The Sub Rules: 12 Non-Negotiables Before a Trade Partner Touches Your Job

Every experienced restoration owner has a subcontractor story that cost them five figures. The companies that stop collecting those stories run their subs by rules — written down, applied every time, no exceptions for the guy who “seems solid.” These are the twelve I install in every engagement.

Before the First Job

Rule 1. No certificate, no work. Current general liability with your company listed as additional insured, workers’ comp coverage, state licensing where required — copies in your file before day one. An expired certificate is a liability trap with your name on it. Rule 2. Two references from comparable restoration work, actually called. Not supplied — called. Rule 3. A signed master subcontractor agreement before the first job, covering scope definition, change order authorization, payment terms, insurance, dispute resolution, and indemnification. Have an attorney review the template once; it’s worth it every year after. Rule 4. Two to three vetted subs per trade. One is a scheduling hostage situation. Six is a relationship you can’t manage.

In the Field

Rule 5. Every job with subcontracted work has a named PM who owns the schedule, the quality walk, and the punchlist. Subs with active oversight perform better than subs left to self-manage; daily check-ins on active reconstruction are job cost protection, not micromanagement. Rule 6. No work outside the original scope without a written change order — signed by the owner, authorized by the adjuster if the job is insurance-funded. Verbal approvals are not approvals. Rule 7. Everything documented, same day. The sub who can’t work inside a paper process isn’t the right partner, however good his hands are.

The Money

Rule 8. Pay on milestones, as a percentage of completion — never upfront lump sums. Rule 9. Retain 10% until final punchlist completion and client sign-off. Retainage is what keeps the last 10% of the job — the part clients remember — from becoming your problem at your expense. Rule 10. A callback caused by the sub is remediated by the sub, at the sub’s cost, and logged in their file.

The File

Rule 11. Two documented quality failures in a year earns a performance conversation. Three earns a replacement. Feelings don’t manage subs; files do. Rule 12. Classify honestly. A worker who functions as an employee but is paid as a 1099 creates tax and labor-law exposure that dwarfs whatever it saves. If you’re not sure which side of the line a worker sits on, that’s a CPA conversation, not a judgment call.

Run this way, subcontractors stop being a margin leak and become what they should be: capacity you can trust at a margin you can predict. The full management framework — vetting, agreements, field control, and payment structure in detail — is in Subcontractor Management for Restoration Companies.

Related reading

• Subcontractor Management for Restoration Companies
• Equipment and Fleet Economics for Restoration Companies
• Subcontractor Management System for Restoration Companies

Mike McCabe is The Profit Detective — a 36-year restoration industry veteran who has worked personally with 150+ restoration companies across North America.