How Do You Back-Charge a Subcontractor?

By Wyatt Cooper · Published October 22, 2026 · 6 min read

Key takeaways

A back-charge is the GC recovering, from a subcontractor's contract, a cost the GC paid because of that sub: cleanup, damage, rework or labor added to its scope.
It holds up when four things are in place: a subcontract clause, written notice with a chance to cure, a daily record of the cost, and the sub's chance to respond.
Price it like a change order in reverse: labor hours at stated rates, materials, equipment, then only the markup the subcontract allows.
Deduct only what the sub agreed to or the subcontract lets you withhold; carry disputed items in the log, not in the payment.

To back-charge a subcontractor, find the subcontract clause that lets you, give written notice describing the problem and a deadline to fix it, and do the work yourself only after that deadline passes. Record the cost each day: hours, rates, materials and equipment, with photos. Add only the markup the subcontract allows, send the back-charge with its backup, and deduct it through a deductive change order or as the subcontract says. Keep disputed amounts out of the deduction until they're resolved.

When a back-charge is fair

Most back-charges come from four situations: a sub leaves debris and the GC's labor cleans it up; one trade damages another's finished work; work is rejected and the sub doesn't fix it; and a sub falls behind and the GC adds labor to its scope (see what to do when a sub falls behind). In each, the GC spends money that the subcontract made the sub's responsibility. (The general contractor's guide and the project lifecycle cover the money side of the job.)

Federal construction contracts show the principle. Under the inspection clause, FAR 52.246-12, the contractor "shall, without charge, replace or correct work found by the Government not to conform to contract requirements" (paragraph (f)), and "if the Contractor does not promptly replace or correct rejected work, the Government may— (1) By contract or otherwise, replace or correct the work and charge the cost to the Contractor" (paragraph (g)). Subcontracts carry the same idea one tier down. The default clause, FAR 52.249-10, adds that the contractor "shall be liable for any damage to the Government resulting from the Contractor's refusal or failure to complete the work within the specified time".

Six steps to a back-charge that sticks

Find the clause: cleanup, protection of work, correction of rejected work, supplementation or default. Note any notice deadline and the markup it allows.
Give written notice before you spend: what is wrong, where, photos, what the sub must do and by when. A same-day email is better than a perfect letter next week.
If the deadline passes, do the work and keep a daily cost record: who worked, hours, rates, materials with receipts, equipment with rental tickets.
Price it: labor, materials and equipment at cost, then the markup the subcontract allows on the total.
Send the back-charge with its backup and ask the sub to sign it or respond in writing by a date.
Deduct it: a signed deductive change order to the subcontract, or the method the subcontract states. Log every back-charge, agreed or not.

A worked example: protecting the flooring

A fictional office fit-out. The drywall sub, Crestline Interiors, left joint compound on the new resilient flooring in three rooms after notice on April 6 to clean it by April 8. The GC's two carpenters cleaned and replaced damaged tiles on April 9, 10 and 13.

Back-charge BC-03: Crestline Interiors, Larchmont Commons

Basis: Subcontract article 14 (cleanup and protection of others' work). Markup allowed: 10%.
Notice: Email with photos, April 6: clean rooms 104, 106 and 108 by end of day April 8. Not done.
Labor: 2 carpenters × 8 hours × 3 days = 48 hours × $72.00 = $3,456.00
Materials: Replacement resilient tile and adhesive, supplier invoice attached: $640.00
Equipment: Floor scrubber rental, 3 days, ticket attached: $450.00
Subtotal: $3,456.00 + $640.00 + $450.00 = $4,546.00
Markup: 10% of $4,546.00 = $454.60
Back-charge: $4,546.00 + $454.60 = $5,000.60
Response: Signed by Crestline Interiors April 15. Deducted by deductive change order SCO-07.

A back-charge on a fictional job. Every name, rate and amount is made up.

The back-charge log for the same fictional sub: only agreed items are deducted
No.	What	Amount	Status	Deducted
BC-01	Debris removal, level 1, March 20	$1,180.00	Signed	$1,180.00
BC-02	Damaged door frame, room 112	$865.00	Disputed: sub says the frame was damaged on delivery	$0.00
BC-03	Flooring cleanup and tile, rooms 104–108	$5,000.60	Signed	$5,000.60
Total		$7,045.60		$6,180.60

The deducted total counts only the signed items: $1,180.00 + $5,000.60 = $6,180.60. BC-02 stays in the log at $865.00 until it is settled, and the log total ($7,045.60) is what's claimed, not what's taken. Withholding a disputed amount from a payment is a separate decision your subcontract and your state's prompt-payment law govern; see prompt payment acts before you do it.

How subs push back, and how to avoid it

"We never got notice." Send it in writing, the way the subcontract says, and keep the proof.
"It wasn't us." Photos with dates and rooms, and the daily log that shows who was working there.
"Your rates are too high." Use the rates your subcontract or your posted labor rates state, and show the hours by day.
"You marked up the markup." Apply the allowed markup once, on the subtotal.
"This is a year-end surprise." Send each back-charge when it happens, not as a stack at closeout, and keep them off the the sub's pay application until they're agreed.

The bottom line

A back-charge recovers a cost the subcontract made the sub's: notice first, then the work, then a priced record with backup and only the allowed markup.

Deduct what's signed and log what's disputed. Back-charges sent as they happen get paid; a stack at closeout gets argued.

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Sources

FAR 52.246-12, Inspection of Construction, paragraphs (f) and (g) — Acquisition.gov (General Services Administration). Read October 22, 2026.
FAR 52.249-10, Default (Fixed-Price Construction) — Acquisition.gov (General Services Administration). Read October 22, 2026.

Questions

What is a back-charge in construction?

A cost a general contractor charges against a subcontractor's contract because the GC paid for something that was the sub's responsibility: cleanup, damage to others' work, rework the sub didn't do, or labor added when the sub fell behind.

Do you have to notify a subcontractor before a back-charge?

Almost always. Most subcontracts require written notice and a chance to fix the problem before the GC does the work and charges for it. Without notice, a back-charge is easy for the sub to dispute.

Can you add markup to a back-charge?

Only what the subcontract allows. Many allow overhead and profit on the GC's cost; apply it once, on the subtotal of labor, materials and equipment.

How is a back-charge deducted?

Usually by a deductive change order to the subcontract that the sub signs, which lowers the contract sum. Some subcontracts let the GC deduct from a payment instead; follow the method yours states.

What if the subcontractor disputes the back-charge?

Keep it in the log with its backup, meet with the sub, and resolve it under the subcontract's dispute process. Don't add a disputed amount to the deducted total until it is agreed or decided.