Subcontract Execution Procedure
Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Project Managers, Legal, Operations
Purpose
Establish the process for executing subcontract agreements to ensure proper scope definition, risk management, and contract compliance.
When to Execute Subcontract
Before Work Begins
- ALWAYS have executed subcontract before work starts
- No verbal agreements for scope of work
- No "handshake deals"
Timeline
- Award: Verbally communicate selection
- Draft: Send within 3-5 days
- Execute: Before mobilization
- Minimum: 7 days before work starts
Subcontract Components
Essential Elements
| Section | Content |
|---|---|
| Parties | Full legal names, addresses |
| Project | Name, location, description |
| Scope | Detailed work description |
| Price | Lump sum or unit prices |
| Schedule | Start, duration, milestones |
| Terms | Payment, changes, disputes |
| Exhibits | Drawings, specs, insurance |
Scope of Work Development
Clear Scope Definition
Include:
- Work to be performed
- Materials/equipment to provide
- Labor classifications required
- Quality standards
- Code requirements
- Coordination requirements
Specifically Address:
- Inclusions (what's in)
- Exclusions (what's out)
- Allowances (if any)
- Alternates (if applicable)
Scope Clarity Checklist:
- Referenced drawings listed
- Specification sections listed
- Physical boundaries defined
- Interfaces with other trades clear
- Exclusions explicitly stated
- General conditions items addressed
Subcontract Review Checklist
Before Sending for Signature:
Scope:
- Scope matches bid/proposal
- Inclusions/exclusions clear
- Drawings/specs referenced
Commercial:
- Price correct
- Payment terms stated
- Retainage terms included
- Change order process defined
Schedule:
- Start date stated
- Duration or completion date
- Milestone dates (if applicable)
- Liquidated damages (if applicable)
Insurance:
- Minimum limits specified
- Additional insured required
- Certificate due date
Legal:
- Indemnification clause
- Dispute resolution
- Termination provisions
- Compliance requirements
Attachments:
- Scope exhibit
- Drawings list
- Specification sections
- Insurance requirements
- Safety requirements
Key Subcontract Clauses
Payment Terms
- Monthly billing cycle
- Pay application requirements
- Lien waiver requirements
- Retainage terms
- Final payment conditions
Change Orders
- Written authorization required
- Pricing methodology
- Markup limitations
- Time for response
Schedule
- Coordination required
- Notice of delays
- Acceleration rights
- Float ownership
Quality
- Work standards
- Inspection requirements
- Correction of defects
- Warranty obligations
Safety
- Compliance with laws
- Safety program requirements
- Drug testing
- Incident reporting
Insurance
- Types and limits
- Additional insured
- Waiver of subrogation
- Certificate requirements
Subcontract Execution Process
Step 1: Prepare Draft
- Use company template
- Insert project-specific info
- Develop scope exhibit
- List attachments
- Internal review
Step 2: Send to Subcontractor
- Transmit with cover letter
- Set response deadline (typically 5 days)
- Note insurance due date
- Request acknowledgment
Step 3: Subcontractor Review
- Allow time for review
- Be open to reasonable changes
- Negotiate if needed
- Document any changes
Step 4: Execute
- Sub signs and returns
- GC reviews signed copy
- GC countersigns
- Distribute fully executed copy
Step 5: Post-Execution
- Scan and file
- Enter in commitment log
- Collect insurance certificate
- Schedule kickoff meeting
- Issue Notice to Proceed
Insurance Certificate Requirements
Before Work Begins:
- Certificate received
- Limits meet requirements
- Project listed
- Additional insured endorsement
- Certificate holder correct
- Expiration date noted
Monitor:
- Track expiration dates
- Request renewals 30 days ahead
- No work without current insurance
Subcontract Agreement Quick Form
================================================================
SUBCONTRACT AGREEMENT
================================================================
This Agreement made [Date], between:
CONTRACTOR: _______________________________________________
Address: _________________________________________________
SUBCONTRACTOR: ___________________________________________
Address: _________________________________________________
PROJECT: _________________________________________________
Location: ________________________________________________
================================================================
1. SCOPE OF WORK
Subcontractor shall furnish all labor, materials, equipment,
and supervision necessary to complete the work described in
Exhibit A (Scope of Work) and the following specification
sections: [List sections]
2. CONTRACT SUM
☐ Lump Sum: $______________
☐ Unit Prices: See Exhibit B
☐ Time & Material: Not to exceed $______________
3. SCHEDULE
Start Date: _______________
Completion Date: _______________
Duration: _______________
4. PAYMENT TERMS
Progress payments monthly, Net _____ days
Retainage: _____% until _____________
5. INSURANCE REQUIREMENTS
See Exhibit C - Insurance Requirements
Certificate due within _____ days
6. INCORPORATED DOCUMENTS
☐ Prime Contract (relevant portions)
☐ Project specifications
☐ Project drawings
☐ Safety requirements
☐ Insurance requirements
================================================================
CONTRACTOR SUBCONTRACTOR
By: ________________________ By: ________________________
Name: ______________________ Name: ______________________
Title: _____________________ Title: _____________________
Date: ______________________ Date: ______________________
================================================================
Related Documents
- Subcontract Template (full form)
- Scope of Work Exhibit Template
- Insurance Requirements Exhibit
- Prequalification Procedure
- Change Order Procedure
Template provided by support.construction. Customize with your company information.