How Do You GC's Handle Paying Subs

Broncoman72

I am curious to see how general contractors handle paying subs. Do you allow the homeowner pay the bills direct and tell them up front you want X for the job, or you need x percent? Or do you pay the subs out of an account and bill the home owner at the end of the project.

Specifically, I am talking about building a complete home.

Thanks in advance

skyhook

The subs get paid at different times. Therefore the GC needs money all the time. GC secures the money from HO. Everybody gets paid on demo, tear off, material deliveries, labor draws and/or passing inspections. In exchange for lien releases.

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modterry

I plan my draws according to needs to pay for materials and labor. Like the post above a draw may be on the start of some phase of the job. Our deposit up front handles alot of the initial materials and get us to the next phase.

SLSTech

Were supposed to pay the subs, no wonder why my phone is always ringning in the middle of the night...

Seriously though, along with the info listed above --- for small jobs the Electrical, HVAC & Plumbing subs generally get paid twice - at the end of Rough In & the Finish - generally the day they finish & I sign off on it. The rest of the subs get paid at completion. (No hold backs - deposits rarely ever asked for here)

Larger jobs, If the subs job will last more than a couple of weeks - draws will be given based on work completed

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Alabama Full Service Remodeling, Renovation, and Preservation by SLS Construction
Certified Energy Efficiency Audits, Ratings, Modeling, Verifications, & Consulting
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kevjob

When their rough inspections pass I pay them, I use the same subs for 5 years now though.

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Kevin
Basement Finishing Highlands Ranch Colorado
Littleton Colorado, Basement Remodeling
Kitchen Remodeling Denver

thom

Broncoman, as the GC, it is your job to provide financing for the job. That can be done in several ways.
1) get a construction loan (or the client can). This will require clear title on the lot and a lien on that title.
2) finance it out of your pocket.
3) finance it out of your clients pocket.

No matter which system you use, you must establish the payout schedule so you will have the cash to pay your subs as they finish their portions of the project. This may require you to be able to cover some of the costs during the interim.

Construction financing will be your most valuable tool. Save $ so you can provide it yourself and over time you will be at a competitive advantage.

ottagosoon

The real question here is "should this guy be in business???"

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Can't Say That Here!!!

macatawacab

Years back I had to change because I could not finance 15 homes a year and buyers could back out at the close.

Now, or at least I used to until this economy hit, I have a closing before construction starts. The owner supplies 100% financing and I get my money from the title company. The title company protects the owner, all the improvements are capital improvements on the owners real property, and I know the money is in the bank before I start. Everyone likes it.

genecarp

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Kgmz

Only way to do it.

We have some very good subs. And they know I am going to pay them the day they are done and not come up with the pay you in 30 days stuff. You always reward great work with prompt payment and they are not there to finance my job.

orson

Quickly and with gusto.

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Lancaster Remodeling Contractor - Lancaster Remodeling
Kitchen & Bath Remodeling PA- Bathroom Remodeling Lancaster PA
Custom Kitchen Remodeling PA - Ruby Construction FaceBook-Lancaster Bathroom Remodeling

A.W.Davis

With our plumbing subscontractors, we typically pay them upon completion. With our drywall subcontractors, we will pay them a percentage upon startup, and the rest when they are done.

We do the rest

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A.W. Davis Construction Co.
http://www.awdavisconstruction.com/
Your friendly remodeling contractor

Broncoman72

I am not in business yet, simply thinking about getting into GCing/Construction management.
To those of you providing good feedback, I appreciate it. I was curious becuase financing a couple houses would be very difficult when starting out.