What is the difference between prime and subcontractor

Subcontracting opportunities are posted in the following directories:. Teaming, however, is a different concept. FAR Subpart 9. The latter, in essence, is an agreement to develop a contractor subcontractor agreement for the specific acquisition, once awarded. GSA contractor teaming arrangements provide yet another teaming opportunity. Because the subs are among the furthest away from the money that originates at the top of the payment chain.

Again, construction is an industry where margins are tight. Each party on a construction project is not only interconnected through the work done on the project jobsite but also through the financial aspects of the project. Read more: The Payment Chain Explained. A prime or general contractor is typically its own separate entity. That is, the contractor is a business that must look out for its own interests.

This continues down the line of the payment chain to the sub-subcontractors , suppliers , laborers , etc. Each party on a construction project must look out for themselves when it comes to payment. At the same time, in order for everyone to do their job and get paid, everyone must cooperate. Now, the contractor receives payment first from the owner. That contractor is responsible for making sure money gets where it needs to go for those parties down the chain.

At the same time, the contractor wants to be sure that all work has been satisfactorily completed before they make payment, and they want to limit any potential liabilities more on that below. However, some parties take it overboard.

Because a contractor holds the money, potentially, that contractor can force other parties to do things they might not want to do — like doing change orders on the fly or taking a discount. No, any party who holds the payment due to another party might resort to bullying others on the payment chain and often, without much consequence.

With the risk of nonpayment also comes some tools that can help keep that risk at bay. We could talk about any one of these topics for days and at times, we probably have. Instead, here are some articles discussing each tool. There are plenty of other options , too.

The takeaway here is that no one on the payment chain is helpless. It only takes one lien or one lawsuit to put an entire project on the brink of disaster. These disputes have a ripple effect that can affect a job top to bottom and can even spread issues onto other job sites. Thus, keeping a project free and clear of payment disputes should be the top priority for everyone along the payment chain — including both contractors and subcontractors.

The tools listed above can be very helpful when payment disputes pop up. While each party along the payment chain will have their own interests, generally, everyone wants the same thing: to do their job, get paid, briefly admire what they built, then move on to the next job site. By setting clear expectations from the start and truly communicating them , fewer issues will pop up throughout the life of the job.

By regularly checking in and giving status reports, subcontractors can be sure that their customer understands how the job is progressing. After all — one of the biggest reasons for payment disputes is late-notice change orders or disputes over project specs. If a subcontractor and their customer are in regular communication, these things are less prone to occur.

Discovered roof leak and builder denies liability and said they no longer use roof contractor who is no longer in business. House built in I heard in a recent webinar the AIA A was recently updated for Force Majeure clauses relating to passing through increased costs due to the pandemic or supply chain delays.

Is this true? All I see online is A View Profile. Back charges can be tricky if you're not careful! It's incredibly important to prioritize communication and documentation when back charges Read more.

A Schedule of Values is an essential tool used in construction project accounting that represents a start-to-finish list of work With a proper dispute resolution clause in place, contractors, subs, and suppliers can avoid taking their disputes into litigation. Lien waivers and lien releases are completely different documents even though they are often confused by the construction industry. The practice of retainage, aka retention, has a tremendous impact on the construction industry.

Learn how retainage works on different Punch list work might seem minor, but it has an improportionate impact on payment. Without getting punch work out of Email Address. Government Sales Insider Inside guide to growing your public sector sales. Home About Subscribe Contact Us. Posts Comments. What is a prime and a sub? Share this:. Like this: Like Loading One Response to What is a prime and a sub?

Follow Blog via Email Enter your email address to follow this blog and receive notifications of new posts by email. Is your company ready to help? Follow immixGroup on Twitter My Tweets.