How to Manage Subcontractors
Coordinate your subs effectively to keep projects on schedule and budget.
Why Sub Management Matters
Subs often represent 50-70% of project cost. Poor management leads to:
- Schedule delays
- Quality issues
- Cost overruns
- Disputes and claims
Good management delivers:
- On-time completion
- Quality work
- Controlled costs
- Repeat relationships
Finding Good Subcontractors
Sources
- Referrals - Ask other GCs, suppliers
- Past performance - Subs you've worked with
- Trade associations - Local chapters
- Bid lists - Build over time
What to Look For
| Factor | What to Check |
|---|---|
| Experience | Similar project types and sizes |
| Capacity | Can they handle your timeline? |
| Financial stability | Been in business how long? |
| Safety record | EMR rating, OSHA history |
| References | Call recent clients |
| Insurance | Proper coverage and limits |
Prequalification Checklist
Before adding to bid list:
- Business license current
- Insurance certificates (GL, WC, Auto)
- Bonding capacity (if needed)
- Safety program documented
- References checked
- Financial review (for large contracts)
Bidding and Selection
Bid Package Contents
Send subs everything they need:
- Plans and specs (relevant sheets)
- Scope of work description
- Bid form/format
- Schedule requirements
- Site conditions
- Insurance requirements
- Contract terms (or at least key terms)
Scope of Work
Be specific about:
- What's included
- What's excluded
- Who provides what materials
- Coordination requirements
- Schedule milestones
- Quality standards
⚠️
Vague scopes lead to disputes. Spend time writing clear scopes upfront.
Comparing Bids
Don't just take low number. Compare:
- Scope coverage (are they pricing same thing?)
- Exclusions (what did they leave out?)
- Qualifications (conditions on their price)
- Schedule compliance
- Experience on similar work
Bid Leveling
Create comparison spreadsheet:
| Item | Sub A | Sub B | Sub C |
|---|---|---|---|
| Base bid | $45,000 | $42,000 | $48,000 |
| Add: permits (excluded) | +$2,000 | incl. | +$1,500 |
| Add: cleanup (excluded) | +$500 | +$500 | incl. |
| Leveled Total | $47,500 | $42,500 | $49,500 |
Now you're comparing apples to apples.
Contracting
Key Contract Elements
- Scope of work - Detailed description
- Contract amount - Lump sum or unit prices
- Schedule - Start, milestones, completion
- Payment terms - When and how paid
- Change order process - How changes handled
- Insurance requirements - Types and limits
- Indemnification - Risk allocation
- Dispute resolution - How to handle problems
Payment Terms Options
| Type | Description | When to Use |
|---|---|---|
| Progress billing | Pay monthly based on % complete | Most common |
| Milestone | Pay at defined milestones | Shorter jobs |
| Unit price | Pay per unit installed | Variable quantity |
| Cost plus | Reimburse costs + fee | Uncertain scope |
Retention
- Typically 5-10% held from each payment
- Released at substantial completion
- Protects against incomplete work
- May release half at substantial, half at final
Coordination
Pre-Construction Meeting
Before work starts, cover:
- Scope review
- Schedule and milestones
- Site logistics (parking, storage, access)
- Safety requirements
- Communication protocols
- Quality expectations
- Payment process
Scheduling
Coordinate sub activities:
- Sequence of trades
- Lead times for materials
- Inspection requirements
- Overlap opportunities
- Buffer time between trades
Daily Coordination
- Morning huddles (who's doing what)
- End of day check-ins
- Issue identification
- Next day planning
Weekly Coordination
- Schedule update meeting
- Look-ahead planning (3 weeks)
- Issue resolution
- Change order status
Communication
Set Expectations
- Who is primary contact?
- Response time expectations
- How to handle emergencies
- Documentation requirements
Document Everything
Keep records of:
- Verbal conversations (follow up in writing)
- Schedule changes
- Scope changes
- Issues and resolutions
- Inspections
Using Technology
Modern tools help:
- Shared schedules
- Document distribution
- Daily logs
- Photo documentation
- RFI tracking
Quality Control
Set Standards
- Reference specifications
- Provide mockups/samples
- First work inspection
- Ongoing spot checks
Quality Checklist
For each trade:
- Work matches plans/specs
- Proper materials used
- Workmanship acceptable
- Clean as you go
- Ready for next trade
When Quality Fails
- Document with photos
- Notify sub in writing
- Give reasonable time to correct
- Withhold payment if not corrected
- Back-charge if you fix it
Handling Problems
Common Issues
| Problem | Prevention | Response |
|---|---|---|
| Late start | Confirm schedule weekly | Call immediately, document |
| Slow progress | Daily monitoring | Add crew, adjust schedule |
| Quality issues | Early inspection | Stop work, require correction |
| Change disputes | Clear scope upfront | Written change orders |
| Safety violations | Pre-work meeting | Stop work, retrain |
Escalation Path
- Field supervisor to sub foreman
- PM to sub PM
- Principal to sub owner
- Written notice of default
- Legal/termination (last resort)
Most problems can be solved at level 1 or 2 if addressed early. Don't let issues fester.
Payment Management
Best Practices
- Pay on time (builds loyalty)
- Review invoices against progress
- Document what you're paying for
- Process change orders before payment
- Track retention accurately
- Get lien waivers with payment
Lien Waivers
Get with every payment:
- Conditional - Effective when check clears
- Unconditional - Effective immediately
Always get waivers to protect against liens.
Building Relationships
Long-Term Benefits
Good sub relationships provide:
- Priority scheduling
- Better pricing
- Problem-solving partnership
- Referrals to other good subs
- Reliability
How to Build
- Pay on time, every time
- Communicate clearly
- Be fair on changes
- Share project success
- Give feedback (good and bad)
- Recommend them to others
Next Steps
- Team Members - Assign and track
- Stages & Tasks - Coordinate work
- Change Orders - Handle scope changes