QScope

Subcontractors

Subcontract packages and payments

A subcontract is a contract in its own right, with its own dates, its own retention and its own notices. Treating it as a line in the main account is how main contractors lose money on notices.

QScope Team·4 min read

Set the package up separately

  1. Open the Subcontractors tab and enter the package name, the subcontract sum and the retention rate.
  2. Set the payment cycle. It is not the same as the main contract cycle and should not be.
  3. Enter the subcontractor bill if you are valuing line by line, or value against the package total.
The subcontract retention rate is usually different from the main contract rate. The difference between what you hold down the chain and what is held from you is real money, and it is part of the cash position on the dashboard.

You are the payer here

Under the Construction Act, the payment notice comes from the payer. Upstream you apply; downstream you notify. Getting that the wrong way round is the commonest confusion in the whole payment regime.

  1. Value the package and issue the payment notice to the subcontractor.
  2. If you intend to pay less than the notified sum, issue a pay less notice before the deadline.
  3. Both dates run on the subcontract timetable, not the main contract one.
Receiving a pay less notice from your client does not automatically produce one downstream. If you are cut upstream and fail to serve your own notice downstream, you pay the subcontractor in full and absorb the difference.

Aligning the cycles

Aligning the subcontract due dates so they fall after the main contract dates is legitimate and sensible: it gives you time to be paid before you must pay.

Making payment conditional on being paid is not. Pay-when-paid clauses are prohibited except where the third party is insolvent, and calling the arrangement back-to-back does not change that.

What the cash position shows

With packages set up, the dashboard shows client receipts against subcontractor payments in one place. That difference, month by month, is the working capital the job actually needs.

Nominated Subcontractors on FIDIC

Not every job runs on a UK subcontract. On a FIDIC contract the Employer can nominate a Subcontractor under Clause 5, and you still value and pay the package down the chain on its own terms.

Each package keeps its own retention rate and its own cycle. Where the main contract is FIDIC, the dates are counted in calendar days rather than working days.

Each package can carry its own retention and cycle. A nominated Subcontractor is set up the same way as any other package, with its own subcontract sum, retention rate and payment cycle. The statutory dates and taxes are published starting points that need local verification.

Keep reading

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