Topic Thread

1.  Subcontractor Back Charges

Posted 4 days ago

How do other contractors handle back charges to GMP subcontractors?  If the contractor performs site cleanup on behalf of a subcontractor (a contractual obligation of the subcontractor), does the contractor issue a deductive change order to the subcontractor?

 

Wee_Logo Bellows

 

Paul Oliver

CFO

W. S. Bellows Construction Corporation

Office:  713.812.2630     Cell:  713.851.4215

wsbellows.com

 



2.  RE: Subcontractor Back Charges

Posted 3 days ago
​Yes.  We issue deductive change orders for any back charges to the subcontractor.

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Melissa Schober
Project Accountant II
WELBRO Building Corporation
Maitland FL

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3.  RE: Subcontractor Back Charges

Posted 3 days ago

Paul,

 

We send invoices to our subcontractors on a monthly basis, as needed, and request that they simply pay the backcharge.  That way it is a cost to the sub and not a reduction in their revenue.  We try to get our PM's to only write change orders for changes in the scope of their work. 

 

Hopefully, they pay the backcharge in a timely manner, and the issue is resolved.  It also makes them aware of the cost in a timely manner.

 

And on our books, there contract amount is still for the full value of the work performed.

 

Sincerely,

 

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Jim Pedigo, CPA

CFO | Crain Construction Inc.

2963 Sidco Drive  Suite 110  Nashville, TN 37204

Direct: 615.515.8011 | Cell: 615.642-8101

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4.  RE: Subcontractor Back Charges

Posted 3 days ago
I worked for one company that sent invoices for backcharges. They had a 25% payment rate until it came time for retainage. So, they held all of their retainage until the invoices were paid. Occasionally the backcharge was more than the retainage and they never paid. I never liked handling it that way. Any items in dispute are hard to mediate months after the fact.

The other two GC's I worked for, did deductive change orders at the time the backcharge (cleanup, damage to another contractor's work that had to be repaired, payment of supplier invoices) occurred. No payments are made to the sub until they have all of their CO's signed including the deductive ones. If there is a dispute, it gets resolved quicker because it gets handled close to when it occurs instead of trying to resolve it at the end of the job when they have been paid everything but retainage.

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Sharon Hessong
It Administrator/Software Trainer
Embrey Partners Ltd
San Antonio TX
(210) 284-3813
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5.  RE: Subcontractor Back Charges

Posted 2 days ago

Yes, we issue a deductive change order to the subcontractor.

 

Cristy Schimmoller

Accounting Manager

 

O'BRIEN ROBINSON - SM

 

(614) 734-1470 x 19

cschimmoller@obrienrobinson.com