Subcontractor Costs

Subcontractor costs are the amounts allowed or paid for specialist work carried out by another contractor as part of a construction project. A subcontract package may cover labour only or include labour, materials, plant, supervision, design, testing and the subcontractor’s own overhead and profit.

The returned price is not automatically the full cost to the main contractor. Attendances, access, coordination, programme risk, financing, administration and non-recovery exposure arising from retention and payment terms, and main-contractor overhead and profit may still need separate allowance.

What can a subcontractor price include?

The exact basis depends on the enquiry and return. A subcontractor quote may include:

• labour and supervision;
• materials and consumables;
• specialist plant, tools or access equipment;
• design responsibility;
• shop drawings or technical submissions;
• testing, commissioning and certification;
• waste removal and protection;
• the subcontractor’s preliminaries;
• the subcontractor’s own overhead and profit.

Do not assume every item is included because it would normally belong to that trade. Check the quote against the drawings, specification, scope schedule and enquiry documents.

What may sit outside the subcontractor quote?

The main contractor may still need to allow for:

• scaffold, hoists, cranes or shared access;
• welfare and temporary services;
• unloading, storage and distribution;
• builders’ work and making good;
• temporary works and protection;
• permits, inductions and logistics;
• power, water and fuel;
• waste skips or common disposal;
• testing or certification by others;
• programme interfaces and return visits;
• management and coordination;
• financing, administration and non-recovery exposure arising from retention and payment terms, together with defects exposure.

These are often called attendances or package interfaces. If they are excluded from the subcontract return and missing from the estimate, the package can appear cheaper than it is.

Estimate allowance vs subcontractor return

An estimate allowance may be based on measured quantities, historical rates, previous quotes, benchmark costs or incomplete design information. A live subcontractor return reflects the scope, market and programme understood by that subcontractor at the time.

The two figures can differ because:

• the design or specification has developed;
• quantities were measured on a different basis;
• the subcontractor excluded part of the package;
• labour, material or plant rates have moved;
• the start date or programme has changed;
• design responsibility or risk has been transferred;
• the original estimate included attendances or risk elsewhere;
• the quote has a shorter validity period.

The useful check is not whether the totals match exactly. It is whether the scope, quantities, exclusions, attendances, programme and commercial basis reconcile.

For the full process, read How to Compare Subcontractor Quotes Against a Construction Estimate.

Main-contractor overhead and profit

A subcontractor return may already include the subcontractor’s own overhead and profit. That does not automatically recover the main contractor’s management, coordination, warranty, cashflow, defects and commercial exposure.

Keep three layers separate:

1. the subcontractor’s own overhead and profit within its price;
2. package-specific attendances, management and interface costs;
3. the main contractor’s overhead, profit and identified risk allowance.

Check the full estimate or tender build-up before adding a percentage. Automatic markup can double count costs already allowed elsewhere, while adopting the subcontractor total without checking can leave the main contractor’s own costs and profit unrecovered.

Managing subcontractor costs

A controlled package review should record:

• enquiry documents and drawing revisions;
• measured quantity or estimate allowance;
• each subcontractor’s price and validity;
• inclusions, exclusions and qualifications;
• attendances and design responsibility;
• programme and lead-time assumptions;
• main-contractor adjustments;
• agreed changes after appointment.

Keep the comparison live as the design and procurement position changes. A quote that was suitable at tender stage may no longer match the construction issue information.

Subcontractor costs FAQs

What do subcontractor costs include?

They can include labour, materials, plant, supervision, design, testing and the subcontractor’s own overhead and profit. The actual inclusions depend on the enquiry and quote.

Does a subcontractor quote include materials and plant?

Sometimes. A return may be labour-only, supply-and-fix or based on a mixed scope. Check the quote and exclusions rather than assuming the package basis.

When should main-contractor overhead and profit be allowed against a subcontract package?

Assess it after checking what the subcontractor price includes and where attendances, management, risk and main-contractor costs sit in the wider estimate. Avoid both double counting and leaving the main contractor’s own exposure unrecovered.

Why can a subcontractor quote differ from the estimate allowance?

The scope, quantities, specification, programme, market rates or risk basis may have changed. Reconcile those items before replacing the estimate allowance with the returned quote.