Back-charge

A back-charge is a deduction one party makes from another's payment to cover the cost of correcting deficient work, cleanup, or damage — without a signed change order authorizing it.

Back-charges happen fast and informally: a sub's work doesn't pass, the GC brings in another crew to fix it, and the cost of that fix gets deducted from the original sub's next payment. Legitimate back-charges are contractually allowed in most agreements — but only when the sub was given notice and a chance to correct the work first.

The dispute usually isn't whether the work was deficient. It's whether the back-charged party got due notice and an opportunity to fix it themselves before someone else did the work and billed for it.

Example

A GC's painter leaves drywall repair unfinished before a paint deadline. The GC has another crew do the touch-up and deducts the cost from the painter's next pay app — a back-charge that holds up only if the painter was notified and given a chance to fix it first.

Where this goes wrong on real jobs

A back-charge without notice is the fastest way to turn a quality issue into a legal dispute.

“I was not given the opportunity to return and correct anything before they decided to backcharge.”

— a subcontractor on r/ConstructionManagers

Related terms

Change orderA change order is a signed, priced amendment to a construction contract that adds, removes, or modifies scope, cost, or schedule after work is already under contract.T&M ticketA T&M ticket (or daily ticket) is the field record of hours worked and materials used on a time-and-materials task, signed by the client or GC's representative on-site the same day.Pay application (pay app)A pay application (pay app) is the formal monthly billing document a contractor submits requesting payment for work completed to date, measured against the schedule of values.

Used in

Change order template for subcontractorsSubcontractors who need a formal change order memo the same day the field asks for extra work.Change order template for small GCsSmall GCs who need every change order in writing before work proceeds, without slowing the job down.Change order template for remodelersRemodelers who need client-facing change orders that hold up when a scope disagreement comes up.Change order audit for specialty subsSpecialty subs who need to know how much dispute exposure is sitting in their change order documentation.Change order audit for general contractorsGCs who need to know where verbal approvals are creating dispute risk before it becomes litigation.

Next step

Where this shows up in Datumel:

Change Order Audit$9,999 one-time

A review of your change order documentation and dispute exposure. Finds where approvals slip through verbal exchanges.

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