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Michael Stone: Between an Owner and a Sub

One subject comes up often on coaching calls. A subcontractor causes a problem on a construction job, and the general contractor needs to make it right. That’s what happened here, but with a twist.

The subcontractor was a friend of the owner, and the owner recommended bringing them on. The sub, who is a remediation contractor, agreed to work under the general contractor’s direction and contract terms. The sub, however, would be paid directly by the owner. Can you see how this could go sideways?

It did. The sub didn’t complete the job, and the work they did was under par. In addition, they dumped materials covered with mold into the GC’s dumpster, violating the rules on the disposal of hazardous materials. When the GC discovered what the sub had done, he stopped the job and asked for advice.

He needed to schedule a meeting with the owner and the subcontractor as soon as possible. At the meeting, explain to the owner that he wouldn’t continue with the job until the problem was resolved, and that would require direct action by the owner. Essentially, it was up to the owner to get the sub to come back to the job site, clean the hazardous materials out of the dumpster and correct the mistakes made on the job.

The reason the owner needed to make things right was because the general was the outsider in this relationship. The friendship between the owner and the sub would take precedence over the business involved. If the friendship fell apart and the sub sued the owner for payment, the contractor would be pulled in and it wouldn’t end well.

I also suggested that he write a change work order for the job, specifying what needed to be done by both the owner and the subcontractor to get the job back on track. List the extra time and cost incurred by the general to get this straightened out.

If you’re a general contractor, never let the owner get between you and the subs on your jobs. The owner tells you what they want done and they pay you for the work. You design the job, write the agreement, schedule it, and get it built. You manage and pay the subs. That is how you keep firm control of your jobs and prevent the problems outlined here.

These situations don’t always end well, but this one did. I received a follow up call from the general contractor telling me they have the matter cleaned up, at least from his standpoint. They had a meeting, he was absolved from any wrongdoing, and he exited the job. That’s the best possible result in a situation like this.

Listen to the audio here, or select the dots on the right to download:

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