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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​

SectionContent
PartiesFull legal names, addresses
ProjectName, location, description
ScopeDetailed work description
PriceLump sum or unit prices
ScheduleStart, duration, milestones
TermsPayment, changes, disputes
ExhibitsDrawings, 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​

  1. Use company template
  2. Insert project-specific info
  3. Develop scope exhibit
  4. List attachments
  5. Internal review

Step 2: Send to Subcontractor​

  1. Transmit with cover letter
  2. Set response deadline (typically 5 days)
  3. Note insurance due date
  4. Request acknowledgment

Step 3: Subcontractor Review​

  • Allow time for review
  • Be open to reasonable changes
  • Negotiate if needed
  • Document any changes

Step 4: Execute​

  1. Sub signs and returns
  2. GC reviews signed copy
  3. GC countersigns
  4. 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: ______________________

================================================================
  • Subcontract Template (full form)
  • Scope of Work Exhibit Template
  • Insurance Requirements Exhibit
  • Prequalification Procedure
  • Change Order Procedure

Software Integration​

BLDR Pro:

  • Commitment tracking
  • Document storage
  • Insurance monitoring
  • Change order tracking

Template provided by support.construction. Customize with your company information.