Last edited 04 Jul 2024

Backcharge

The term backcharge refers to a financial charge made by a contractor against a subcontractor when the subcontractor fails to fulfill their contractual obligations, such as completing their work on time, performing work to the required quality standards, or causing damage that needs to be rectified. The contractor incurs additional costs to rectify these issues, which are charged back to the subcontractor responsible.

This might occur for example:

The contractor must document the deficiencies or issues caused by the subcontractor, including evidence of the additional costs incurred. The subcontractor is notified of the issues and the intention to backcharge. This includes providing them with an opportunity to rectify the situation themselves within a specified timeframe, if applicable. The costs are calculated and deducted from the payments owed to the subcontractor. This deduction is typically reflected in a payment certificate or similar financial document.

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