Business Tips

When subcontractors get hit with back charges

Let’s say the GC is unhappy about work performed. This isn’t always the sub’s fault, but you might still end up getting slapped with back charges. Here’s what you should know about why you might get hit with back charges so you can A) avoid back charges if possible, or B) know what to expect if you can’t.

As you know, contracts can be less than clear, especially with regard to the Scope of Work. And even if the work doesn’t meet the GC’s standards, that wasn’t usually the intention of the specialty contractor. This is why it’s important for subs to make their bids as clear as possible, stating plainly and in detail all the work you intend to include and what you’re going to exclude, also.

Still, the GCs don’t always heed what’s in the bid, and they might write the contract more generally, leaving room for more work by the sub—and for that common annoyance of scope creep.

Like it or not, you are going to be faced with times in your career as a sub when a contractor claims that your work doesn’t meet the contracted stipulations.

How back charges happen

If you don’t agree that the rework they request needs to be done, or if you dispute the extent of the needed alterations, you could end up facing back charges from the GC. This is more or less what the process would look like:

1. Written warning

If a general contractor takes issue with some part of a subcontractor’s work, he or she typically needs to provide written notice to that effect. This means an actual letter that’s been typed out detailing the problem.

If you receive a notice about rework the GC is calling necessary and their point or points of contention still isn’t clear to you, you can ask for more detail.

2. A chance to remedy

No matter how frustrated a GC might be with what they consider poor workmanship on the part of the sub (that’s you), the subcontract you both signed may require that he give you a chance to rectify the issue and a certain amount of time in which to do it.

If this isn’t immediately offered by the GC, you should check the subcontract to see if rework and a time frame is stipulated there. This might be your last chance to address the issue without having to pay the as-yet-unknown price that the GC will ultimately assess for it.

3. A chance to inspect

If you do the rework and everything comes out fine in the GC’s eyes, that’s great—end of story.

But let’s say you weren’t given the opportunity to do rework, and it wasn’t stipulated in the contract. Or you did the rework in a way that you considered sufficient and the GC still wasn’t happy.

Before hiring others to handle remediation, the GC is typically obligated to allow the sub in question to come to the site and inspect the allegedly deficient work. This gives you the opportunity to take notes on the conditions and assess what you think might be a reasonable value for the work the GC claims needs doing.

4. Notice of remedial work

After the inspection phase, you should be receiving written notice from the contractor as to when the remedial measures will occur. The GC should allow you the option to be on site to observe as the remediation takes place.

5. Completed back charge form with documentation

The final communication you should receive from the contractor should include not just the back charge form with final amount, but also detailed documentation of the remediation efforts. The GC should provide a thorough breakdown of the work done, including all invoices and timesheets.

6. Deduction of back charges

Finally, the GC will take the amount on the back charge form out of any amounts due to you.

It’s no fun to be hit with a back charges form, but it’s far less trouble and much less expensive than a lawsuit. If the above steps are followed properly, then the general contractor has done his due diligence, and you as the subcontractor should certainly have an idea of what to expect when the bill comes.

Another safeguard against unresolvable disputes between you and the GC is clear, clean job cost reporting. ExakTime’s powerful project reporting ensures you can always look back and see which of your worker was responsible for which task—and how much a certain task or sub-task cost you to complete.