By Rieva Lesonsky, CEO GrowBiz Media & SmallBizDaily.com
If your construction business relies only on in-house employees, working with subcontractors can provide many benefits and make it easier for your company to grow. When should you hire a subcontractor to help with projects, and how can you ensure the relationship will be a positive one?
The benefits of hiring construction subcontractors
By giving you access to equipment, skills, and labor, working with a subcontractor allows you to take on projects you might otherwise have to turn down. It can also speed up completion of construction projects by enabling you to hand off certain aspects of the project, such as plumbing or painting, to your subcontractor.
When you use a subcontractor, you don’t have to invest in new equipment for a job. Instead, you can rely on the subcontractor to provide their own equipment.
Subcontracting gives you quick access to labor without spending extra time and expenses on hiring employees. It also saves you the cost of employee benefits and payroll taxes for the subcontractor’s employees.
Developing a good working relationship with a subcontractor can expand your client base. For example, your business may be referred to new customers by a subcontractor, or a company you used as a subcontractor might hire your company as a subcontractor in the future.
The risks of hiring construction subcontractors
There are also a couple of potential downsides to consider when it comes to subcontracting. If your client base is similar, the subcontractor could potentially compete with you for jobs in the future. If you’re concerned about this, consider including a clause in your contract to prevent the subcontractor from soliciting your clients.
The subcontractors you want may not be available when you need them. This could delay a project. It’s a good idea to line up a few different subcontractors to work with so you have a backup plan.
The subcontractor’s workers may not have the same high standards as your employees. You may need to spend more time overseeing and reviewing the quality of work to ensure the overall project meets your standards.
4 tips for making subcontracting work for your business
To increase your chances of successful subcontracting:
1. Review the subcontractor’s prior projects
Look for a subcontractor who has experience with projects similar to the one you’re working on. Get references and talk to other companies that have worked with the subcontractor to see how satisfied they were.
2. Consider the subcontractor’s concurrent projects
How many additional projects is the subcontractor working on, and how will that affect their dedication to your project? Make sure they have adequate labor to handle your needs even if they take on new projects during your relationship.
3. Ask for a project schedule
Get a time estimate for how long their part of the project will take. Have a plan for what will happen if there is a delay on their part that will affect the overall timeline. Looking at your labor reports and time tracking records for similar projects you’ve worked on can help you determine if their time estimates are realistic. Make sure all parties are clear on the project scope and what happens if the customer wants to add to the scope in the middle of the project.
Make sure the subcontractor has the correct licenses and adequate insurance. Find out about their safety record and what steps they take to ensure safety on site. The subcontractor should have appropriate licenses, insurance, and bonding abilities.
4. Get a handle on the subcontractor’s employees
A time tracking app with GPS can show you who has clocked in, when, and where, and it can alert you if your subcontractor’s team is late or absent from the job site. This helps you nip absentee problems in the bud and keeps your project moving. It also prevents your project from going over budget due to employee overtime.
By following these tips, you’ll enjoy a more successful subcontractor relationship and be well on your way to growing your construction business.
Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at email@example.com, follow her on Google+ and Twitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.