Working with subcontractors: quotes, contracts and payments

Most jobs need more than one trade. Good subcontractors make you look good, and bad ones can cost you the job and your reputation. Managing them well comes down to clear scope, written agreements, good scheduling and paying fairly and on time.

Choose the right subbies

Before you bring someone onto your job, check:

• They hold the licence or registration the work needs
• They have the insurance you need, such as public liability
• They can show recent work or references
• They have the capacity to turn up when you need them
• Their safety practices fit with yours

Build a small group of reliable subbies over time. They learn how you work, and you can quote faster because you trust their numbers.

Get quotes that match the scope

Send every subbie the same scope, plans and specs. Ask them to list what is included, what is excluded and any assumptions. Then compare quotes line by line. The most common gap on a job is where two trades each think the other one is doing something, like making good after a pipe goes through a wall.

Put their quotes into your own price, and add your margin. You are taking on the coordination and the risk for their work. See how to write a scope of work clients understand.

Put it in writing

Even for small jobs, agree in writing:

• The scope and price
• Start date, duration and who supplies materials
• How variations are agreed and priced
• When and how they will be paid
• Who fixes defects, and by when
• Safety requirements on your sites

In New Zealand, construction contracts are covered by the Construction Contracts Act. It sets rules for payment claims, payment schedules and retention money. Make sure your agreements and payment process fit with it.

Scheduling

• Book subbies early and confirm a few days before
• Give them a clear start time, site access details and who to call
• Make sure the site is ready for them, so they do not turn up to find they cannot start
• Keep the program up to date when things move, and tell them straight away

Every wasted trip costs them money, and they will remember it next time you need them.

Safety on shared sites

When several businesses work on one site, everyone shares safety duties. Talk about the hazards before work starts, agree who controls what, and include subbies in your toolbox talks. See how to run a toolbox talk.

Variations

If the client changes something that affects a subbie’s work, get the subbie’s price before you agree it with the client. Do not let subbies take instructions straight from the client without telling you. See how to price and agree variations.

Paying subbies

• Agree payment terms up front
• Check their invoice against the work done and the agreed price
• Pay on time. Good subbies go to the builders who pay well.
• If you hold retentions, know the current rules on how retention money must be held

Quality and handover

Check each trade’s work before the next one covers it up. Fix problems early, when they are cheap to fix. At the end of the job, collect any certificates, records of work, warranties and manuals each trade must provide.

When things go wrong

Sooner or later a subbie will run late, do poor work or disagree with you about money. Deal with it early and calmly. Talk to them before the problem grows, and refer back to what you agreed in writing. Keep notes, photos and messages. If work is defective, give them the chance to fix it first, with a clear deadline. If you cannot sort it out, follow the dispute process in your agreement, and get advice before you hold back payment.

Quick checklist

• Licences and insurance checked
• Same scope sent to everyone, quotes compared line by line
• Written agreement with scope, price, payment terms and defects
• Bookings confirmed and site ready
• Safety talked through before starting
• Paid on time, retentions handled properly
• Paperwork collected at handover