Necessary Provisions In Subcontractor Agreements
Every general contractor that uses an expansive network of subcontractors is unnecessarily increasing their exposure to risk. While a general contractor does not have the time to micromanage their subcontractors, the work of a subcontractor is still the responsibility of the general contractor in charge.
As contracting business experts, we understand how quickly things can work in the contracting world. A need comes up and you seek out a subcontractor to satisfy that need. But if you want to protect your business from potentially damaging financial risk, then you need to take the time to get every subcontractor to sign a general agreement that contains clauses which protect you from harm.
Subcontractors Must Follow OSHA Laws
As a general contractor, you have a spotless record with OSHA regarding workplace safety. But all it takes is one irresponsible subcontractor to destroy your perfect record. Your general subcontractor agreement needs to outline the importance of abiding by all OSHA standards, and you should also request a copy of the subcontractor’s OSHA policy for your own protection.
Hiring Other Subcontractors
You hired ABC Contracting to do some work on your project, but then something goes wrong and your company is liable for damages. When the information starts to come out about the incident, you find out that ABC Contracting actually hired DEF Construction to do the job, and DEF Construction has a horrible safety record.
When you sign up subcontractors to work for your company, you do not want to discourage their ability to hire their own subcontractors. But you do want your subcontractors to adhere to hiring policies that protect your company from any potential damages.
As a general contractor, you should insist that your subcontractors have qualified supervisors on every job site. Many states require certified supervisors on every job site, and the lack of certified supervisors could mean big fines for your company. When you sign up a new subcontractor, you need to have a clause in the contract that makes the subcontractor responsible for hiring and maintaining their own supervisors. Some subcontractors will assume that the general contractor will supply jobsite supervisors, and a provision like this will clear up that confusion.
One of the tasks of a general contractor is to execute regular job inspections to make sure that the job progress is in line with the initial project plans. A site inspection is also a chance for the general contractor to make sure that all subcontractors are following the project guidelines, and working within all local, state, and federal labor laws.
To avoid any issues with site inspections, we recommend that you make site inspections part of your subcontractor agreements. This will allow you access to the subcontractor’s project logs, site equipment, and anything else needed to make sure that the subcontractor is following project guidelines.
Subcontractors are necessary to getting almost any job done, but it is still important to make sure that you protect your business from potential subcontractor negligence. By utilizing the right agreements and having strong insurance coverage in place in the event that something does happen, you can protect your business from a potentially catastrophic event.