Prequalification
Also known as: prequal · subcontractor prequalification
Prequalification is a general contractor's vetting process that a subcontractor must pass before receiving invitations to bid. It typically reviews insurance coverage, financial capacity, bonding, safety record, licensing, and references from comparable completed projects.
For a contractor moving into commercial work, prequalification is the actual gate. Until you are through it, you generally will not be invited at all, no matter how competitive your pricing would have been.
What a prequalification packet usually contains
- Certificates of insurance — general liability, auto, workers' compensation — often at higher limits than residential work requires, and frequently with an additional-insured endorsement
- Workers' compensation experience modification rate (EMR) and recent safety records
- Financial statements, sometimes reviewed or audited depending on contract size
- Bonding capacity or a letter from a surety
- Trade licenses, business registration, and a W-9
- References from comparable completed projects
- A written safety program, and on public work the ability to run certified payroll
Specific requirements vary by contractor, by state, and by whether the work is public. Confirm with the GC and your insurance agent rather than assuming a standard. More on the transition in growing into commercial work.
Related terms
- Invitation to BidAn invitation to bid (ITB) is a general contractor asking a subcontractor to price a defined scope of work on a specific project. It names the project and location, states a bid due date, and provides access to drawings, specifications, and any addenda issued.
- Bid BondA bid bond is a surety guarantee, usually five to ten percent of the bid amount, that a contractor who is awarded a project will enter into the contract and provide the required performance and payment bonds. If they refuse, the bond compensates the owner for the cost of going to the next bidder.
- Substantial CompletionSubstantial completion is the point at which a project is sufficiently finished that the owner can occupy and use it for its intended purpose, even if minor items remain. It typically starts warranty periods, ends liability for liquidated damages, and triggers the process that releases retainage.