Finance category
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Subcontractor Default Cost Calculator
Subcontractor defaults cost 20-50% of contract. This calculator sizes total exposure.
Total default cost
$270,900
Re-procure premium
$158,400
Delay cost
$112,500
How the math works
Default cost = remaining scope × re-procure premium + delay days × carry.
Pre-qualify subs rigorously. Review financials, request current references, check surety bond capacity. A single major sub default can cost 10-20% of project budget.
How to Use
- Enter original subcontract amount.
- Enter % work completed.
- Enter re-procurement premium %.
- Enter delay days.
- Enter daily carrying cost.
- Read total default cost.
Frequently Asked Questions
Default causes?
Cash flow problems (most common), key personnel loss, unrealistic bid, work quality issues, labor strike, supplier disputes. Scan for warning signs: missed meetings, subcontractor cash requests, rumors.
Re-procurement premium?
New sub typically charges 10-30% more than original — fresh mobilization, schedule pressure, material inflation. Plus 4-8 week gap for procurement. Budget 20-40% total default cost vs original contract.
Protections?
Subcontractor default insurance (SDI) 60-80 bps of subcontract value. Performance bonds from each major sub. Pre-qualification with financial review. Interim payments to maintain sub cash flow.
How often should I rerun this?
Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.
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