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301 Explainer: Contracting and Sub-Contracting
Throughout February UrbanToronto is featuring a special State of Construction editorial series to explore all the critical issues of construction across our region.
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UrbanToronto articles regularly reference construction managers, contractors, subcontractors, and trades on site, but the distinctions between these roles may not be clear to all of our readers as the terms are sometimes thrown around interchangeably. In practice, however, each describes specific contractual and legal relationships that shape how projects are built, scheduled, and paid for.
On most projects, construction begins with a prime contract between the owner or developer and a prime contractor. On a smaller project, like a home or a multiplex, the prime contractor is commonly referred to as the GC, or General Contractor. Most of what UrbanToronto looks at though is larger, so for any complex projects, the developer will hire a CM, or Construction Manager.
In Canada, the relationship is nearly always structured using baseline contract forms developed by the Canadian Construction Documents Committee, such as CCDC 2, which are then customized for each job to define the responsibilities of any consultant or contractor for completing work described in the contract.
Ontario has a distinct legal concept for the CM, referred to as the constructor in official parlance. Under the Province’s Occupational Health and Safety Act, the constructor is the party with overall responsibility for controlling and coordinating the project site, including health and safety obligations. The Ontario government’s constructor guideline explains that the role is defined by site control rather than job title. Normally, this role is taken on through the architect’s office, as architects compile specifications from all contractors and subcontractors into master documents covering the full build process.
The term ‘subcontracting’ refers to the relationship between the Construction Manager and the trades. Here, the former engages other specialized firms to carry out particular portions of the work on the constructor’s behalf. Subcontractors typically do not contract directly with the owner, but instead enter into agreements with the CM to perform tasks such as excavation, concrete forming, glazing, mechanical, electrical, or elevator installation. Dozens of trade contractors may cycle through a single condominium project.
On a typical construction site in Toronto, subcontracting unfolds in clearly defined stages. Early phases rely on firms expert in handling demolition, shoring, caisson drilling, excavation, and dewatering, before foundations are poured. Structural work follows, with concrete forming, reinforcing steel, and placing crews cycling through, floor by floor. As the building rises, additional subcontractors mobilize for the exterior envelope, followed by mechanical, electrical, elevator, drywall, and finishing trades.
Contracting structures can vary depending on how a project is procured and managed. In the traditional prime contract model, the owner deals primarily with the CM, who in turn coordinates all subcontractors. Other arrangements, such as construction management models, distribute coordination and risk differently, sometimes involving the owner more directly in trade contracting. Legal practitioners and industry groups often contrast these approaches when discussing scheduling flexibility, cost certainty, and risk allocation.
Because so much work on a project is delivered through subcontractors, contracting structures have a direct impact on construction schedules. Each trade depends on the work before it being completed to specification and on time, and delays in one area can ripple through the entire sequence. Long-lead items such as curtain wall systems, elevators, or mechanical equipment are typically procured months in advance of their installation onsite. UrbanToronto construction updates often track milestones such as topping out or enclosure, which signal that certain subcontracting phases have been completed.
Contracting and subcontracting also shape how money flows through a project. In Ontario, payment relationships are governed by the Construction Act, which establishes a chain of payment from owner to contractor to subcontractors. The Act requires statutory holdbacks to be retained at each level of that chain, meaning owners hold back a portion of payments to contractors, and contractors do the same for subcontractors. These holdbacks are intended to provide security for payment and help manage risk.
When disputes arise over payment, the Construction Act provides formal remedies. Subcontractors who have not been paid for work performed may register a construction lien against the property, subject to strict timelines and procedures set out in the legislation. While the appearance of a lien in reporting or land registry records can attract attention, it does not necessarily indicate that a project is in serious trouble. Instead, liens function as a legal tool designed to protect payment rights within the contracting structure.
Finally, marketing materials, planning reports, and warranty documents may refer to a “builder,” “vendor,” or “general contractor,” even though those terms can carry different meanings depending on context. Ontario’s homebuilding framework, administered through Tarion and the Home Construction Regulatory Authority, uses vendor/builder terminology to describe the parties responsible for selling and constructing new homes, which may or may not align with the prime contractor delivering the physical work. These labels are often used loosely, and their legal meaning depends on the governing statute or contract rather than the title itself.
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From 2015 to 2017, UrbanToronto ran an occasional series of articles under the heading Explainer. The series was revisited, expanded, and articles were updated where necessary in 2023. Now, additions to the series will occur on occasion, like this article. Each Explainer takes a concept from Urban Planning, Architecture, Construction, or related topics covered on our sites, and presents a detailed look at it. While you may already know what some of the concepts covered by the Explainer articles mean, others may be new to you. To read other Explainer features, click on the blue Explainer box at the top of the page. If you have other planning terms that you would like to see detailed in an Explainer article, or thoughts about this one, please share them via the comment field below!
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UrbanToronto’s research and data service, UTPro, provides comprehensive data on construction projects in the Greater Golden Horseshoe—from proposal through to completion. Other services include Instant Reports, downloadable snapshots based on location, and a daily subscription newsletter, New Development Insider, that tracks projects from initial application.
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Thank you to the companies joining UrbanToronto to celebrate State of Construction Month.