Subcontractor Agreements - Why Subcontractor Agreements are Important

Published: 10th December 2009
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A Subcontractor Agreement or Subcontract Agreement permits a contractor to hire a third party to finish a portion of the work.This sub-contractor agreement is commonly employed once a Contractor has already signed a contract with someone else.

A subcontractor (or "sub") is the person or business organization that promises to assume a piece or all of the responsibilities of the primary party's original contract. The subcontractor is employed by a general contractor to execute specific work as a share of the general work. The sub contract agreement generally allows for a particular portion of a contracted job.

Subcontractor Agreements are a very standard type of construction contract. It is critical for both companies to make a written legal contract which lays out the project specifics, stipulates fees and payment, and allows remedy for non-payment.

Why Subcontractor Agreements Are Used

Contractors take on subcontractors in order to tighten costs and/or to minimize project risks. Many subcontractors are highly accomplished specialists, and often will work with a single buidling contractor company. Subcontract Agreements allow general contractors improved subcontractor management tools.

Before participating in a Subcontractor Agreement, you need to make some decisions and take some particular actions. There are a few good guidelines to help you get the best from taking on a subcontractor.

First, you have to define the range of the work you want to have the subcontractor finish. For instance, if the job requires drywall to be installed and then tiled, you want two subs. Each individual task requires its own separate agreement. Of course you could have the same sub execute both jobs, but you will need a distinct subcontractor contract to specify each individual job.

Second, generate a thorough job description. Include blueprints and a thorough listing of the work to be finished. The more detailed the description, the fewer the problems.
Call for as many bids as you can. You can call subs you already know and have worked with, or advertise, or both, just to maximise your options. Make sure you give each prospective subcontractor a copy of the detailed job description you created. In that manner they can give you their most competetive bid.

Getting The Right Sub Contractor

Choose your sub on quality, not just price alone. If you choose a subcontracting company that does inferior work, you won't be getting such a great deal after all. Do your proper due dilligence - get references and follow them up. Actually call the subcontractor's customers and ask not only about their overall satisfaction, but about specifics. Always ask to see a copy of the sub's valid insurance certificate. To mitigate risk, ensure the sub is properly covered. Does the job require a license? Ask to see it.
Whenever possible, use a subcontractor that you know does quality work at a decent price. If you are pressed for time, go with someone you already know personally. If you can't wait for bids, just go with someone you know and ask for a ballpark. Understand that this is an estimate only, and his end cost will be different.

Subcontractor Agreements Are Your Friend - Always Use Them

Clearly lay out the work to be done, screen the subcontractor properly, you will be able to greatly expand your services and give your customers good value for their money. A solid Subcontractor Agreement will ensure that both you and your sub are properly protected.

subcontractor contract
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