Subcontract agreements in residential construction


What is a subcontractor agreement?

Construction businesses use subcontractor agreements to outline the guidelines and terms expected of third party subcontractors performing work or supplying materials. These agreements contractually obligate subcontractors, trades, and vendors to adhere to certain standards on contractor jobsites.

In residential construction, builders and remodelers create subcontract agreements with any subcontractor, trade, or vendor working on a project or who partners with their company. These contracts document project details (such as scope, price, and time), payment expectations, insurance requirements, jobsite conduct, and more.

Why are subcontract agreements important in residential construction?

One of the biggest objectives of a residential construction project is ensuring the client receives excellent quality and craftsmanship. Any building firm with a large internal team controls the labor output simply by setting standards for employees. Working with subcontractors and trades adds in layers of complexity since these individuals work outside the construction company team. While these individuals may have their own personal or company standards and guidelines, they may not align with the building firm’s goals. Without any clear guidelines outlining the responsibilities of both parties, building firms and subcontractors risk damaging relationships and costly legal suites.

Subcontract agreements fill this gap by providing a legal document where building firms and subcontractors negotiate the terms and conditions necessary for both parties to feel satisfied and protected. With a signed agreement finalized before work begins, subcontractors get the space to focus on the work, while builders and remodelers receive peace of mind knowing expectations align with their goals and ultimately the clients dreams.

How do builders + remodelers obtain, organize, and store subcontract agreements?

After consulting with a legal representative to craft what terms, guidelines, and standards fit the business needs, there are a couple methods builders and remodelers employ to document these contracts, obtain a signature, and store the final product.

1. Manual Contracts

Many word processing tools effectively capture the desired language needed to get alignment between construction businesses and subcontractors. Once created, subcontract agreements can be printed for both the building firm and subcontractor to sign. While quick and easy to generate, printed agreements require either the coordination of an in-person meeting or rely on the postal service for back and forth delivery of this critical paperwork, all just in time for work to start. Once signed, paper agreements need filing and safe storage for future reference and tracking, along with any addendums or revised copies. Builders and remodelers face the risk of needing this paperwork at a moment’s notice when they aren’t in the office or they are at the mercy of an administrator’s availability, plus the added stress of carefully moving this paper around without damaging or losing it. 

2. Contract Software Tools

Going digital solves many of the problems that come with manual methods. Software tools that enable eSignature make in-person meetings and snail mail irrelevant, plus reduce the time spent getting these critical documents signed before work begins. With an organized, digital filing system, finding this paperwork becomes simple and easy, allowing project managers to pull up information anytime. Operating without a cloud-based or network driven storage system, however, resurrects many of those more manual risks and stressors since electronic files often end up on one team member's computer. Depending on the document storage system, subcontract agreements across several subcontractors and projects can get mixed together, creating chaos and costly delays. While great at keeping these contracts out of the rain, such tools don’t bring the whole workflow together or include paying subcontractors for their work, communicating changes to work, or tracking expiration dates.

3. Integrated Construction Management Software Suites

Combined with all other project and subcontractor details, subcontract agreements reach new levels of efficiency in an integrated construction management software suite. Builders and remodelers need to quickly reference contracts with subcontractors in the same instance as looking up the latest client change order or the last paid bill. Softwares that integrate these details together save countless calls to the office and eliminate hours of searching and pulling details together across disparate folders, all while tying these details together directly.

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Joseph Hornbuckle
Joseph Hornbuckle

Joseph, a native of Atlanta, has been a strong advocate for better story telling to help builders + remodelers learn the software.