Subcontractor agreements facilitate productive partnerships between subcontractors and general contractors. In this article, we’ll share a simple subcontractor agreement template you can tailor to a variety of situations.
What is a subcontractor agreement in construction?
Let’s start with the basics. Subcontractor agreements formalize the relationship between subcontractors and general contractors. As you’ll see in our template below, they outline the components necessary for a project’s successful completion.
Subcontractor agreements protect all involved parties by specifying services and associated clauses (i.e. when those services need to be rendered and on behalf of which client).
The subcontractor agreement is typically created and signed following bidding and subsequent negotiations. It essentially solidifies commitments made in other correspondences (i.e. verbally) prior to the agreement being signed.
Sample subcontractor agreement template
Here are the common components when writing a subcontractor agreement.
Declaration of involved parties
This section defines a few key items:
- the date on which the agreement was notarized
- the two parties involved in the agreement (typically the subcontractor and general contractor) along with their respective full mailing addresses
Declaration of the client
This section clarifies that the subcontractor must complete work according to the agreement held between the general contractor and the client/project owner. It also specifies who the owner is and lists their full mailing address.
Here, the agreement will detail which services (or work) the subcontractor is expected to provide. For example, it might state, “Subcontractor agrees to install 100 windows on the client’s skyscraper.”
This section explains exactly what component(s) of the work a subcontractor is responsible for. Choices typically include:
- Labor: If this is the subcontractor’s responsibility, they’ll provide the workers needed to render the services. They’ll also shoulder the associated labor costs.
- Materials: When this falls under the subcontractor’s purview, they’ll purchase all equipment required for their services.
- Equipment: If this box is checked, the subcontractor will be responsible for purchasing and managing equipment.
- Travel: When a subcontractor is in charge of travel, they’ll pay the costs associated with transporting labor, materials, equipment, and other essentials to the job site.
Some subcontractor agreements in construction will also include additional responsibilities as needed (typically placed under the category of “Other”).
This section will also typically mention the subcontractor won’t be held responsible for costs not mentioned. The implication is that the general contractor or some other party will be required to address those needs.
A subcontractor agreement will also typically specify how the subcontractor will be paid for the job. Some agreements implement a conditional payment clause. “Pay-when-paid” is a common clause indicating the subcontractor won’t be paid until the general contractor pays them for their work.
Last but certainly not least, this portion of the subcontractor agreement template contains fields for the project’s location to be specified. If the project’s location isn’t established when the agreement is created, however, some templates leave room for a “To be determined” checkbox.
Next, let’s explore how general contractors and subcontractors must protect themselves when signing agreements. We’ll start from the perspective of subcontractors.
Protecting yourself as a subcontractor when signing an agreement
Ensure the contract is detailed
Take another look at the subcontractor agreement template we’ve included above. Notice it contains a level of detail and information the untrained eye might see as pedantic. For example, does the client’s information really need to be stated so clearly, especially if they’re well-known?
The answer is yes. A subcontractor agreement is essentially a collection of shared facts that will help third parties (such as a judge) mediate any conflicts that arise. It’s in everyone’s best interest to make sure the contract is sufficiently detailed.
Make sure you understand everything before signing
Subcontractors must understand what a project entails (including what’s expected of you) before signing the associated agreement. Know your responsibilities inside out and communicate them with your team members to avoid misunderstandings.
Don’t be afraid to scale back expectations if the general contractor is asking too much
Ideally, the goals and responsibilities communicated in your subcontractor agreement should reflect prior discussions you’ve had with your general contractor (i.e. during the bidding process). There shouldn’t be any last-minute surprises like extra services stuck into the agreement.
When this happens, subcontractors are often tempted to sign the agreement anyway for fear of losing the contract or others like it in the future. If the extra work is infeasible based on the timeline and budget, though, agreeing to do it goes against your best interests. In such a scenario, don’t be afraid to address those concerns.
Protecting yourself as a general contractor when signing an agreement
Be very specific regarding your expectations for the subcontractor
Before your subcontractor signs the agreement with your company, they should know details such as exactly what work is required of them and who will cover specific costs related to their services. For starters, this will increase your chances of having a successful partnership. It will also cover you legally if the subcontractor fails to deliver on some aspect of their work. Don’t leave important details to handshakes and verbal agreements!
Avoid blindsiding subcontractors with last-minute requests and major changes
As mentioned earlier, the subcontractor agreement signing stage typically comes after most details have been provided and worked out. Therefore, it’s generally poor form to cram the contract with additional expectations.
To be clear, subcontractors will often sign these agreements anyway, especially if you’re a larger general contractor they’d want to work with again in the future. That doesn’t mean they’ll do a good job rendering those additional requested services, though.
In fact, you’re essentially robbing yourself of the ability to request the exact services you need and gauge the subcontractor’s response.
To phrase things differently, last-minute concessions often don’t work out for any involved parties whether it’s the subcontractor, general contractor, or client.
Whether you’re a general contractor or subcontractor, utilize resource management software
If you haven’t already begun planning your project’s resource allocations, the subcontractor agreement signing phase is certainly not too early to do so.
Bridgit Bench offers solutions for subcontractors and general contractors alike. Subcontractors, click here to learn more about how Bridgit Bench can help you manage your workers and forecast project needs. If you’re a general contractor, visit this page to learn about Bridgit Bench’s high-level functionality that can help you keep track of subcontractors, other resources, and project needs.
We hope this article has helped you understand what simple subcontractor agreements are and how to create them for your projects. For more information about construction management-related processes, visit our blog here.