Hiring Subcontractors: The Ultimate Guide

Hiring subcontractors is a common practice in construction. Sometimes, general contractors don't have the staff or specialty skills to accomplish specific tasks a project requires. Instead of hiring permanent staff for a single job, general contractors turn to subcontractors for their skills and labor. Subcontractors can be a huge help for your business, so it's important to know how to properly hire them to maximize the value they can provide. Learn more about some of the best practices for hiring subcontractors to ensure your next project is completed on time and runs smoothly.

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What Is a Subcontractor?

A subcontractor is typically defined as someone who's hired for a project by a contractor instead of directly from the client. Contractors often hire subcontractors to perform specialized work. The main contractors on a project will typically interact with the client directly. They'll also usually be in charge of managing the entire project and making sure everyone is completing their tasks on time and correctly. In contrast, subcontractors often stick to working on a specific portion of a project.

Instead of speaking with the client directly, the subcontractor communicates with the builder or general contractor. A subcontractor will also work for the contractor or builder on a contract basis. Though the contractor and subcontractor draw up contracts with each other, it's important to note that subcontractors aren't employees of the builder or contractor. Since a subcontractor isn't a direct employee, they legally operate as an independent business.

 

How to Find Great Subcontractors for Your Projects

There may be times when a trusted subcontractor isn't available, or you're looking for new talent. As a result, you may need to find new subcontractors you can do business with. Since a subcontractor will be responsible for the completion of different parts of your project, you want to hire someone who has the expertise and professionalism to get the job done right.

Check out some of the following tips for finding reputable subcontractors in your area:

1. Ask Construction Industry Friends

The first group of people you should talk to is your friends and contacts in the construction industry. Those in the industry are likely aware of subcontractors with good reputations and can steer you in the right direction. They can also help you evaluate the differences between competing subcontractors, helping you select a team that's not just serviceable, but exceptional. Keep in mind that competitors in your industry may not be willing to give you information on subcontractors they regularly use.

2. Talk to Wholesalers and Specialty Suppliers

If you're looking for a subcontractor in a specific application, you may be able to find a recommendation by talking to relevant wholesalers or specialty suppliers. For example, if you need a roofing subcontractor, you could connect with a roofing shingle supplier for recommendations of subcontractors they are familiar with or that they use. Since these businesses often provide subcontractors with materials, they may have some recommendations for who to work with. This could be especially useful when looking for a subcontractor who is experienced with a less common material or task.

3. Connect With Local Trade Schools

You may be able to consult with a local trade school for quality subcontractor recommendations. It's likely these establishments have a network of subcontractors with which they place students for training and job shadowing. They may even have a list of trusted subcontractors their graduates work for.

While communicating with the school, get a feel for the quality of a subcontractor's workmanship and their professionalism. Research and call on subcontractor recommendations that seem promising. After introducing yourself to a potential candidate, get their business card and gather contact information if you'd like to proceed.

4. Browse Message Boards and Local Social Media Groups

A great resource for finding local subcontractors is browsing social media groups and message boards. These groups and message boards will likely have recommendations about local subcontractors or answers to common questions about the area's workforce. You can even post on these sites asking about available subcontractors. There's a chance other users will give you some tips or other relevant information on your post.

5. Speak With Previously Used Subcontractors

You may also want to get in contact with subcontractors you're currently working with or have worked with in the past. They often know about other subcontractors in their industry, especially if they've worked alongside them previously. To avoid making it sound like you're trying to find a subcontractor to replace them, keep your questions information oriented and aim to ask about subcontractors in a different specialty.

6. Search Online

There are plenty of websites available to find subcontractors online. You can usually find listings for subcontractors on sites like Craigslist, MerchantCircle, The Blue Book, Yelp, Handy, Nextdoor and Angie's List. You can also go on job boards like Monster, Indeed and CareerBuilder.

 

Hiring Subcontractors the Right Way

Once you've narrowed down some of the top subcontractors in your area, you can move forward with the hiring process. There are a few different actions you can take to hire subcontractors the right way. Some of these actions include communicating the subcontractor's responsibilities, doing your homework on the potential subcontractor and ensuring any subcontractor you hire will sign a contract. Find out more about hiring subcontractors in the most optimal way below:

Have a Clear Idea of What You Require From the Subcontractors

Before you hire any subcontractors, you should know what you need them to do for your project. Start by crafting a scope of work that shows what tasks you'll need the subcontractor to accomplish. You can include written specifications and drawn plans to help you narrow down the type of work a subcontractor will perform. You can also put together a schedule to make sure any subcontractor you hire has the ability to complete the job on time. It's important to state what will not be the subcontractor's responsibility to ensure the scope of work is clearly defined.

Make Subcontractors Bid Similarly

If you're accepting bids from subcontractors, it's best to have them all bid in a similar way and in the same format. Before you review bids, establish a procedure that only allows bids from subcontractors who have the correct licenses and insurance. This can help you identify qualified candidates who already have the necessary protections.

 

6 Questions to Ask Subcontractors Before Hiring

Once you have a clear idea of what you're going to require from subcontractors you plan to hire, you can move on to selecting the right subcontractors for your project. You may request bids from multiple subcontractors to field your options, or you may go directly to a subcontractor you've targeted as a good fit.

Before you begin working with subcontractors, you should ask a few questions to see if they're a good fit for your project. Check out six primary questions you should have answered before you hire a subcontractor:

1. How Do You Plan to Meet the Project's Qualifications and Expectations?

One of the first questions you should ask a potential subcontractor is about how they plan to perform the duties you've laid out for them in your scope of work. As you decide between candidates, look into the technical skills and qualifications of your potential subcontractors. You can also check their previous work experience to see if they've handled similar projects in the past and ask for any certifications they've earned.

Diving into subcontractors' qualifications and experience can safeguard you from hiring candidates who need lots of guidance and assistance during the project. In your research, you should look for subcontractors who'll work independently, without taking up excessive time with basic questions.

Alongside checking their qualifications, you can inquire about the types of equipment they have to use for the job. If they have mostly older tools or machinery, you may want to opt for a different candidate, as this type of equipment can be inefficient, prone to needing repairs and could even raise your liability risks. Subcontractors who have newer equipment may be more likely to complete jobs faster and not be slowed down by unexpected maintenance issues.

2. Do You Have Enough Workers Available to Finish the Job on Time?

Having the right-sized labor force available to complete a job is one of the top factors that goes into completing a job in time. You can have the best staff and equipment, but if you don't have enough hands for a project, you may run into slowdowns and inefficiencies. Before you hire a subcontractor, review their workforce and make sure they have enough labor available to meet strict deadlines.

You can also research a subcontractor workforce's qualifications and tenure. For instance, if you discover a subcontractor commonly uses temporary workers, it could be a sign they'll be relying on an inexperienced labor pool for your project. This inexperienced labor pool can be an issue, as they may not be able to perform their duties to the highest quality standards and in an appropriate amount of time.

3. Can You Provide References?

Like any hiring process, outside references about the potential subcontractor are crucial to ensuring your projects are completed on time and at the standard the client expects. After receiving references from a subcontractor, make sure to follow up on them. As you speak to previous contractors and companies they've worked for, pay attention to any recurring praises or criticisms about the subcontractor's performance.

4. What's Your Safety Record?

Another area of inquiry should be the subcontractor's record of safety. Since construction is filled with risks and safety concerns, it's critical that any subcontractor you hire is going to take safety seriously. You want to make sure the subcontractor's workforce doesn't get hurt on the job, and you likely don't want the subcontractors harming your workers through negligence or inappropriate practices.

It's important any subcontractor you do business with has a history of following safety protocols and makes safety a priority. To get an idea of their safety history, you can check for Occupational Safety and Health Administration (OSHA) violations by searching through any safety inspection reports from their previous work. You can also look up their Experience Modification Rate. An acceptable rate will be at 1.0 or lower, which is a sign the subcontractor has an effective safety program. You can often find the Experience Modification Rate by going to your state rating bureau.

You may want to include safety requirements in writing to ensure subcontractors know exactly what's required of them while on your work site. If they don't agree to follow safety procedures, or if they have a track record of skirting around regulations, they're likely a poor fit for your project. Keep in mind that an OSHA inspector could show up unexpectedly, which may cause your project to shut down if safety regulations aren't being followed.

5. Are You Properly Insured?

General contractors regularly invest in insurance to give their workers and businesses better protection. General contractors may even be bonded to give clients peace of mind that they'll finish the work as requested and take care of the expenses related to labor and material. Just like the need for contractors to take out insurance for their workers, business and clients, subcontractors should also have some insurance as well.

Any subcontractor you work with should have minimum liability coverage for auto and general. Additionally, they should have worker's compensation coverage for anyone they're employing. Before you make any agreement with a subcontractor, they need to provide proof of insurance with a certificate of liability. A professional subcontractor will be aware of what insurance they're expected to have and will be able to show you documentation proving their coverage.

6. Will You Sign a Contract?

Stay away from subcontractors who won't sign a contract. A lack of documentation can lead to issues later on if there's any disagreements, possibly resulting in the general contractor getting burned. Professional and reputable subcontractors understand this and will likely want to put an agreement in writing.

 

What Are Subcontractor Agreements?

Once you've decided on the best subcontractor for your project, the last step of the hiring process is to write out a contract and have the subcontractor sign it before they start work. This subcontractor agreement should be in writing and have all obligations between the two parties spelled out clearly.

In this written agreement, the contractor needs to make sure everything is as detailed and specific as possible. Some common details included in these agreements will deal with the how and when of payment between the two parties, as well as information on the subcontractor's obligations for the type of work they're tasked to do.

Detailed agreements help safeguard both the general contractor and subcontractor for times when the two parties are in disagreement. The agreement is a document they can both refer to in order to settle the dispute. Given the importance of the contract, it's a good idea to have a lawyer review a contract and provide advice before anyone signs the document.

 

What Is Included in a Subcontractor Agreement?

As you look to hire a subcontractor, you may want to be aware of what's normally contained in the contracts they sign. Below are some common items included in contracts:

  • Detailed schedule: Most subcontractor contracts should include a detailed schedule concerning the type of work they're going to be doing. The schedule should show the subcontractor the dates when they need to complete their work and information on milestones they need to reach. This sort of detailed schedule can help a project stay on track and ensure every party knows their obligations.
  • Guarantee of insurance and license: An agreement also commonly includes a warranty or guarantee that makes sure the subcontractor is insured and licensed. Even if the subcontractor provides information about being licensed and insured, it's often a good idea for the general contractor to check the paperwork against their state's databases to ensure everything the subcontractor reports checks out.

  • Indemnity clauses: Many agreements also include indemnity clauses. These clauses make it so the subcontractor has to assume complete legal responsibility for any issues that come up due to their actions on the job site. In the future, an indemnity clause can protect the general contractor from having to take responsibility for a mistake made by a subcontractor.
  • Clean up and removal of debris: If the subcontractor's work will result in a need for debris removal or cleaning, general contractors will often include stipulations about how much cleaning and debris removal will be required of the subcontractor. These written terms ensure general contractors don't have to assign staff or hire new workers to complete clean up duties not finished by the subcontractor.
  • Payment terms: Your agreement should detail how and when workers will get paid. If you have any bonuses or other incentives built into the agreement, they should also be in writing. To avoid lawsuits or other disputes, it's crucial to have payment details spelled out in the contract so no one can complain they were misled or lied to.
  • Termination terms: Protect yourself from being stuck with a subcontractor who is not performing satisfactorily by adding terms that describe what can cause the agreement to terminate. This gives clear parameters for the actions or failures in completing tasks or following regulations that give the contractor the right to terminate a contract with a subcontractor. These termination terms can also help protect the subcontractor from certain actions of the contractor.
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