Managing subcontractors during construction

Signing the subcontract is the start of a relationship that will last a year or more. Most of a general contractor's success depends on how well it manages that relationship: setting clear expectations at the start, coordinating trades week by week, spotting problems early, enforcing the subcontract fairly when needed, and closing out cleanly so that the owner receives a complete, documented building and the subcontractor receives its final payment. This lesson follows a subcontract from kickoff to closeout. Payment certification and change orders are covered in CON-310 and CON-220, safety supervision in the HSE courses, and default insurance and surety in CON-350.

The subcontractor kickoff meeting

Before a trade mobilizes, the project manager and superintendent should hold a kickoff (or preconstruction) meeting with the subcontractor's project manager and foreman. It turns the subcontract into a shared plan for the field.

A short written record of the kickoff, signed by both sides, avoids the 'nobody told us' conversations that otherwise come months later. The foreman and the superintendent should leave the meeting knowing each other and how to reach each other.

Coordinating the trades

Day-to-day coordination happens through the look-ahead schedule, usually three weeks long and updated weekly, and the weekly coordination meeting where trades agree on sequence, access and hand-offs. The superintendent runs both. Good look-aheads are built with the trades, not issued to them, and each trade commits to the work it will complete in the coming week. The share of commitments actually completed (sometimes called percent plan complete) is a simple measure of how reliable the plan is.

# Weekly commitments completed by trade (percent plan complete), weeks 30 to 33
commitments = {
    #             (committed tasks, completed) for 4 weeks
    "Framing":    [(12, 11), (12, 12), (14, 12), (13, 13)],
    "Mechanical": [(9, 7),   (10, 6),  (10, 6),  (11, 6)],
    "Electrical": [(10, 9),  (10, 9),  (11, 10), (10, 9)],
    "Windows":    [(6, 6),   (6, 5),   (7, 7),   (6, 6)],
}
for trade, weeks in commitments.items():
    ppc = [c / n for n, c in weeks]
    trend = "falling" if ppc[-1] < ppc[0] - 0.1 else "steady"
    print(f"{trade:11} " + "  ".join(f"{p:4.0%}" for p in ppc) + f"   {trend}")

Framing      92%  100%   86%  100%   steady
Mechanical   78%   60%   60%   55%   falling
Electrical   90%   90%   91%   90%   steady
Windows     100%   83%  100%  100%   steady

Mechanical's completion rate has fallen from about 78 % to 55 % over four weeks, while the other trades are steady. That trend is an early warning: the mechanical crew is not keeping up, and if nothing changes the rough-in will delay drywall on the upper floors. The superintendent should raise it now, informally first, rather than wait for a missed milestone.

Tracking manpower and productivity

Most performance problems show up first as too few workers on site. The subcontract schedule or the kickoff meeting should include a planned crew size by month; comparing actual daily headcounts with the plan, and with the work actually completed, shows whether a trade is resourcing the job properly.

# Mechanical crew: planned versus actual average crew, and work completed (illustrative)
months = ["Jul", "Aug", "Sep", "Oct"]
planned_crew = [8, 12, 16, 16]
actual_crew  = [8, 10, 11, 10]
planned_pct  = [8, 18, 31, 44]      # cumulative % of mechanical scope planned
actual_pct   = [8, 16, 25, 33]      # cumulative % completed
for m, p, a, pp, ap in zip(months, planned_crew, actual_crew, planned_pct, actual_pct):
    print(f"{m}: crew {a:2} of {p:2} planned | progress {ap:2}% of {pp:2}% planned")
behind = planned_pct[-1] - actual_pct[-1]
print(f"Behind plan by {behind} percentage points of a 5,812,000 subcontract = {behind/100 * 5_812_000:,.0f} of work")

Jul: crew  8 of  8 planned | progress  8% of  8% planned
Aug: crew 10 of 12 planned | progress 16% of 18% planned
Sep: crew 11 of 16 planned | progress 25% of 31% planned
Oct: crew 10 of 16 planned | progress 33% of 44% planned
Behind plan by 11 percentage points of a 5,812,000 subcontract = 639,320 of work

The mechanical subcontractor has been running about two-thirds of the planned crew since September, and is now 11 points behind plan, about $640,000 of work. The data turn a vague sense that 'mechanical is slow' into a specific, documented shortfall that can be discussed with the subcontractor's management.

Escalating performance problems

When a trade falls behind or its quality slips, the contractor's response should be proportionate and documented, escalating only as needed. Jumping straight to a default notice damages the relationship and may be unenforceable if the subcontract requires earlier steps; waiting too long leaves no time to recover.

The cause matters. A trade that is behind because the general contractor's own sequence changed, because another trade is late, or because of unresolved design questions is not in default, and treating it as if it were invites a claim. Before escalating, the project team should honestly check whether the contractor or others contributed to the problem.

Back-charges and supplementing forces

If a subcontractor fails to do what its subcontract requires, such as clean-up, protection, or keeping up with the schedule, and the contractor has given notice, the contractor may do the work itself or through others and back-charge the cost. A back-charge must be supported by notice, an opportunity to cure (where the subcontract requires it) and clear cost records. Unsupported back-charges are among the commonest sources of subcontractor claims.

# Back-charge for clean-up and protection the drywall trade failed to perform (illustrative)
crew_hours, crew_rate = 36, 68            # Halyard general crew
bin_charge = 650                          # extra waste bin
materials = 420                           # poly and tape for protection
markup = 0.10                             # as allowed in the subcontract for back-charges
direct = crew_hours * crew_rate + bin_charge + materials
total = direct * (1 + markup)
print(f"Direct cost {direct:,.0f}; with {markup:.0%} markup {total:,.0f}")
print("Supporting records: notice dated, photos, daily reports with hours, bin invoice")

Direct cost 3,518; with 10% markup 3,870
Supporting records: notice dated, photos, daily reports with hours, bin invoice

Back-charges should be raised promptly, not saved up for the end of the job. A subcontractor who receives a surprise list of $80,000 of back-charges at final payment will dispute all of them; one that receives a notice, photos and a $3,200 charge the week it happened is more likely to accept it and fix the behaviour.

Default and termination

Terminating a subcontract for default is a serious step, usually the last on the ladder. The subcontract sets the procedure: written notice of default, a cure period, and a further notice of termination if the default is not cured. The contractor then completes the work by others and charges the extra cost to the defaulting subcontractor (or its surety, if bonded). Before terminating, the contractor should confirm that the procedure has been followed exactly, that the default is the subcontractor's and not caused by others, and that replacement capacity exists. If the subcontractor is bonded, its surety must be notified as the bond requires, often before termination, so that it can choose how to respond (CON-350). Termination for convenience, where the contractor ends the subcontract without fault, is a separate right that usually requires paying for work done plus agreed costs.

Evaluating subcontractor performance

At the end of each subcontract, and ideally at mid-point, the project team should rate the subcontractor on a short, consistent scorecard. The results feed the approved bidders list (Lesson 3) and give the subcontractor useful feedback.

# End-of-project subcontractor scorecard (1 to 5)
criteria = ["Schedule", "Quality", "Safety", "Coordination", "Paperwork and closeout", "Changes and claims"]
scores = {"Framing": [5, 4, 5, 4, 4, 5], "Mechanical": [2, 4, 4, 3, 3, 3], "Windows": [4, 3, 5, 4, 2, 4]}
for trade, s in scores.items():
    avg = sum(s) / len(s)
    weak = [c for c, v in zip(criteria, s) if v <= 2]
    print(f"{trade:11} average {avg:3.1f}  weak: {', '.join(weak) if weak else 'none'}")

Framing     average 4.5  weak: none
Mechanical  average 3.2  weak: Schedule
Windows     average 3.7  weak: Paperwork and closeout

Closeout

Closeout is where many subcontracts drag on for months. Each trade must finish its deficiencies, deliver its closeout documents and be paid its final amount and released holdback or retainage. Starting closeout planning at the kickoff meeting, and tracking it trade by trade from the time a trade is 75 % complete, keeps it from becoming a scramble at handover.

# Closeout tracker: share of items complete by trade (illustrative)
items = ["deficiencies", "warranties", "O&M manuals", "as-builts", "training", "release documents"]
status = {
    "Framing":    [1, 1, 1, 1, 1, 1],
    "Mechanical": [0, 1, 0, 0, 1, 0],
    "Electrical": [1, 1, 1, 0, 1, 0],
    "Windows":    [1, 0, 1, 1, 1, 0],
}
for trade, s in status.items():
    missing = [i for i, ok in zip(items, s) if not ok]
    print(f"{trade:11} {sum(s)}/{len(s)} complete  missing: {', '.join(missing) if missing else 'none'}")

Framing     6/6 complete  missing: none
Mechanical  2/6 complete  missing: deficiencies, O&M manuals, as-builts, release documents
Electrical  4/6 complete  missing: as-builts, release documents
Windows     4/6 complete  missing: warranties, release documents

Holdback is released under the provincial lien or prompt payment statute after the relevant period has passed with no liens registered, or on the annual or phased release schedule some provinces now require (CON-220 and CON-320). The contractor should not release subcontractor holdback before its own holdback is secure, and should obtain the subcontractor's statutory declaration first.