Subcontractors Requesting Deposits

MEDIAINSTALLS

do GC's give subs deposits up front for work? What is the normal range or percentage

J F

The only deposits we give (or are asked for) are for carpet/hardwoods and cabinetry.


J

genecarp

IT all depends on the relationships you have with your subs, and the strenth of there individual buisnesses, my subs are guys i have worked with for years, they run succesful buisnesses, and do great work, sometimes i have to chase them to pay them, sometimes they tell me they are tight, and i will pay them upfront for an entire job. we work together, like gentleman, and our word insures payment, and service....

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rbsremodeling

x2

I work exactly as Gene described. After you build a trust and relationship with your subs. It makes life easier. I have subs I have never signed a contract with. ( I know very un professional blah blah blah) but I have never been screwed by them even when things go bad and we have each others back.

It how ever takes time, years to build these relationships in the mean time be very careful how you issue money and try to put up as little up front "with in reason" with new subs.

When you find a good sub treat them right.

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kevjob

i have the same subs for years as well and if anyone needs money they can always call me other than that I pay after your rough inspection has passed.

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

Chris Johnson

Well, I'm a sub

Did you as the GC get a deposit for the job?

Why can't I have a deposit for the work I am about to embark on?

I am about to schedule your job on my calendar and then there is a good chance you will be delayed for various reasons and delay me, mind you I have just ordered $ 30k worth of product for your job and that two week delay is already ticking on my terms with my supplier...so yes I want a deposit to cover my expenses.

No offence

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Chris

Mud Master

I absolutly want a deposit/draw.

I won't even drop a piece of lumber or a scrap of drywall on the jobsite without at least 15% up front. Normally I get 15% upon acceptance of proposal, 35% upon material drop, 20% upon rough framing inspection, 10% upon sanding of drywall, 15% upon completion of acoustical & 5% upon completion of punch out.

That is on a job where I am awarded full build out/restoration, different jobs get different deposits. If I only did the drywall or only framed I would require 35% upon material drop, 45% upon drywall scrap out/exterior load bearing complete, 20% upon sanding/framing completion & 10% upon point-up/passed inspection.

That is how I work my projects. But cut it anyway you want, your subs need money to continue rolling as much as you do. Would you do a 2.5 million dollar project & finance it to the end? Neither would your subs. That goes for any job even if it is only $1,000.00. A subcontractor is still a contractor & still has all the overhead & liabilities that a GC or CM would have. In order for a business to function, money must be constantly flowing into the bank account, as it will inevitably flow back out. Without progress payments, a business could not function due to lack of flowing capital. The suppliers & insurance companies won't wait til' the end of the project to be paid, and neither should the one paying them.

So yes, a GC should be paying draws to thier subcontractors, just as the subcontractors should be requesting draws from the GC.

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Kgmz

As a GC, I do not get a deposit before the job.

And that does not mean I cannot help you out with a deposit if needed.

Example: A custom home being payed for with the home owners construction loan. The banks will not allow any deposits of any significance, and you only get paid with draws as the work is done with progress inspections and payments. The little money you get up front is to cover architectural drawings, engineers fees, and permits. It is not to help you finance the job. You are expected to have the means to be able to finance the job and the banks will check to see you have the means. If you don't have the means the bank will not allow the home owner to use you for the job and will recommend they find another contractor.

The above also applies to a large commercial project that is being financed. Or any time a bank is involved.

Most of my subs do not ask for a deposit. They also know I will pay them immediately when they are done. I don't wait to pay them after a inspection because I trust them and they will come back to make any corrections. And if they do need some cash during the job they know all they have to do is ask, and I'll write a check on the spot.

I do have a couple of new subs that are small and a little cash short, but they do excellant work. And I have accounts with the same suppliers all my subs do. So if they don't have the cash to get the materials they can put it on my account. I am willing to help the little guy get started as long as they do good work for me, and are honest and straight with me. Remember I was a little guy once too.

tnt specialty

We're a GC as well as a sub.

never asked for a deposit either way.....

never give deposits to subs....That doesn't mean I haven't helped a guy out once in awhile financially,,,,but that's a different story....

MEDIAINSTALLS

Thank you all for the response.

We are a sub and i ask for a deposit on products. wanted to make sure i am not reaching on what i am saying. I have a GC who made me a promise and pretty much did not follow through on it. The project is complete and now wants to wait until they get paid to pay me anything. We did the sound system for this place, although it is not a huge job the equipment is not paid for yet but is in use. I can understand waiting on labor but product should be covered somehow. I know shame on me for allowing it. I stated I will have to remove it until it is paid for---I am taking the risk at this point. It is someone i know but first time we worked together.

i did all this based on being strung along and wanting to get in with the county on top of it

Buckknekkid

we accepted 3 jobs lately from GC's completed them all , no complaints, Vince Forgione stiffed us outright . I think I;ll ask for 100% next time

GregS

I just signed a new contract for my builder to wire up their office. Due to their past problems with payment, I wrote the contract and asked for 50% deposit and 50% upon significant completion.

They signed it and gave me a cheque, I start tomorrow.

I understand what you are saying about paying for equipment up front. And I agree with that. But you will be hard pressed to find any sort of production builder pay you up front for anything.

It's cases like that you wish you were dealing directly with the HO and then just passing the GC a commission. I pay 5% commission to GCs if I am dealing with the HO direct. All the GC has to do is make a phone call to start rough-in and a phone call to do termination. I handle everything else.

excellencee

On the first house I wired, the GC in passing told me that he would not use a sub who asked for a deposit on a job. I didn't ask for one on that job or any since. His view was that if you ask for a deposit then you must not pay your bills. If you paid your bills, then you could put the materials on your account like he does. When I passed my rough inspection, the check was waiting. I've worked for other builders who were waiting for the material list to go buy materials so I could start work. This was common for their subs. I don't want the hastle of wrong materials, materials not on site when needed, or the lost material markup. I have a commercial customer who wonders why I don't ask for a deposit. I just tell them to pay me promptly and I don't need it.

AtlanticWBConst

Never had a sub ask for a deposit.....Actually, my masonry sub does, for materials, and that's understandable. Other than him, no one else...

Obviously, if it's a sub that is only providing labor, then I am not giving a deposit.

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- Build Well -

MEDIAINSTALLS

I agree with all. we normally never ask for anything if it is labor only. Just a small one to ensure cover of some of the more expense equipment (ex. $1100 amplifier) all labor and material such as wire I do not worry about, it is not going to make or break me.

i just do not like that I explained to the GC how we operate and never brought it up again just to have the GC come up to me 2 weeks later and say I'll give you something next week and never did.

No reason to make statements you can not follow up on....

Chuck A

"The project is complete and now wants to wait until they get paid to pay me anything. We did the sound system for this place, although it is not a huge job the equipment is not paid for yet but is in use. " - from post #10


You didn't take the job agreeing to be paid when the GC got paid. Exercise your lien rights. Especially since the customer is using your product now.

I am a GC, and hopefully I just paid my last deposit ever. Once the cabinet people got my deposit, they stopped returning my phone calls. Once I did get ahold of them, the lies started. Long story short, they delayed installation for about two months. Fortunately, they are now out of business and can't screw anyone else.

skyhook

Experience prevails with Subs and GCs. When the contract is signed and the expenses start rolling in, show good faith and get the draw. Front money usually goes somewhere else.

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Tiger

I like advances but if there are any problems with that I just want equity. Without an advance I'll set up payment on completion of the service, special equipment, rough, & final. It seems to be a regional thing also. In this area advances are common with homeowners, and not common with GCs.

Dave

Floordude

I require a 10% security deposit and a signed contract, just to be place on the schedule, first come first served. This is non-refundable. This secures a spot on my schedule with you. This keeps the serious, serious. If they change thier minds and want to hold off for now, I keep the deposit, because now there is a big hole in the schedule.

If I'm supplying any materials, that is due(+ my mark up) at time of arrival to start the project, or 50% of the contract, which ever is greater. 40%, or balance is due at time of completion. Change orders are paid at the time of the change orders signing, before any work continues.

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Brock

My subs are so wealthy that it would be an insult to offer them an upfront.