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5 Best Practices in Creating a Subcontractor Agreement


In creating a subcontractor agreement there are certain must dos to make your agreement worth something to both the subcontractor and the general contractor.  Take your time in making your agreement once and you can use the samle outline for every agreement you enter into.  Below are what I feel the most important items to consider in making you subcontractor agreement.


1. Be specific of insurance requirements and follow up –

The biggest problem I see general contractors run into is not being militant of collecting certificate of insurance with them named as additional insured.  This can cost huge dollars in Workers Compensation and General Liability audits at the end of the insurance policy term.  Your contractors insurance premium is one of your largest costs and it is only an estimate until you are finished with your audit.

2.  Be specific and use dates.  

It is very important to have finish by guidelines as well as penalties/rewards in your contract.  Both parties need to be held accountable for expectations and work performed.

3.  Review agreement with each other.  

This agreement should not be a 1 sided contract.  Take the time to sit down and review the contract with each other after it is complete.  Lots of good things usually happen in this conversation and you can save huge headaches down the road with a little planning up front.

4. Use Initials.

Have each other initial next to key terms of contract.  This adds validity to the contract and creates accountability down the road.  

5. Get requirements of contract when signed.  

Once the contract is signed it is easy to move along with forgetting about requirements of contract.  It is best practice to do it all at once and be done with it.  Put it in the file and commence the project.  Don’t let things linger.

 

CONCLUSION:

Take the time to follow these simple rules and you will be in great shape for your insurance audit.  This will also help prevent overpromising and underdelivering.  Take this as serious as picking who you do business.  An ounce of prevention is worth a pound of cure!  Download our sample subcontract agreement here and you will be off to a good start!


 

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