Subcontractor

What is a subcontractor?

A subcontractor is a company hired by the general contractor, or by another subcontractor, to do part of the work. It holds its own contract with the party above it and usually has no contract with the building owner. The federal definition is broad: any supplier, distributor, vendor or firm that furnishes supplies or services to a prime contractor or another subcontractor.

Why it matters to a revenue leader

Selling as a subcontractor means the GC controls the owner relationship, the payment timing and often the retainage. Margin depends on how well the sub reads each GC's habits: who shops numbers, who pays slowly, who handles change orders fairly. A revenue leader at a specialty contractor should manage GCs as accounts with their own history and know which ones produce work worth bidding. Subcontract work also opens a path to the owner for service agreements after turnover.

An HVAC company works as a subcontractor on a school renovation. The GC pays 45 days after the owner pays it and holds 10% retainage. The seller prices that cash delay into the bid, and the service team meets the district's facilities director before turnover.