The Subbies That Make Your Business Work
Most construction businesses depend heavily on subcontractors. Even builders with their own carpentry crews need electricians, plumbers, gasfitters, concreters, roofers, and a range of other trades to complete a full building project. Managing these subcontractors effectively — their contracts, their quality, their scheduling, and their payment — is one of the most important management skills a construction business owner or project manager needs.
Good subcontractor management is the difference between projects that run smoothly and profitably and those that drag on, generate defects, and end in disputes.
Written Subcontracts
Every subcontractor relationship should be governed by a written subcontract. Handshake deals and text message agreements create ambiguity about what was agreed, which scope items are included, what the price covers, and how variations and delays are handled. When problems arise — and they do — a clearly written contract is the reference point that allows disputes to be resolved quickly rather than escalated.
Standard form subcontracts — including the NZS 3604 subcontract conditions or the New Zealand Specialist Trades Contractors Federation subcontract — provide a starting point. The key elements to get right are: scope of work (precisely described), price and payment terms, programme and milestone dates, variation procedures, quality standards and inspection rights, and defects liability provisions.
Payment: Your Obligation and Your Right
The Construction Contracts Act 2002 governs payment in the construction sector. It establishes the payment schedule framework — which requires prompt payment following a valid payment claim — and creates a mechanism for suspending work if payment is not made. Understanding the CCA is important for both head contractors managing subcontractor payments and subcontractors managing their entitlements.
Prompt payment to subcontractors is not just a legal obligation — it’s a business relationship investment. Subcontractors who get paid on time by a head contractor will prioritise that contractor’s work and return their calls. Those who have to chase payment will deprioritise the relationship and be less responsive when you need them.
Quality and Programme Management
Integrating subcontractors into your quality management and programme management systems is essential for project success. Subcontractors need to know what standard of work is expected, when they need to be on site, and how their work interfaces with other trades. Regular site meetings, clear programme milestones, and documented quality checks create the management visibility that allows problems to be identified and addressed before they become costly.