There are many reasons that you may be hiring subcontractors for your next project. You may need someone whose skill set is different from your own. For example, a general residential contractor may need to subcontract the electrical portion of the job. If you have a project that is outside your immediate region, you may need a subcontractor who is local to that area. A utility contractor, may have a job that stretches for several miles and may need help in completing the project in another county or state. Or maybe you have more work than you can handle, and you need a subcontractor to help meet deadlines. Whatever the reason, subs are often a necessity for many projects, and cultivating and maintaining good relationships with them is key to your success.
Choosing a Subcontractor
Choosing a subcontractor can be a lengthy process, but is well worth the time and effort that you put into it. There are several things that are important to review, and if you do not vet the subcontractor properly, you will regret skipping this step later on. Time invested on the front end, may save time, and money, down the line.
Keeping it Legal
- You will want to make sure that the sub has all the required licenses, permits, and certifications to complete your job. City, county and states each have unique requirements, as well as installations done on federal properties.
- Insurance certificates must be current and verifiable. They must meet the minimum requirements for liability insurance as well as have coverage on any motor vehicles.
- If your subcontractor needs to be bonded, or background checks must be performed on his employees, ask for copies. It is a good idea if employees are driving vehicles on your job site, that you keep copies of their drivers’ licenses.
- Prepare a file with all the current paperwork, and set it up to be reviewed each time a new project comes up or as expiration dates approach.
Reputations are Key
Maintaining a professional reputation is important to you and your business. Ensuring that your sub has a good reputation among other contractors, vendors, and customers is important as well since it has a reflection on you. Ask your sub for references or call around and ask others who may have subcontracted work to them before, for a review. Speak with contractors, customers, and vendors. Most will honestly tell you their history with the sub.
Ask about the following:
- Did they work with or for you? If they haven’t worked with you, have you heard of them? Was it positive or negative?
- Are they reliable and punctual? Do they complete the work on time? Do they ever make excuses for not getting to the site on time?
- Do their employees represent themselves professionally? Are they clean, courteous, and qualified?
- Do they pay their vendors and employees fairly and on time?
- If your customers are familiar with them, how would they rate their performance?
- How much experience do they have?
If you know any jobs that they are currently working on, it might be a good idea to drive to the job site to check on their work. Check to see if their equipment is clean and in good repair, their employees are professional acting and looking, and if the company, in general, would represent you positively.
Creating and Maintaining Good Relationships
You already know that it can be a time-consuming hassle each time you have to find and hire a new subcontractor. Maintaining good relationships with the ones that you have vetted and hired, will not only save you time, but will also save you some headaches. After all, the performance of the subcontractor that you hire, reflects on your company’s overall performance. You will want to be sure their work is as stellar as your own.
1. Set Guidelines and Rules from the Start
- It’s hard to follow the rules if you don’t know what they are, right? This is one of the biggest stumbling blocks that both contractors and subcontractors encounter. This can include things like working hours, reporting, billing, and even dress code. Be clear about what the rules are and what you expect to be done.
- On the job safety specs may need to be reinforced. A sub who is not enforcing the wearing of safety equipment or who does not require employees to follow safety rules, could result in fines and even having the job shut down. If there are OSHA rules that are specific to your industry, make sure that the importance of following these rules is emphasized.
2. Agree on Mutual Expectations
- Up front, discuss not only payments and terms, but also a timetable. Both you and your sub need to be on the same page as to procedures on billing and how soon they will be compensated once the invoice is prepared and submitted. Some jobs can be billed in stages, while others are paid once the entire contract has been completed.
- Be clear about what you expect when it comes to performance, following guidelines, and presentation. Company procedures and communications should be discussed and agreed to. Be open to questions from the sub, and retain as much flexibility as you can without sacrificing the project.
- If change orders are submitted, expect and accept some amount of pushback from the sub. With many jobs, changes are frequent. Discussing how these are handled is important before it actually happens.
3. Communication is Essential
- In any business, communication is key. It may be even more essential when it comes to subs. Keep them in the loop with daily or weekly calls to let them know the status of the job, any changes, and answer any questions.
- Communication is a two-way street. Make sure your sub knows that he can call you or your point of contact with any questions or issues. A sub who feels uncomfortable or feels like he is being ignored, may soon stop calling with information that could be vital to you and your project.
4. Track Progress
- Don’t just call once in a while to check process. Actually go by the job site, to check on the progress. It also gives you an impromptu view of the work being done, how the employees are presenting themselves, and if all safety rules are being followed.
- Progress reports should be required so that you can determine if there is going to be an issue meeting deadlines or if all is going as planned. Keep it simple with either an email or text so that it doesn’t take too much time for you or the sub.
5. Reward Good Performance
- Possibly the number one way to reward good performance, is giving the subcontractor additional work. If they have completed the job satisfactorily, discuss future work with them as an incentive to continue with the high quality of work.
- Another way to show your appreciation, is to fast pay your sub. If you customarily pay in 30 days, see if you can shave a few days off of that. The subcontractor will appreciate it, and it might even save you a little money on terms.
- Sure, supplying the crew with pizza is great, but don’t forget to thank your subcontractor for a job well done. A pat on the back costs you nothing and your subcontractor will remember how they were treated when you need them again. If you cannot keep them busy, offer to write a recommendation for other contractors to read.
Contractors vs Subcontractors
There really does not need to be any adversity between contractors and their subs, as long as they are both doing their jobs. As a contractor, you know your business like the back of your hand. You have worked hard, and you are proud of the business you have built. Finding a subcontractor with the same values, work ethic, and professionalism, may seem difficult, but it doesn’t have to be. Put a little effort into research up front, and you will be able to find the one or ones that is right for you.
Subcontractors can benefit by knowing upfront what is expected of them. They will respect and trust you to treat them fairly, and expect that you will give them your respect and trust in return. Communication is the basis for a long-lasting contractor/subcontractor relationship.
Hiring a subcontractor is essential for many contractors. Once you have found a subcontractor that meets your criteria and excels on the job, you won’t want to jeopardize your relationship. Having close contact, being transparent about your expectations, continuing to communicate with your sub, are all important aspects to making the most of the relationship.
Like many relationships, the one between contractor and subcontractor, is built on trust, communication, and respect. By properly vetting your sub, you will learn to trust that the work is satisfactory, that they are in compliance with laws and regulation, and that they will continue to maintain high standards. The sub will trust that they will be treated respectfully, be paid fairly and on time, and will benefit from two-way communications. Contact us for more hints on running your contracting business.