Back charges in construction: how a sub stops paying for somebody else's mistake

Search for back charges and you will find material written for general contractors: how to issue one, how to document it, how to deduct it. Sensible advice, written for the party holding the money.

Almost nobody writes the other half. So here it is, from the seat of the commercial sub who opens a payment and finds it is $14,200 short of what was certified.

One thing up front. This is not legal advice; what your subcontract says governs, and a large back charge is worth a construction attorney’s read. What follows is about the records you control.

How a back charge actually reaches you

Rarely as a letter. Usually as arithmetic.

The sequence goes: something happens in the field in March. A superintendent mentions it to your foreman, who mentions it to nobody. In June you submit a draw. In July the payment arrives short, with a line on the GC’s remittance that says something like BC-07 clean-up / damage and a number.

By then three things are true, and all three favor the GC.

1. The event is four months old. The crew who were there have been on two other jobs since.
2. You have already signed for the period. Depending on what your subcontract and your waivers say, your room to argue may be narrower than it was in March.
3. The number was set by someone else, with no breakdown you can test.

That is why a back charge is not really a billing dispute. It is a documentation dispute that gets settled in the billing cycle, and it is almost always decided by what somebody wrote down on the day.

The three kinds, which fail for different reasons

Worth separating, because the defense is different for each.

1. Damage or rework you allegedly caused. You cut a conduit. Your lift marked a finished floor. Your crew set something wrong and another trade had to fix it. These turn on attribution — was it your crew, and was it actually your scope.

2. Services the GC provided on your behalf. Clean-up, dumpsters, temporary power, hoisting, layout, security, final clean. Often a prorated share of a project-wide cost. These turn on the contract — does your subcontract actually permit it, is the proration method the one the contract specifies, and is the basis disclosed.

3. Impact to other trades. You were late, so somebody else went into overtime or remobilized. These turn on causation, which is the hardest to prove in either direction, and the one where a daily log decides the question.

Prorated service charges are the most common and the least examined. Many subs absorb them for years without ever checking whether the subcontract permits the deduction or whether the split matches the method the contract names. That is worth one afternoon with your executed subcontracts.

Why subs lose back charges they should win

Four reasons, in order of how often they do the damage.

No contemporaneous record. The single biggest one. Your defense is a memory, and memory is not evidence. The GC’s position is a dated email from their super. Dated beats remembered, every time, in front of anyone.

No right-to-cure demand. Many commercial subcontracts require the GC to notify you of a deficiency and give you an opportunity to correct it before they hire someone else at your cost. If they skipped that and just back-charged you another trade’s invoice at that trade’s rate plus markup, you may have a contractual argument that has nothing to do with the facts of the damage. Read your right-to-cure clause before you argue the merits. It is one of the most often overlooked protections a sub may hold.

No pricing basis. “Clean-up, $3,800” is not a priced claim. It is a number. It is reasonable to ask how it was built — whose hours, how many, at what rate, for what work, on what day. A back charge with no breakdown deserves a written request for one before it deserves a payment.

It was never in the cost record. Your crew spent eleven hours fixing somebody else’s error and the hours got coded to production, which means you absorbed the cost and destroyed the evidence in one move. Now the job looks like your productivity slipped. If that happened, you lost the back charge months before it was ever issued, and you also mispriced your next bid.

The four things to do the day you hear about it

Not the day it hits the draw. The day it is first mentioned — on the phone, in a trailer, in a text to your foreman.

1. Create a dated record of the event, that day. What happened, where, which area and phase, who was present, who says it was caused by whom. Photographs with timestamps are worth more than paragraphs. If you are reading this at 4 p.m. about something that happened at 9 a.m., do it now; today’s record beats next week’s reconstruction.

2. Respond in writing, even if you do not yet know the answer. Two sentences is enough: we received your notice, we are reviewing it, we do not accept it as presented, and we are requesting the backup. Silence is the single most expensive habit a sub’s office has. It costs nothing to write and it changes what the file looks like later.

3. Demand the breakdown and check the clause. Ask for the hours, rates, dates and scope behind the number. At the same time, pull the subcontract and read the right-to-cure and the clean-up provisions. One of those two things usually settles it. Check your subcontract’s notice clause too — some set a short window and a required method for disputing a charge.

4. Track your own hours against it separately. If you cured it yourself, those hours belong somewhere of their own — their own phase or code, not production. If the work was outside your scope, that is not a back charge at all, that is extra work you have not been paid for, and the conversation reverses direction.

Sometimes the back charge is yours to issue

The same logic runs the other way, and subs are far too slow to use it.

If another trade damaged your finished work, if you were held up waiting on access that somebody else owed, if you field-fixed a condition that arrived out of tolerance — that is a cost you incurred because somebody else was wrong. Whether it travels as a back charge to them or a change order to the GC depends on your contract and on who you have privity with. Either way it starts the same: a dated record, made the day your crew found it, with photos and measurements.

These are often among the cleanest claims in commercial construction and subs lose them constantly, because they were handled with a phone call instead of a written record. The foreman mentions it, the other trade’s foreman says he will take care of it, and nine months later the cost is simply absorbed as “the job went badly.”

Why the spreadsheet version loses

A folder of emails and a tab called “issues” fails in four ways that matter here.

• The record is not dated by the system. A row in a workbook can be typed in July about March. Everyone in a dispute knows that, which is why a workbook carries less weight than it feels like it should.
• The field never gets into it. The people who saw the event write nothing. The office writes a summary of a phone call about it.
• The hours are nowhere. The cost of curing the problem is mixed into production labor, so you cannot state what it cost you.
• It does not connect to the payment. The deduction shows up in accounting, the argument lives in email, the evidence lives on a phone. Nobody can see all three at once, which is exactly what you need in order to answer.

How SubMark handles it

Plainly: there is no back-charge module in SubMark, and a vendor who sells you one has sold you a form. A back charge is an evidence-and-cost problem, and SubMark addresses it with the four things that actually decide it.

• Change events, dated when they are created, with photos. This is the right home for “somebody else’s condition is costing us.” It records the event the day it happens rather than the dispute six months later, and if it turns into recoverable work it carries forward into a change order through the normal process.
• Daily logs written by the foreman who was there. Delay with its cause from a fixed list — weather, material, labor, access, GC direction, inspection, other — plus work areas, labor hours and photos. One log per job per day is enforced, so there is never a competing second version of a Tuesday. Field users are free and unlimited, which is the part that makes this work: the moment documentation costs a seat per person, somebody decides which three of your eight foremen write logs, and the gap you just designed is the gap the back charge lands in.
• Your own labor record. Log the hours spent curing somebody else’s problem on the day, and with phase tracking on, keep them in a phase of their own rather than in production. Labor hours from daily logs and the time clock are the hours job costing uses, at the rate that applied on the day worked. That turns “the job felt unproductive” into “eleven hours on the 14th, fixing a condition we did not create.”
• Draws recorded from submitted through certified to received. A payment that arrives short of what was certified is visible as a gap rather than discovered during a bank reconciliation, which is the difference between arguing in week one and arguing in month three.

One honest note on signatures. T&M tags are priced in the office off your rate lists and e-signed on site, and they are the right instrument when a GC has directed the work and will sign for it. They are not the instrument for a disputed back charge — nobody is signing your ticket for their own mistake. And T&M tag hours do not feed job-costing actuals; the hours that drive cost come from your logs and time clock.

Where to start

Take your three largest jobs from last year and add up every deduction a GC took that was not a scope change — clean-up prorations, damage charges, other trades’ invoices passed to you.

Two numbers come out. The total, which is usually larger than anyone in the office guessed. And the share of it you could still prove today if you had to.

The second number is the one that tells you what to change on Monday.

Change orders covers the path from a field event to a signed change, and job costing covers where the hours end up.