completion history	✓Low risk	No failures disclosed.
Your history with them	!Watch	Unknown. Consider a smaller first award.

Where the award limit comes from

Cap	Amount	Governing
20% of their annual revenue	$1,200,000	Yes — this is the binding one
2× their largest completed job	$1,800,000
10× working capital less existing backlog	$1,400,000
Suggested single award limit	$1,200,000

Also set an aggregate limit. The single job limit is the one people set; the aggregate — total open work with them across all your jobs at once — is the one people miss.

What to require at this contract size

Tier 3. Everything in tier 2, plus financial statements, current backlog at cost to complete, a bonding capacity letter, and the key personnel assigned to your job.

Conditions worth attaching

• Phase or reduce the award. Splitting the scope, or awarding one phase now and the rest on performance, converts a hard no into an easy yes and gets them on the record at a size they can carry.
• Increase retention for the first award, and say plainly that it returns to standard on the next one. A condition with a stated exit is a much easier conversation than an open-ended one.

This is a second opinion, not a decision. It applies common rules of thumb, and every one varies by trade, region and contract. Call the references.

A structured second opinion, not a decision and not advice. Do not use it as the sole basis for approving or declining a company.

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What this measures

• Your scope as a share of their revenue — the strongest single predictor of default
• Step-up versus their largest job — whether you are asking them to be a different company
• Backlog versus working capital — the same capacity test a surety runs
• Eight qualitative reads — insurance, license, bonding, references, and your history with them

For the full prequalification process, read Subcontractor Prequalification.

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Related Resources

• Surety Readiness Scorecard — the surety version of this, for your own numbers
• Reading a Subcontractor's Financials — what to do with the statements behind the score
• Subcontractor Prequalification Form — the application to send after you score them
• Conditional Approval Letter — when the answer is yes with controls

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Estimates only

This scorecard applies common industry rules of thumb. Every threshold varies by trade, region, and contract. It is not a substitute for calling references and reading the file.