The GC is withholding pay on one job over another
A finished job goes unpaid because the GC is unhappy about a different job, and the contract may decide who is right.
Whether a GC can hold money from one job over a dispute on another depends on the language in your subcontract and on your state, and an attorney answers that. What the company can control is what it agreed to before the job started and how fast it sees the problem. Leadership reads the payment terms for business impact and the legal read covers what happens if it goes to court, both before the markups go out. After that the PM checks two weeks ahead that the payment is on the way, and the weekly aging report shows what is late.
Three moves, in order
Step 07: Monthly cadence
Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.
Learn this part of the job
SPM The Construction CFO publishes this course. It's a separate company from this one, and the course is on its own school site.
Other problems step 07 solves
Other things that go wrong
What owners ask
GC withholding payment on one job because of another job?
A finished job goes unpaid because the GC is unhappy about a different job, and the contract may decide who is right. Whether a GC can hold money from one job over a dispute on another depends on the language in your subcontract and on your state, and an attorney answers that. What the company can control is what it agreed to before the job started and how fast it sees the problem. Leadership reads the payment terms for business impact and the legal read covers what happens if it goes to court, both before the markups go out. After that the PM checks two weeks ahead that the payment is on the way, and the weekly aging report shows what is late.
Which part of the system fixes this?
The step is number 07, monthly cadence. Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month. It's drawn from chapter 7 of CONTROL: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $5M averages 7% after taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Have leadership read the payment and offset language in every subcontract before it's signed.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 07 depends on step 03, overhead calculation and step 04, estimating system and step 05, software and bookkeeping alignment and step 06, project management. Install it ahead of those and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.