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General Contractor/Subcontractor

 
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Old 12-01-2015, 08:57 PM   #1
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General Contractor/Subcontractor


Looking at bidding some projects as a subcontractor. My portion would have a large amount of materials to purchase. Is it unheard of to make an arrangement with the Prime contractor to purchase the materials?. Talking 20-30 million project with $1-2 million sub work. We are experienced in the work, just $ amount for the materials is outside of our line of credit, as well our bonding amount.
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Old 12-01-2015, 09:11 PM   #2
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Re: General Contractor/Subcontractor


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Looking at bidding some projects as a subcontractor. My portion would have a large amount of materials to purchase. Is it unheard of to make an arrangement with the Prime contractor to purchase the materials?. Talking 20-30 million project with $1-2 million sub work. We are experienced in the work, just $ amount for the materials is outside of our line of credit, as well our bonding amount.
This could be overcome with proper business arrangement, such as X% of project value up front, then payments at logical stages of completed work.

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Old 12-01-2015, 09:20 PM   #3
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Re: General Contractor/Subcontractor


IMO, not likely for you to get help from GC.

He has to bond the the job and probably not interested in a sub he has to worry about.

He may bite for a big enough discount.

Good Luck.
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Old 12-01-2015, 09:51 PM   #4
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Re: General Contractor/Subcontractor


What is the trade.


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Old 12-01-2015, 09:54 PM   #5
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Re: General Contractor/Subcontractor


Landscaping?
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Old 12-01-2015, 10:00 PM   #6
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Re: General Contractor/Subcontractor


To clarify, its State Highway projects and individual bid items for materials and installation. Most of the Material Costs for my end are in Erosion Control products. It appears most of the GC's are requiring sub bonding. I can bond for all my installation/profits but the materials push the limit with the materials over a $ 1 million alone. Thanks for your replies.
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Old 12-01-2015, 10:01 PM   #7
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Re: General Contractor/Subcontractor


As long as you have a good working relationship with a supplier, that would probably be who you'd want to make your deal with. I'm sure 2 or 3 mil in material will certainly raise thier eyebrows! They aren't unsecured they have lien rights. Especially paying them per draws and installments. Worked out prior of course.
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Old 12-01-2015, 10:02 PM   #8
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Re: General Contractor/Subcontractor


Quote:
Originally Posted by 4son View Post
To clarify, its State Highway projects and individual bid items for materials and installation. Most of the Material Costs for my end are in Erosion Control products. It appears most of the GC's are requiring sub bonding. I can bond for all my installation/profits but the materials push the limit with the materials over a $ 1 million alone. Thanks for your replies.
Sorry I didn't read this before my last post.
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Old 12-01-2015, 10:04 PM   #9
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Re: General Contractor/Subcontractor


Don't see how your bonding company would go for it as they would want to know who is financing the materials.

Should the GC flop & not be able to front your materials your bonding company would be on the hook.

As a GC I would not have a sub on a large job like this that didn't have the resources to complete his work.
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Old 12-01-2015, 10:07 PM   #10
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Re: General Contractor/Subcontractor


$1million in SWPPP materials? Good god.


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Old 12-01-2015, 10:13 PM   #11
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Re: General Contractor/Subcontractor


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$1million in SWPPP materials? Good god.


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Probably more than SWPPP, likely some permanent erosion control/stabilization materials and vegetation install.
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Old 12-01-2015, 10:17 PM   #12
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Re: General Contractor/Subcontractor


Yes, crazy amount.
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Old 12-02-2015, 09:57 AM   #13
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Re: General Contractor/Subcontractor


Sometimes, a job is just too large for your company ....
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Old 12-02-2015, 09:52 PM   #14
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Re: General Contractor/Subcontractor


IMO you will have a hard time getting anything up front. The gc has to carry their own work/material and the risk of the entire job. These projects aren't as easy to keep the money flowing like private work either.

If you can't front the material what happens if the project just isn't going well. Then you've got a huge project for your company that isn't making money and you're screwed.
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Old 12-02-2015, 10:01 PM   #15
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Re: General Contractor/Subcontractor


i have been on the sub and GC of a MUCH smaller scale situation.

When as a sub, our contract outlined this as an option. GC purchased bulk material and deducts it form the original agreement.

As a GC I have done this as well. Purchase materials with a specific time line to be completed or x percentage is deducted from the original agreement.

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Old 12-03-2015, 05:16 AM   #16
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Re: General Contractor/Subcontractor


Check the spec book. What are the progress payments like ?? Obviously you will not need $1 million worth of material right up front. Work with your suppliers. If you are large enough to complete the job then you should have enough capital to buy materials and make payroll. I had a GC negotiate a price with me before and I agreed if they paid in 15 days instead of 30.
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Old 12-18-2015, 07:49 PM   #17
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Re: General Contractor/Subcontractor


You might have better luck setting up a joint check arrangement where your GC agrees to write joint checks to you and your supplier for materials

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