Q: Define roles/responsibilities of (main) contractor vs. subcontractors

[TomcoPDR]

Workplace discussion I'm having with other companies... given the following factors, what's your opinion of roles and responsibilities of MAIN (Contractor) and Subcontractor?

Main contractor:
- Deals with business customers, or retail (public) customers
- Uses their company name as the "umbella" or front when the work/job is performed
- "Advertising/marketing" (jackets, shirts, meetings to get customers, etc...)
- All parties uses this company's invoice books to bill out
- All pricing charged are disclosed to subcontractors, in return offering the above, main contractor takes a set percentage from the open-book invoice charged.

Subcontractor:
- Independent individual, must incorporate their own company (which then invoices the main contractor)
- Ownership of their trade tools
- 100% responsible to pay their OWN: vehicle/gas, hotel/road travel time, breakage of items on the job, food,
- (in this case) main contractor made mandatory for SUBS to purchase their own WCB (if you're owner/operator, u can opt out)
- Subs are subject to job unstability (layoff without EI), and uncontroled amount of Subs called in for a project.


Question: Mostly MONEY $$$$$$ lol... ok, to what extend is the main contractor responisible for his Subs? (meaning is the main contractor obligated to pay Subs regardless, or are the Subs subject to risks of customer non-payment as well?)

Hope that made sense, I can elborate more... and of course there are many different scernios and all... just trying to get some opinions. Or just other industries that deals with main/subs

[Darell_n]

General contractor makes installment payments to the subs as per contract for the job. If customer doesn't pay General, they suck it up and pay Subs for completed work or the next job Subs quote twice as much or they tell the General to stuff it. Most likely just sue the General for money owing.

[AndyL]

General = Prime contractor...

Prime arranges the work, contracted to do the work, will be handling payment (in and out) for the work.

The Prime contractor is responsible for paying the bill to the subcontractor. If the Prime isn't paid - he still has to pay the bill, regardless of whether he's paid or not. This is why they take a markup - to cover such costs - ie legal fees to lien a car... Since the sub has no ability or right to lien (usually waived in the contract) - it's not his responsibility.

[TomcoPDR]

^^:werd: exactly, thanks for the answers.

This other general contractor is trying to tell me they only pay their Subs, WHEN THEY GET PAID. He's trying to tell me that if they paid the Subs first, according to Revenue Canada, that'd be considered being an employee, without taking risk of non-payment from the customer... lol

[Mar]

I get a lot of subcontracted work handed to me for websites and there have been a few times where the client didn't pay and I still charged the main contractor a couple grand for the work. It's not my problem if the client doesn't pay, I wasn't hired by the client.

That would be like passing it even further down the line and the client saying to me that their customers didn't give them the business they were expecting, do they still have to pay me? Of course.

[bbcustoms]

Originally posted by TomcoPDR
^^:werd: exactly, thanks for the answers.

This other general contractor is trying to tell me they only pay their Subs, WHEN THEY GET PAID. He's trying to tell me that if they paid the Subs first, according to Revenue Canada, that'd be considered being an employee, without taking risk of non-payment from the customer... lol

This is the oldest trick in the book with general contractors. I have been in the industry for 14 years now and seen it over and over again.

There are no BS rules as employees with revenue Canada if you pay out before you receive payment, the contractor just doesn't want to kill his cash flow.

I have worked with multiple contractors that all run that game and it's a lot more common than you would think. The real fact is that most generals don't have the money to cover the bills if they don't receive payment, depending on the size of job they are doing as well as the size of the contractor.

The position of the general contractor has quite a bit more involved than what was described in your original post depending on service of work. For example I have a small general contracting company for commercial construction and staff project managers and coordinators, carpenters, and laborers. We sub out mechanical, electrical, flooring, millwork, paint, etc. but still do a lot of the work plus management ourselves. I know there are a couple companies that do nothing besides push sales and sub everything out but there isn't that many anymore as the costs become much higher and everyone is worried about bottom dollar these days.

pm me if you want to chat more about it

[TomcoPDR]

Originally posted by bbcustoms


I have worked with multiple contractors that all run that game and it's a lot more common than you would think. The real fact is that most generals don't have the money to cover the bills if they don't receive payment, depending on the size of job they are doing as well as the size of the contractor.



That's nail on the head anyways... I was just making sure I'm not crazy what this other general company owner was trying to tell me about their boys (subs)

Different industries, but same shit then I guess, lol....

What I feel is BS too is, most times these "subs" are 100% carrying their own expenses, labour (some might even have to pay for 2-3 employess), tools, training, etc... And then these "generals" are the ones keeping $1-3 mil on a project and take off, lol...

[garnet]

there isnt any revenue canada rules on the arrangement, it's BS, but it's not unusual for your general contractor to pay his subs, as he gets paid by you (the client)

being a general contractor, i for one would never carry a full $ load on behalf of a client, because i am not anxious to be stiffed, and believe me it happens!!

i wouldn't fault a general contractor for wanting to not have the client get to far ahead for work done, without payment(s) made up to a reasonable current point

as a general i can say i would not go into a contract, without the stipulation of either a regular timed installment from client paid, or that invoices are paid up to full at pre-determined intervals (once or twice per month)





Originally posted by TomcoPDR
^^:werd: exactly, thanks for the answers.

This other general contractor is trying to tell me they only pay their Subs, WHEN THEY GET PAID. He's trying to tell me that if they paid the Subs first, according to Revenue Canada, that'd be considered being an employee, without taking risk of non-payment from the customer... lol