Subcontractors & Certificates: Paying for Work That Was Actually Done
Subcontractors are how most Kenyan contractors get work done and where most of them lose control of cost. Valuing work rather than trusting a claim, why retention on a subcontract must mirror the one held against you, and the paperwork that decides who carries a defect.
A main contractor with four active sites is usually managing more subcontractor money than material money, on considerably less paperwork. Materials arrive with a delivery note and are counted at the gate. Subcontracted work arrives as a claim on a piece of paper, valued by the person claiming, verified by whoever is on site that day.
That asymmetry is the whole subject. The largest cost category on most projects is also the one with the weakest evidence behind it, and it is not because anybody intends it that way.
Value the work, do not process the claim
The difference between a well-run subcontract and a badly-run one is the direction the number comes from. In a badly-run one the subcontractor states what they have done and the contractor agrees or argues. In a well-run one somebody measures what is on site against the schedule of rates, and the claim is checked against that measurement.
The distinction sounds procedural and is not. A claim you are checking anchors the conversation to their number; a valuation you performed anchors it to yours. In practice this single change accounts for most of the difference between contractors who control subcontract cost and contractors who negotiate it monthly.
| What to establish before work starts | What it prevents |
|---|---|
| A schedule of rates or a lump sum with a payment breakdown | Valuation becoming a monthly negotiation from first principles |
| Who measures, and how often | A claim arriving with nobody having looked |
| What counts as complete for each element | Payment for work that is 80% done and will stay that way |
| Whether materials are supplied by you or by them | The most common single dispute on a Kenyan subcontract |
| Retention percentage and release conditions | Discovering at handover that you hold nothing |
A claim you are checking anchors the conversation to their number. A valuation you performed anchors it to yours. Everything else about subcontract control follows from which one you have.
Materials supplied to a subcontractor are still your stock
Where you supply materials and they supply labour — very common in Kenya — the materials remain your cost until they are built into the works. Yet they routinely leave the store with no destination beyond "site", and the subcontractor's consumption is never reconciled against what the job should have needed.
Issue to the subcontractor as a custody event, not as a general site issue. Then over-consumption is a specific conversation with a specific party, held while the work is still in progress, rather than a variance discovered at project close when everybody has left.
Cement issued against work valued
Illustrative. Sixty-six bags is worth having a conversation about, and it is a conversation with several legitimate answers — wastage, a variation nobody recorded, material moved to another element. All of them are answerable this month and none of them are answerable in six months, which is when this comparison is usually first made. Site-wide material discipline is covered separately in site materials control.
Retention: mirror what is held against you
Retention is held against a contractor by their client and, in a well-structured chain, by the contractor against their subcontractors on comparable terms. Where the two do not mirror, the contractor finances the gap — releasing subcontractor retention before their own is released, which is an interest-free loan to a party who has already left the site.
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Record the retention percentage and the release trigger on each subcontract
Not a percentage alone — the trigger. Practical completion, defects period expiry, or a certificate. The trigger is what determines the date.
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Hold both sides in the same place
Retention receivable from your client and retention payable to your subcontractors, visible together. The exposure is the difference, and it is a number most contractors have never seen.
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Diarise the release dates when the contract is signed
Nothing will remind you. A defects period running twelve months outlives the project team, which is why unclaimed retention receivable is one of the most common losses in the sector.
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Do not release early to be helpful
A subcontractor requesting early release of retention is asking you to give up the only leverage you hold over defects that have not yet appeared.
Retention receivable is money you have already earned
It sits outside normal receivables chasing because it is not yet due, so it falls out of everyone's attention. Record it as a receivable with its release date at the moment of certification rather than when it becomes payable — that puts it in your ageing where somebody looks at it.
Who carries the defect
When a defect appears after handover, the commercial question is whether it belongs to a subcontractor and whether you still hold anything against them. That question is answered by paperwork that had to exist before the work started, and it is a short list.
- A written scope, so what they were responsible for is not a matter of recollection.
- A record of what was certified as complete and when, since a defects period runs from a date.
- Retention still held, or a guarantee, so there is something to set against the cost.
- Evidence of who supplied the materials, because a defect in a material you supplied is not their defect.
- Any variation instructions in writing, since the disputed element is frequently the one nobody priced.
Contractors who lose these arguments rarely lose them on the merits. They lose them because the scope was verbal, the completion date is uncertain, and the retention was released last year.
What we do and do not do
What AWRA OpsHub does today
- Subcontractors as vendors with purchase orders, approvals and payment history.
- Costs charged to the job, so subcontract spend sits against the project alongside materials and labour.
- Committed versus actual, so an approved subcontract order is visible as exposure before invoices arrive.
- Materials issued with a named custodian or destination, which is what makes the consumption comparison possible.
- Approval thresholds on orders and payments, so authority is enforced rather than assumed.
- Document storage with access logging, for scopes, certificates and instructions.
More we can add to your workspace
- A subcontract valuation and certification module. Measurement against a schedule of rates, interim valuations and certificates as a built-in workflow rather than a process you run alongside.
- Retention as a distinct object. Today you record it as a payable or receivable with a date; a modelled defects liability period that releases on schedule is the build.
- A variation register. A dedicated workflow with a status per instruction, instead of ordinary orders and documents.
- Compliance verification of subcontractors. A tax compliance certificate, insurance cover and a registration checked against the issuing authority.
Retention and valuation are the two that matter most in this sector, so plan around them explicitly. A simple schedule of retentions with release dates, reviewed monthly, is a five-minute habit that prevents the most expensive omission on this list.
Anything above that you need, we can build for you
Everything listed above as something we can add describes what ships in the standard product today — it is a starting point, not a limit on what AWRA OpsHub can do for your organisation. Kenya's eTIMS integration and its maintained payroll engine are both in the product because clients needed them and commissioned them; neither appeared by itself, and the same door is open for whatever you just read about. One qualification so this is worth what it claims: a small number of things on this blog we deliberately leave to a specialist rather than build — a statutory ledger we will not sign our name to, a rule that would decide a tax question for you, a clinical or member-funds record that belongs in a regulated system — and where that is true the post says so in those words. Everything else is a scope, a timeline and a price.
The operational work, which is what most commissions actually are
An extra approval stage in a chain that does not match the standard one, a custom field set on employees or assets that only your sector needs, an expiry that has to block an order rather than send an email, a report your board asks for in a shape nothing produces, or a scanner or weighbridge feeding the goods-in door. These are the commissions we are asked for most often and the smallest ones we quote — and unlike a revenue-authority pipeline, none of them waits on a regulator.
The module-shaped additions, which are the ones readers ask for most often
A price list with real discount authority, a customer-facing quotation that expires, a bill of materials or recipe costing, a staff advance that is issued, acquitted and chased, a member or unit ledger, a matching rule that holds a payment. Each of these is a build rather than a setting, and each has been quoted before — a bigger piece of work than a custom field, with a written spec and a date instead of a roadmap slide.
The report, document or pack nothing currently produces
The board pack in the shape your board actually asks for, a donor or funder layout, an invoice or receipt template carrying what your regulator or your customer expects, a dataset the report builder cannot reach yet. Usually the fastest thing on this list to deliver, because the data is already in the system.
Systems, rails and hardware you already run
The accounting package, CRM, online store, core banking or custom database you intend to keep — connected through our API so a fact is entered once and appears everywhere it is needed. Plus the physical edge: a scanner, a scale, a weighbridge or a till peripheral feeding the door it belongs to.
How it works: you describe the requirement, we return a written scope, timeline and cost, and once agreed it is built into your environment and maintained as part of the product. Nothing here waits on a regulator or a published specification, which is why operational builds are the ones we quote fastest. Tell us the requirement that would otherwise rule us out — that is a better first conversation than a demo.
Tell us what your operation needsOur take
Value the work yourself before you look at their claim, issue supplied materials to the subcontractor as a custody event so consumption is comparable against progress, and hold retention on both sides in one schedule with the release dates diarised at signing. The defect argument you eventually have will be decided by paperwork created months before anyone knew there was a defect.
See job costing for contractors
Subcontract orders and costs charged to the job, committed versus actual exposure, materials issued with custody and approval thresholds that hold.
Explore job costingFrequently asked questions
How should we value subcontracted work each month?
By measuring what exists on site against the agreed schedule of rates, and then checking the subcontractor's claim against your measurement — not the other way round. Whoever produces the first number sets the anchor for the conversation, and processing a claim rather than performing a valuation is the single most common reason contractors lose control of subcontract cost. There is no built-in valuation module, so this is your process supported by records.
Does the system track retention?
Not as a distinct object — there is no defects liability period model and nothing releases retention automatically. Record retention receivable from your client and retention payable to subcontractors with their release dates as ordinary receivables and payables at the point of certification, and keep both sides in one schedule you review monthly. Unclaimed retention receivable is one of the most common losses in the sector precisely because it falls out of everybody's attention.
What is the most common subcontract dispute?
Who was supposed to supply which materials, followed closely by whether a particular element was in the original scope or was a variation. Both are settled before work starts or they are argued about afterwards, and the second version is expensive. Write the materials position and the scope down, and issue any materials you supply as a custody event to that subcontractor so consumption can be compared against valued progress while the work is live.
Should we release retention early if a subcontractor asks?
Only with a clear commercial reason, because retention is the only leverage you retain over defects that have not appeared yet — and a subcontractor who has left the site has very little incentive to return without it. Where you do release early, do it against something: a guarantee, a completed defects inspection, or a partial release tied to a specific element signed off.
Can the system check a subcontractor's compliance documents?
No. Nothing verifies a tax compliance certificate, insurance cover or a registration against the issuing authority — documents can be stored and their access logged, but verification is a phone call or a portal check by a person. Any vendor claiming automated verification in this market is describing something worth examining closely, because the underlying registries do not generally support it.
