Subcontractor and Vendor Management Flashcards

What document is typically used to formally define the scope of work, payment terms, and obligations for a subcontractor on a construction project?

Answer: Subcontract agreement

A subcontract agreement is the binding contract between the general contractor and subcontractor that defines scope, compensation, schedule, and all other terms governing their relationship.

Which process involves evaluating a subcontractor's financial stability, experience, safety record, and past performance before inviting them to bid?

Answer: Prequalification

Prequalification screens subcontractors before bidding to ensure they have the capacity, competence, and financial stability to successfully perform the work.

A 'scope gap' in subcontracting refers to a situation where:

Answer: Work required by the contract is excluded from all subcontractor bids

A scope gap occurs when a required portion of work falls between trade subcontracts and no subcontractor has included it in their bid, leaving the work uncovered.

Which type of bond guarantees that a subcontractor will complete their contracted work if they default or become unable to finish the project?

Answer: Performance bond

A performance bond is issued by a surety and guarantees that the subcontractor will fulfill the contract terms; if the sub defaults, the surety steps in to complete or fund completion of the work.

What is the primary purpose of requiring a subcontractor to name the general contractor as an 'additional insured' on the subcontractor's general liability policy?

Answer: To provide the GC coverage under the sub's policy for claims arising from the sub's work

Additional insured status extends the subcontractor's liability coverage to protect the GC against third-party claims arising out of the subcontractor's operations on the project.

In subcontract management, a 'back-charge' is best described as:

Answer: A deduction from a subcontractor's payment for costs the GC incurred due to the sub's failure or non-performance

A back-charge allows the GC to recover costs incurred when they must correct, complete, or clean up work that the subcontractor failed to perform, deducting those costs from the sub's contract balance.

Which document, signed by a subcontractor upon receiving payment, releases their right to file a mechanic's lien against the property for the amount paid?

Answer: Lien waiver

A lien waiver is signed by a subcontractor or supplier upon payment, waiving their right to file a mechanic's lien against the owner's property for the paid amount.