ConstructionDive

The Dotted Line: Inside the ‘dance’ of subcontractor negotiations

The following is the sixth installment of Construction Dive’s “The Dotted Line” series, which takes an in-depth look at different construction contract types each month with expert input. Read the first five installments herehereherehere and here.

 

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Negotiating a subcontract can be a tricky process. Different types of subcontracts are currently in use — such as documents from ConsensusDocs, the American Institute of Architects, the Design Build Institute of America, government contracts and custom forms unique to a contractor or owner. However, a few big issues remain points of negotiation no matter what form of contract is used. Of course, the more the subcontract is worth, the higher the stakes, so deliberations are bound to get a little tense.

 

According to Bill Scott, executive vice president of Texas-based Linbeck Group, it’s nothing personal. “Subcontractors are my favorite partners,” Scott said. “We can’t build projects without them. We have to have them.”

 

However, that doesn’t mean that subcontractors get whatever they ask for when it comes to striking a clause or rewording something in their subcontracts. And it doesn’t mean that a subcontractor is always going to feel comfortable with what’s in the subcontract to sign and go forward with the project. Industry experts point to a few main obstacles that consistently emerge when negotiating subcontracts, and offer advice on how to navigate them.

 

Why ‘it’s all driven from the owner’

 

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