{"id":4553,"date":"2026-05-10T16:10:27","date_gmt":"2026-05-10T16:10:27","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/seven-key-strategies-for-successful-subcontracting-frantz-ward-llp\/"},"modified":"2026-05-10T16:10:27","modified_gmt":"2026-05-10T16:10:27","slug":"seven-key-strategies-for-successful-subcontracting-frantz-ward-llp","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/seven-key-strategies-for-successful-subcontracting-frantz-ward-llp\/","title":{"rendered":"Seven Key Strategies for Successful Subcontracting | Frantz Ward LLP"},"content":{"rendered":"
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Taking the time to read and understand your subcontract is a necessary step for any successful project. Although subcontracts are not uniform and can be quite lengthy, these are the top seven provisions you need to understand.<\/p>\n<\/div>\n

1. Incorporation by Reference \/ Flow Down<\/strong><\/p>\n

Subcontracts almost universally incorporate the Prime Contract between the owner and contractor by reference. Further provisions in the subcontract state that the subcontractor owes the contractor all the duties and obligations that the contractor owes upstream to the owner.<\/p>\n

Subcontractors should try to limit this to documents and obligations that are specific to their scope of work. In other words, exclude items that are the responsibility of others or that are otherwise excluded by the qualifications and exclusions in the proposal or bid.<\/p>\n

Most importantly, get a copy of the Prime Contract and review it (or have it reviewed by counsel) before signing the subcontract. This is not just a technicality.<\/p>\n

2. Schedule<\/strong><\/p>\n

Subcontractors will want the ability to rely on and enforce the Project Schedule attached to the Subcontract. Accordingly, subcontractors should look to strike or modify any language in the Subcontract giving the contractor unfettered discretion to change the schedule.<\/p>\n

Contractors will want to retain the right to re-sequence the subcontractor\u2019s work at no additional cost. An example of this is: \u201cContractor may amend the Project Schedule from time to time as it sees fit, and Subcontractor agrees to adhere to such schedule and carry on Subcontractor\u2019s Work promptly and efficiently as necessary to avoid causing delay in completion of the Project.\u201d<\/p>\n

3. No Damage for Delay<\/strong><\/p>\n

This relates closely to the schedule issue. Subcontractors will want any \u201cno damage for delay\u201d provision stricken. Otherwise, the parties can negotiate a \u201cdeductible,\u201d whereby the first specified days of delay (i.e., 15 to 30 days) are absorbed by the subcontractor and any delays after that time period are compensable.<\/p>\n

It should be noted that \u201cno damage for delay\u201d provisions are void to the extent a delay is chargeable to the owner or contractor. Ohio Revised Code (\u201cR.C.\u201d) 4113.62(C)(2).<\/p>\n

However, if the clause does not completely preclude a subcontractor\u2019s ability to recover these damages, it may be enforceable. For example, provisions that limit recoverable damages to the escalation in material and labor costs may be enforceable.<\/p>\n

Also, provisions making recovery contingent on payment from an upstream source, e.g., \u201cpay if paid,\u201d may also be enforceable. As a contractor, these concepts should be written into the agreement in place of a blanket prohibition on the recovery of delay damages.<\/p>\n

4. Subsurface or Concealed Conditions<\/strong><\/p>\n

Subcontractors should try to avoid provisions that require them to \u201caccept\u201d the project site and the site conditions or that otherwise shift the financial risk of unforeseen, unanticipated, or changed conditions. It is acceptable for the subcontractor to accept the site conditions as set forth in a geotechnical report, but many times the contract will state that the geotechnical report is \u201cfor information only, and may not be relied upon by the subcontractor.\u201d In all cases, the subcontractor should be able to rely on the geotechnical report and make a claim for an equitable adjustment in the contract time and contract price if actual site conditions materially differ from those disclosed in the report.<\/p>\n

Also note that these provisions may contain a strict notice period and\/or liquidating agreement whereby a contractor has no independent liability to a subcontractor for differing conditions. These clauses typically state that a subcontractor can collect damages from a contractor only if, and to the extent that, the contractor recovers damages upstream from the owner.<\/p>\n

5. Contingent Payment Provisions<\/strong><\/p>\n

A contingent payment clause is a contractual provision that makes payment contingent upon the happening of some event. In construction subcontracts, the typical contingent payment clause makes the subcontractor\u2019s payment contingent upon the payment of the contractor by the owner. Contingent payment clauses can be \u201cpay when paid,\u201d which links the timing of the subcontractor\u2019s payment to the time when payment is made to the contractor by the owner (allowing a reasonable time). \u201cPay if paid\u201d provisions, on the other hand, specify that the owner must pay the contractor in order for the subcontractor to ever receive payment.<\/p>\n

In Ohio, \u201cpay if paid\u201d clauses are enforceable per Transtar Elec., Inc. v. A.E.M. Elec. Servs. Corp<\/em>., 140 Ohio St.3d 193, 2014-Ohio-3095. However, a contractor cannot cause the non-payment and then rely upon a \u201cpay if paid\u201d provision to escape liability.<\/p>\n

Subcontractors will want to reject \u201cpay if paid\u201d provisions altogether or change them to \u201cpay when paid.\u201d<\/p>\n

6. Indemnity and Insurance<\/strong><\/p>\n

Subcontractors should attempt to reject or limit any suggested indemnification provision by arguing:<\/p>\n