AEC definitions
A back charge is a deduction from money owed to a subcontractor or supplier, for a cost the contractor incurred because that party failed to do its work. Typical items are cleanup, damage, or unfinished punch. The subcontract must allow it, notice should come first, and the backup has to show the cost.
Definition
A valid back charge is not a surprise discount. The usual sequence is notice of the deficiency, a chance to correct it, then the cost of correction if the party does not act, charged at the rates the subcontract states. Unsigned extra work, a vague 'supervision' percentage, and charges for scope the subcontractor never had will not hold. Back charges between the owner and the prime are usually deductive change orders, not informal deductions. Use the contract's word.
In depth
Tell the party what is wrong, the contract clause, and the date you will correct it if they do not. A back charge for work you already did in silence is harder to defend.
Emergency work that protects the project can proceed faster. Document why it could not wait.
Tickets, material invoices, and photos are the file. A lump sum 'cleanup, $5,000' with no crew record will be rejected by a payer who is paying attention, and by a court.
Markup only if the subcontract allows that markup on back charges.
If the scope letter gave the work to someone else, the back charge is aimed at the wrong trade. Check the leveling sheet before you deduct.
Owner-directed changes are change orders to the prime, then to the sub if the sub performs them. They are not back charges.
The subcontractor should see the back charge in the payment, with a reference to the notice. Hiding it in a short payment creates a prompt-payment problem on the undisputed amount.
Retainage is not a substitute for a documented back charge.
Pay the undisputed balance. Identify the disputed back charge.
A total stop on payment over a small deduction can breach the subcontract even when the deduction was partly right.
Examples
A subcontractor leaves debris after notice. The GC photographs the cleanup, records the crew hours, and deducts that cost on the next pay application.
An owner change is priced as a change order. It is not back-charged to a trade that did not cause it.
A back charge with no notice and no tickets is credited back when the subcontractor disputes it.
FAQ
Unlock the value of your institutional knowledge—organized, connected, and grounded in your team's critical workflows with Nomic.
