A contractor who builds their payment application to the owner carefully — a documented percent complete, precisely calculated retention, full backup attached — often pays their own subcontractors a completely different way: a transfer for whatever amount a phone call settled on, or a rough end-of-month estimate, with no schedule spelling out what is actually done and what is not. The same discipline an owner demands of the main contractor has to travel one level down, from the main contractor to whoever works under them — or the most careful arithmetic at the top turns into a guess at the bottom.
Key takeaways
- Comparing bids line by line surfaces what the total alone hides: a cheaper total that quietly drops an entire scope item is not actually cheaper.
- Award creates a contract with a fixed value and a set retention rate, tied to a Schedule of Values whose lines must sum to exactly the contract value.
- A subcontractor payment is calculated with the same logic any well-prepared progress payment application should follow — gross by progress, retention, net due — applied one layer below your own main contract.
- Retention gets withheld in both directions: the owner withholds from the contractor, and the contractor withholds from the subcontractor — and the cash-flow squeeze in the middle is real.
- A closed or terminated subcontract cannot have a new instalment billed against it by accident — the guardrail is built into the system, not dependent on anyone remembering.
Paying subcontractors mirrors getting paid — and just as easy to get wrong
Every main contractor knows the value of a tight payment application: percent complete backed by measurement, retention calculated precisely, backup that makes rejection difficult. But the moment the role flips from "collecting" to "paying", that same discipline usually collapses. The subcontractor calls, names a figure, and gets paid off an estimate — with no reference schedule spelling out exactly what is actually due this month.
This is not random carelessness; it is the natural result of having no tool that imposes the same discipline on paying downward. When the mechanics are enforced — a bid, a comparison, an award tied to a Schedule of Values, and instalments calculated from that same schedule — paying a subcontractor becomes exactly as precise as any well-prepared payment application assumes, instead of that discipline running in one direction only.
Comparing bids on more than the bottom line
A bid package starts with a defined scope of work and a bid due date, then goes out to several invited suppliers. When bids come back, the usual trap is picking the cheapest total without looking at what is inside it — and the total alone will not reveal that one bidder simply dropped an entire item from their scope instead of pricing it.
| Supplier | Total submitted | What the line items reveal |
|---|---|---|
| Supplier A | 900,000 | Omits the "external cladding" line (32,000) entirely — the real comparable total is 932,000 |
| Supplier B | 950,000 | Covers the full scope as issued in the bid package |
| Supplier C | 980,000 | Covers the full scope, plus an unrequested contingency line |
Comparing bids line by line — not total against total — surfaces a gap like this before award, not after it, when the missing item shows up as a surprise change order once the subcontractor has already started work.
Award creates a contract with a Schedule of Values that must reconcile
At the moment of award, the contract value and the retention rate get fixed. But one lump-sum figure is not enough to bill instalments against later — how would percent complete even be measured against a contract with no line items? That is what a Schedule of Values is for: the contract value broken into lines, each with its own value, with the lines summing to exactly the contract value.
| Schedule of Values line | Value |
|---|---|
| Mobilization | 50,000 |
| Substructure | 300,000 |
| Superstructure | 350,000 |
| MEP rough-in | 100,000 |
| Finishes | 50,000 |
| Total | 850,000 |
Requiring the sum to match the contract value is not a formality. A Schedule of Values that does not reconcile makes every subsequent instalment arithmetically meaningless from the start — the same discipline a bill of quantities enforces on the main contract, carried through unchanged to the subcontract beneath it.
Billing a subcontractor in instalments
Once the contract has a Schedule of Values that reconciles, billing each period (usually monthly) becomes a defined mechanic — the same logic as any disciplined progress payment application, applied one layer below your own main contract.
Measure progress against the Schedule of Values
Percent complete for each Schedule of Values line is measured first — typically anchored to progress on the matching lines in the main bill of quantities.
Calculate the gross value
The value of work completed this period, by the percentages above, summed across every Schedule of Values line.
Deduct retention
The retention rate agreed in the contract is withheld from the gross figure.
Calculate the net due
Gross less retention is the amount due to be paid this period.
Review: approve or reject
The reviewer approves or rejects the payment application, attaching a note explaining why on a rejection.
Tying the progress measurement to actual bill-of-quantities percentages — not a verbal estimate — means a subcontractor's payment moves at exactly the pace of their documented progress, no faster and no slower.
Retention gets withheld in both directions
Retention is not a detail that only touches your relationship with the owner. The owner withholds a percentage from every payment application you submit, and you — by the same logic — withhold a percentage from every payment to your subcontractor. The two rates are entirely independent; a subcontract does not automatically inherit the main contract's retention rate, it is set for each subcontract individually at award.
That puts the contractor in a genuine squeeze in the middle: waiting to collect their own payment application — which can run late — while still expected to pay subcontractors on time so they keep working. Both schedules — the main contract's Schedule of Values and each subcontract's own — need to be read together when planning cash flow, not each in isolation from the other.
A closed subcontract can't be billed by accident
This kind of guardrail does not depend on anyone remembering to manually close the billing door once the contractual relationship has ended — the state itself blocks the wrong action regardless of who attempts it or why.
How this works in muqawil
The bidding and subcontracts module in muqawil covers the full cycle: a bid package with a scope and due date, inviting multiple suppliers, comparing their bids line by line, awarding to a contract with a value, retention and a Schedule of Values whose lines must equal the contract value, then instalment payment applications calculated as gross, retention and net for each period, approved or rejected with a reviewer note.
- Bid packages with a bilingual scope of work and due date, invited out to multiple suppliers.
- Line-by-line bid comparison, not total against total alone.
- A Schedule of Values required to sum to exactly the contract value at award.
- Instalment payment applications with gross, retention and net per period, automatically refused against a closed contract.
Frequently asked questions
How do we compare bids fairly when suppliers priced the scope differently?
By comparing each bid's line items side by side, not the total alone — which is what surfaces an item dropped from a bid that looks cheaper, before award rather than after it.
What stops a Schedule of Values from not matching the contract value?
The sum of its lines is required to equal the contract value exactly before it can be approved — without that match, every subsequent instalment is calculated on a basis that was wrong from the start.
Is the subcontractor's retention rate the same as our own contract's retention?
Not necessarily. The two rates are entirely independent; each subcontract's retention rate is set individually at award, whether it matches the main contract's rate or differs from it.
Can a payment be billed against a subcontract that has already ended?
No. A subcontract marked completed or terminated explicitly refuses any attempt to raise a new payment application against it.
Does a subcontractor need their own account to see their payments?
The supplier inside the bidding module is a record within your own company account, for bidding and billing purposes. A subcontractor who wants to run their own operations — their own attendance, their own daily reports — can also register as a fully separate, fully isolated entity; the two are independent and neither requires the other.
Can bids be priced in different currencies?
Yes, each bid and each subcontract carries its own recorded currency.
Award your next contract on a Schedule of Values that reconciles
Create a bid package in muqawil, compare bids line by line, and award to a Schedule of Values that equals the contract value exactly.