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Backcharges – Avoiding surprises

11/24/2009

by Bradley H. Rice

Backcharges are one of many challenging issues on construction projects. Like thieves in the night they often appear unexpectedly with little or no warning, resulting in subcontractors being backcharged with little or no notice. This lack of notice and opportunity to allow a subcontractor to cure a problem causes much frustration for subcontractors.

A typical backcharge clause will place requirements on a subcontractor, such as a requirement to keep the jobsite clean on a daily basis, and then allow the general contractor to charge costs it incurs to clean the jobsite back to the subcontractor without being required to provide the subcontractor any notice of the impending charges. A simple way to avoid such a surprise is to negotiate a notice provision in the original contract that requires the general contractor to provide the subcontractor notice and opportunity to cure before the general contractor incurs the costs.

For example, inserting a simple clause that requires a general contractor to provide 48 hour written notice to the subcontractor before incurring such costs can render positive results. First, it affords the subcontractor an opportunity to correct any problems; second, it reduces the frustration and animosity between subcontractors and general contractors that can occur when costly surprises arise; and third, it provides the general contractor with an opportunity to obtain compliance with the contract without the hassle of finding someone to do the work. Backcharge clauses offer an opportunity to compromise, but those opportunities are best explored at the negotiation stage rather than after a problem has arose.

Construction