What it is
New construction HVAC is the rough-in and finish work on a building going up — running duct, setting equipment, line sets, gas piping, and commissioning the system, usually as a subcontractor to a general contractor (GC) who runs the whole project. The GC holds the contract with the building's owner and hires trades like you to do your slice. You bid the mechanical scope, you do the work in phases as the building progresses, and you bill against that progress.
This is a different animal than service work. The jobs are bigger, they stretch over weeks or months, and the money is structured around the construction draw schedule instead of paid at the door. Get the cash-flow side wrong and a profitable job can sink you.
Who it's for / when it makes sense
New construction fits a shop that can carry payroll and material cost for a long time before getting fully paid, and that has the crew to commit to a project schedule without abandoning its service customers. The volume is attractive, and a good relationship with one active builder can mean steady work for years.
It is a dangerous channel for a thinly capitalized shop. You'll buy equipment and run labor for weeks, bill in pieces, wait on draws, and have a chunk held back as retainage until the very end. If your bank account can't survive that gap, this work will bankrupt a busy company. Go in only when you have the cash cushion and the discipline to bid and bill it right.
How to bid it (step by step)
- Get the plans and the full scope. You bid off the mechanical drawings and specs. Read them carefully — what equipment, what efficiency, who supplies what, who's responsible for the thermostat, gas line, condensate, and electrical hookup. Assumptions are where bids bleed money.
- Price it complete, with your real overhead and margin. Material, equipment, labor hours, permits, your true hourly cost, and profit. New-construction margins are tighter than retail, so there's no room for a wage-only guess.
- Spell out your inclusions and exclusions in writing. State exactly what your bid covers and what it doesn't — "final electrical connection by others," "owner-supplied thermostat," "startup included." Ambiguity becomes free work you're expected to eat.
- Define the payment terms in your bid. Propose your progress-billing schedule, your terms, and how retainage is handled. Whoever sets the payment terms controls the cash flow — make sure it's not just the GC.
- Get a written subcontract or PO before you order a thing. A handshake on a six-figure job is how young shops get burned. The signed contract or PO is your legal footing and your path to getting paid.
What it actually pays / the fee model
You won't get paid in a lump at the end, and you won't get paid at the door. New construction runs on progress billing: you bill the portion of your scope you've completed at set points — rough-in done, equipment set, finish complete — and the GC pays against the project's draw schedule, often NET-30 from the billing date and sometimes only after the owner funds that draw. Your money arrives in chunks, on the construction's clock.
On top of that, the GC almost always holds back retainage — a percentage of every payment (commonly 5 to 10 percent) kept until the whole project is finished and signed off. So even on the portions you've billed and "been paid" for, a slice is withheld for months, sometimes long after your work is done. Your last real money on a job can land far past the day you packed up.
The headaches & how to handle them
Retainage held until the end. That 5 to 10 percent withheld across the whole job is often your entire profit margin sitting in someone else's account until final sign-off. Price knowing it'll be slow, track exactly how much retainage is outstanding on every job, and chase it the moment the project closes — it's the money shops most often forget to collect.
Progress billing and draw delays. You bill a phase and wait, and if the owner's draw is late or the GC is slow, your payment slips even though you finished on schedule. Bill promptly and accurately the instant a phase is complete, never let billings fall behind the work, and keep a clear record of what you've billed versus collected.
Cash-flow risk is the real danger. You front equipment and payroll for weeks against staged payments with a piece held back. Don't take on more new-construction volume than your cash can float, and stagger jobs so you're not fronting three rough-ins at once.
Lien rights — your backstop, on a deadline. If a GC doesn't pay, a mechanic's lien on the property is your strongest leverage, but lien rights come with strict steps and deadlines that vary by state — often a preliminary notice filed early in the job and a hard deadline to record the lien after your last day of work. Miss the deadline and you lose the right. Learn your state's rules, send any required preliminary notice at the start of every job, and calendar your deadlines. This isn't hostile; it's standard construction practice that protects you.
Change orders and scope creep. The GC will ask for extras and field changes. Never do added work on a verbal "just take care of it" — get a written, priced change order before you perform it, or you'll do real work for free with no recourse.
Getting squeezed at the end. Final payment and retainage are where a shaky GC stalls, nitpicks a punch list, or disappears. Keep your documentation, signed contract, change orders, and lien rights in order so your final money is enforceable, not a favor.
Tips & gotchas
- Vet the GC before you bid. Ask other subs how they pay. One with a reputation for slow pay or stiffing trades is a job to walk away from no matter how big.
- Get a partial release of retainage at milestones if the contract allows it, instead of waiting for the entire project to close — it eases the cash squeeze on long jobs.
- Don't let one builder become your whole business. If they slow down or fold, a single-builder shop goes down with them.
Bottom line
New construction and GC work can build real volume and a multi-year relationship with a good builder, but it runs on the construction's cash clock, not yours — progress billing in chunks, draws that lag, and retainage held until final sign-off. The job can be profitable on paper and still drown a shop that can't float the gap. Bid it complete with your real costs, get a signed contract before you order anything, send lien notices and calendar your deadlines on every job, never do a change order without it in writing, and only take on as much as your bank account can carry. Protect the cash flow and this is good work; ignore it and one big job can take the company down.