Subcontract overview

After a prime contract is set up, you can create purchase orders (POs) and subcontracts to procure goods and services. Both types of financial transactions appear as committed costs in the Project Analytics dashboards. The key difference is that subcontracts support documenting revisions through subcontract change orders (SCOs), and subcontract invoices can include retention (holdbacks).

Creating a subcontract is similar to setting up a prime contract. For each subcontract, you can define the scope of work, list inclusions, exclusions, and contract documents, and break down the contract amount using a schedule of values. As with prime contracts, four subcontract types are available: Fixed Lump Sum, Cost Plus (with or without a Guaranteed Maximum Price), and Unit Price.

  • When you create or modify a subcontract, Sage Construction Management checks the vendor’s profile for expired insurance records. If any are found, a warning message appears in red.
  • The type of the subcontract impacts the subcontract invoice process.
  • The default subcontract invoice retention percentage (holdbacks) is set in the subcontract.
  • To prevent subcontracts from being modified if a sub invoices exist, , select the Settings () > Feature Settings > Procurement> Do not allow Subcontracts or SCOs to be modified after Sub Invoices have been created option.

  • Subcontract status progresses in the following order:

    1. Draft

    2. Pending Submission

    3. Pending

    4. Not Approved

    5. Approved

  • In Project Analytics, job cost dashboards include only subcontracts marked approved with a status date. They're displayed as a committed cost transaction.

  1. Ensure that the vendor that will be issued the subcontract is included in the project directory.
  2. Ensure that the prime contract that will be referenced on the subcontract is approved with a status date.
  3. Ensure that the job cost code that will be referenced on the subcontract original items (schedule of values or unit price items) are set up for the project.
  4. Optionally, if tax codes will be referenced on the subcontract original items, ensure that they're set up in Settings () > Company Settings > Taxation.

Add subcontracts

Edit subcontracts

  • If subcontract items (schedule of values, GMP amounts, or unit price items) exist, then the subcontract type cannot be changed.
  • If a subcontract invoice exists, then the subcontract type, status, and status date cannot be changed.
  • If a subcontract invoice exists and the Do not allow Subcontract or SCO Items to be modified after Sub Invoices have been created option in Settings () > Feature Settings > Procurement is selected, then you cannot add or modify subcontract original items.
  • If a workflow rule that applies to a subcontract has already been initiated or approved, you cannot modify the SCO unless the rule is abandoned.

Posted December 23, 2025 © 2025 The Sage Group plc or its affiliates ("Sage") or its licensors. All trademarks mentioned are the property of their respective owners. Use of non-Sage trademarks is not an endorsement of any person or product.