My experience GCing our build after I had to fire our builder is that subs who have some money in pocket tend to disappear. Those who have to finish the job to get paid, show up.

I was constantly waiting on subs who would start a job, work a day or two, then disappear - sometimes for weeks. The guy who was supposed to do the sheetrock in my house literally took 5 and 1/2 MONTHS to finally finish the sheetrocking job. It should have taken him 2 weeks max! And, he only finally showed up to finish the job when I discovered that he was on probation for a felony and I tracked down his probation officer and complained to him. The probation officer was very understanding (I think he was in the midst of building a house too, LOL!) Probation Officer told my sheetrocker, you got two choices, get that lady's house sheetrocked and sheetrocked properly within one week or plan on going back to jail!

After that, I did a bit of thinking and came up with a procedure that, for me at least, stopped that kind of malfeasance in its tracks. I'll outline it for you below. Once I started letting every potential sub know that if they were gonna work for me, this was the way it was gonna be and don't even bother bidding if you don't like the terms, I had no more problems. Some people decided not to bid at all (their choice) but the ones I hired showed up and FINISHED the jobs they were hired to do. No more waiting all day on subs who never showed up. No more fights. On a couple of occasions, I got last-minute phone calls from subs who had an emergency but I always told them not to worry about it, so long as they showed up the next day, it would not be a problem. And, except for one guy, everyone of them actually showed up the next day and then stayed on the job and finished. The one guy gave me excuses twice. When he called with the 3rd excuse, I told him, I'm not accepting your excuse. You have two hours to get here or I'm calling in a replacement. He showed up in 45 minutes... a bit sullen perhaps, but he finished the job and got paid. Once I instituted my procedures, things moved along like clockwork. We finished our house from rough sheetrock stage to move-in level in about 10 weeks. Not bad for a GC who was figuring things out as she went.

Anyway, here is the procedure I decided to follow:

1) Potential subcontractors provide bids that separate out the materials costs from the labor costs.

2) Once I accept a bid, subcontractor lets me know where he wants to get supplies/materials.

3) I meet subcontractor at material suppliers location.

4) Sub orders all needed supplies.

5) I verify that supplies/materials are set to be delivered to my worksite then I pay for supplies with MY credit card. Subcontractor also signs materials list indicating that he approved purchase of materials/supplies per the accepted bid. (I don't actually care if amount is slightly more or less than bid showed for materials but I keep a copy of materials order form.) Subcontractor get NO money in his pocket. No more, "I need half down b/c I have to buy supplies." No more weeks of waiting after paying half down while subcontractor gives the excuse, "I've ordered the supplies but X is on backorder and, until it arrives, I can't get started, I'll call you when it comes in."

6) When supplies/materials are delivered to my site, I check things off on the invoice. I know when everything has arrived. Or, if something gets backordered, I know and have the option of looking elsewhere for the item. And, the supplies BELONG to me, not to subcontractor. I paid for them, not him. Once job is finished, any leftover supplies belong to Sub who finished the job - if he wants them.

7) Agreement with sub includes a clause setting forth the pre-agreed upon amount of time (after materials are delivered to the site) that subcontractor has to get started on the labor portion of the job.

8) Agreement also sets forth the amount of time after starting labor that subcontractor has to FINISH the job completely.

9. VERY IMPORTANT, Agreement includes clause that Subcontractor agrees that, once labor portion of job has begun, subcontractor will continue to be on jobsite each and every business day (Monday thru Friday excluding major holidays) for a minimum of 8 hours between the hours of 7AM and 6PM until job is fully completed - including any punchlist items. Sub and his crew must work diligently at all times while on the worksite to complete the job in a timely fashion. (An exception can be made for inclement weather if the job requires outdoor work. If you're feeling generous, you can also build in a one-time, ONE day automatic excused absense and/or a clause allowing subcontractor to to follow a procedure satisfactory to you for asking to be excused for an absence on a given day in the event of an illness or family emergency. Note that you may need to set a limit to how many of these excuses you will accept.)
   
   10) Payment is due for labor only after job is complete. While bid sets out materials and labor amounts separately, these numbers are guidelines only. If sub completes job according to the agreement, amount actually due for labor is calculated by "Total bid price minus amount spent for materials" - and any leftover materials belong to subcontractor if he wants them. This relieves subcontractor of worry about getting exact costs of materials prior to bidding. It also incentivises subs not to waste materials. While materials belong to me until contract is complete, the cost of wasted materials comes out of sub's pocket.

11) VERY IMPORTANT- in the event that Sub does not complete the job per the agreement, the Agreement contains a clause setting forth a formula by which the value of sub's partially finished work will be calculated. Basically: If subcontractor fails to appear for work on the day that labor is slated to begin, subcontractor is in material breach of the agreement. Owner may, at his discretion, immediately hire a replacement to do the labor and no payment for labor will be due to subcontractor. If subcontractor begins labor under this agreement but fails to timely complete or fails to stay on the job as required by the agreement, Subcontractor is in material breach. Owner may, at his discretion and without further notice to Subcontractor, hire replacement to comlete job. The value of all labor provided by subcontractor prior to breach will be calculated by: Total Accepted Bid Amount minus Amount spent on materials minus Amount paid to replacement to complete job minus Amount paid for any additonal materials needed by replacement to complete job. Further, in the event of breach by subcontractor and homeowner's decision to hire a replacement, no money is due to subcontractor until replacement completes the job and has been paid. In the event of breach, Owner is under no obligation to seek multiple bids before hiring a replacment and Owner may accept any bid for replacement to complete the job that is no more than twice the amount agreed for the entire job under this agreement.

13) Thus, if sub breaches by failing to show up to start the job when planned, I am free to IMMEDIATELY (like the same day!) hire someone else to do the job and original subcontractor gets paid nothing for his labor b/c he hasn't done any labor.

14) If sub breaches by failing to timely finish the job, I have the option of telling him at the end of his last scheduled day "don't bother come back, I am going to get someone else to finish." Likewise, if sub fails to STAY on the job and working everyday, I am free to call someone else in immediately to finish the job.

15) If I have to hire a replacement, I owe original sub NOTHING for his labor until the replacement has completed the job and been paid. At that point, the amount owed and payable to the original sub for the work he put into the job is calculated by: Original Sub's total bid amount MINUS Amount actually spent on materials for sub #1 MINUS Amount paid to Sub#2 to finish the job. (Agreement with Sub#2 is set up exactly like agreement with sub#1.)

To illustrate:

Assume the bid I originally accepted from SUB #1 TOTALED $5000 ($3000 for labor and $2000 for materials). Sub #1 and I go to the store and purchase $1500 worth of materials. Sub #1 finishes the job. He gets paid $3500 and gets to take home any leftover supplies if he wants them. Both sides happy.

But, if Sub #1 gets half-way into the job and then disappears. I call in Sub #2 who had originally given me a bid of $5500 ($3500 for labor and $2000 for supplies). I tell sub #2 that the job is partway completed and that I already have some of the supplies needed on hand. I ask sub#2, to look over what has been done and the supplies on hand and give me a labor and materials bid to finish the job.

After looking at the work already done, Sub#2 says, "well, the job is about half done but I'm gonna have to pull some of this out and redo it b/c it isn't up to my standards so I'm gonna have to charge you $2800 in labor to finish the job. And, because I'm gonna have to pull some of the already used materials out and replace them, I'm gonna need maybe another $500 worth of supplies. So, total bid $3300.

Since this is less than twice the amount of the original total bid, I am free to accept it if I want to. The fact that it is more than the original sub's bid to do all the labor - and the work is already half complete - doesn't matter. The fact that the job is already half done yet sub#2 is asking for more than half of the amount HE originally bid to do the full job also doesn't matter. Since I still have $3500 in my pocket from the $5000 I orginally planed to spend on the project, I can accept this bid to get the job finished and not wind up paying more than I originally expected to pay. [I'm convinced subs get away with pulling the disappearing is act is, once they have some of your money in their pocket, they know that it will cost you extra to get someone else to take over and finish their partially done work.]

Once I accept his bid, Sub#2 and I go to the suppliers and he picks out $400 worth of additional supplies. Again, I purchase the supplies and they belong to me.

Sub #2 finishes job.

I pay Sub#2 $2900 for finishing the job. (Total of what he bid minus the $400 I spent on extra supplies for him). Sub #2 also gets to keep any leftover supplies because, unlike sub#1, HE finished the job.

At this point, I have paid out a total of $4800 for a job that was originally supposed to cost me $5000. ($1500 for supplies requested by sub#1, $400 for supplies requested by sub#2, $2900 for labor for sub #2.

I call sub#1 and tell him he can come pick up his check for $200 for the work he completed. I give that to him along with a copy of the invoices for additional materials purchased and a copy of the check paid to sub#2 as proof of what was spent to finish the job.

Sub#1 is gonna scream bloody murder that he did at least half the job and should get paid half of what he bid. Too bad. Because he walked off the job, I had to hire someone more expensive to finish the work. His original agreement sets out the terms for how the value of an unfinished job would be calculated and I'm following that agreement. If sub#1 files a lien or tries to sue, he WILL NOT win.

Maybe once the building industry really picks back up again, subs won't be willing to accept jobs with conditions like mine. For now tho, many of them are scrambling for work and it isn't like my conditions are unreasonable. The sub doesn't have to spend any money out of his pocket to buy supplies for my job. I don't have to trust him with "half down" and pray and hope he doesn't just fly the coop with my money. I paid my subs soon as they finished the job - no 30 or 60 day waiting period - but I didn't pay a penny for labor before the labor was done. This is the way the rest of the world works and, IMHO, it is past time that subcontractors started being halfway responsible too.