Identifying a Reliable Subcontractor
Finding a good subcontractor can be a tricky thing! Here are a few tips we found and thought might be useful.
How to Identify a Reliable Subcontractor in Construction
A Subcontractor must facilitate your construction project
BY JUAN RODRIGUEZ
“In many situations, a subcontractor is a right way to go because there are certain areas that a contractor needs an expert in certain trades. A construction business or general contractor is dedicated to managing the overall activities and performance between subcontractors. Companies have different methods of evaluating and shortlisting subcontractors depending on past performances, financials and other important factors. The following article presents some ideas on performance indicators that will facilitate choosing the right subcontractor for your construction project.
Can a Subcontractor Perform Better Than Your Own Crews?
The first question that you will need to answer yourself is the one that will eventually guide you to choose a subcontractor. Understanding the scope and project requirements is vital before you can acknowledge the need for a subcontractor. A subcontractor is needed when the work falls outside of your expertise area or when your resources are already assigned to a different project, limiting the capabilities to execute the work using internal resources.
How Big Is Your Project for Your Subcontractor?
Before starting the qualification process, the general contractor needs to determine the size of the scope being subcontracted out and the resources needed to perform this work. It is important to understand this part prior to execution in order to get the proper bonding and insurance coverage for you and your subcontractor. When the subcontractor scope is too broad, then you might need to do one of two things: break the project into smaller components or analyze if this is the right project for your organization.
Once determined that it is suitable for your organization, let’s then move on to qualifying the right subcontractor.
Subcontractor Qualifying Indicators
Now that you have decided to get a subcontractor to supplement your workforce, the general contractor needs to evaluate the following areas:
Project Plan and Schedule
Letter of Recommendation or References
Project Cost and Payment Terms
Theses factors should be weighed in resulting in a total score that it is used to determine the best option for your project. A subcontractor must be able to provide this information as an answer to your RFP or during an RFQ process.
One of the most important factors when qualifying subcontractors are their safety performance. Be sure to review the EMR rates, OSHA recordable, time loss due to accidents/incidents. From a contractor standpoint, you will need to review who is their main safety officer, its background, and credentials. As a contractor ask for their safety plan and program and be sure to review it so that it aligns with your safety expectations. Safety can also include environmental response and procedures upon emergencies and spills.
Subcontractor Financial Capabilities
A key aspect of protecting your business is to hire a financially solid subcontractor. I know most of the companies will not disclose their financial information, but there is some information that they can provide like bonding capabilities and letters from financial institutions that will express their financial stability. Always make sure that all the bidders are actually qualified to work as a subcontractor, and have the required licenses and insurance
As part of the qualifying process, a subcontractor should provide basic information along with resumes highlighting the relevant experience of SPOC (Special Point of Contact), person in charge, Sr. leadership directors and personnel who will be in charge of the project. The org chart must be clear enough that you must have resources assigned to your project and depending on the project, those resources can be 100 percent dedicated to your project.
A subcontractor must bring their own equipment and tools, so be clear to specify that in your RFQ and review the subcontractor proposal to make sure those tools are included. The equipment described in the proposal must meet your demands and also include a maintenance repair plan. Please note that all maintenance, lube and fueling cost must be part of the subcontractor responsibilities. Transportation permits and costs are subcontractor’s items so they should be taking care of those items.
Project Plan or Subcontractor Schedule
A subcontractor must provide a detailed plan of action including a narrative on how they will manage the project and how they handle unforeseen conditions. A good subcontractor will provide a detailed schedule of activities including information on how much time it will take them to complete the work. A project schedule might help in many instances and a conference call to go over the scope is highly recommended.
A subcontractor proposal must make reference to their previous experiences but most important they should reference similar projects, in size and scope. Feel free to ask about concurrent projects and how those project could affect the resources devoted to your project. A list is similar projects must describe scope, schedule, budget, manhours worked and any special consideration that was part of the project. It is very important to determine whether the project was performed in recent years, similar conditions or to similar contractors/owners.
It is your responsibility to call and verify references provided before awarding the subcontractor a construction contract. Using the listed names and projects included in the RFP, the general contractor should call or ask specific details about the subcontractor performance on a particular project. Please note the position of the person giving the information and be as specific as possible when asking for details and contract information.
Not always the lowest bidder is the best option for you. Once you have evaluated the items listed in this article, you will be better positioned to make a recommendation whether to use a specific subcontractor or not. Ask for details on payment terms, and avoid using subcontractors asking for large amounts of down payment, that might be a red flag. Discount terms and payment terms must be discussed and agreed especially final payment and release of waivers.”
FINDING GOOD SUBCONTRACTORS
“You find subcontractors much the same way that you would find a general contractor or any other professional such as a doctor, dentist, or accountant. Ask around, talk to friends and neighbors, see who is working in your neighborhood.
If you see work being done in your neighborhood, don’t be shy. Introduce yourself, get a business card, take a look at the work if it is visible outside. If it’s indoor work, knock on the door later and ask the owner how the job is going. Ask if you can take a look –usually they are proud to show off their new project.
If the work is a large job handled by a general contractor, you may need to do a little more digging to figure out who the subcontractors are. Often the company name and phone number are painted on the side of the truck. Other times, you’ll have to walk up and ask who is doing the plumbing, electrical, roofing, tile, or whatever work it is you are in need of.
You can also ask at the local lumberyard – especially a contractor-oriented yard. However, I’ve had better luck with specialty suppliers. For example, if you’re looking for a tile installer ask at a tile retailer. For a plumber or electrician, ask at the local supply house that wholesales to the trade.
Once you’ve found a couple of good subs, chances are they can introduce you to others. These folks work together regularly and know who does good work. Try to get at least two or three names for each trade so you can get competitive bids. Also not everyone will be available when you need them.
Hiring a subcontractor is really no different than hiring a general contractor, except that the scope of work is much more limited. However, the principles are the same:
Start with a clear description of the scope of work, using drawn plans and written specifications, as needed.
Solicit bids on an apples-to-apples basis.
Make sure the subcontractor is properly licensed and insured.
Use an appropriate contract that clearly defines the scope of work, price, and payment schedule. Make sure the contract covers important details such as the schedule, clean up, removal of debris, and a written warranty.
Deposits. Be leery of a contractor or sub who wants a large down payment before starting the job. If materials need to be special-ordered, one option is for you to order the materials under your own name with the required deposit. That way, if the sub never shows up for one reason or another, you own the special-order materials and have not lost your deposit.
If you’ve hired good people, and clearly described the work to be done, they will need minimal supervision on the job. It’s important that you discuss the job ahead of time, work out any potential problems or conflicts with other trades, and communicate what is most important to you.
For example, if a deck builder is bringing a small backhoe into your yard, discuss what impact this will have on the existing landscaping and how best to protect your lawn and plantings. If old roofing is to be removed, discuss the cleanup of nails and debris from the yard. Discuss any concerns about pets, kids, clean up, or other important issues.
Also discuss aspects of the work that are especially important to you. Since this varies from customer to customer, it’s difficult for the sub to know exactly what you are looking for. Are there trees you want the excavator to preserve? Do you want the skylight centered perfectly over the stairwell? Do you want the ceramic tiles to lay out in a certain way? Is it important to you that built-in shelving match a photo you tore out of a magazine? Does a closet or niche have a minimum dimension you need for a piece of furniture or equipment.
Just because it is drawn correctly on paper doesn’t mean it will be built exactly as drawn or described in the specs. Life on a job site is messy and noisy, and things happen quickly. If something is important to you, communicate it clearly to the people doing the work.
Scheduling subs. This is one of the trickiest aspects of any large project. If you are hiring multiple subs to build an addition, for example, their work must be done in the right sequence. The drywall can’t go up before the insulation is installed. The insulation can’t be installed before the rough wiring and plumbing, and so on. Sometimes one sub wants to run the ductwork exactly where another sub plans to run the plumbing drain, leading to potential conflicts.
Getting subs to show up on schedule can be challenging. A contractor who regularly gives work to a subcontractor will have more clout than you when a sub is super busy and behind schedule. A few recommendations:
Build a little slack into your schedule to play catch up when needed. Expect delays due to bad weather, changes to the plan, late deliveries, and no shows, as well as Murphy’s Law, which operates at full force on construction sites.
Listen to your subs’ suggestions for saving time and money and doing a better job. If you think they are just trying to cut corners, hold your ground. But often their suggestions are based on past experience of what works well and what doesn’t.
Promise to pay promptly and do so when the work is complete. Subs will appreciate this and respond in kind. Cash flow is always an issue for small companies.
Keep them informed. If you anticipate delays, let them know asap so they can shuffle their schedule around. When you’re ready to move, give them a heads-up a week ahead of time so they can pencil you in.
Prep work for subtrades. Provide key subs with their own set of plans with any special requirements clearly marked. The framers should get a framing plan, the electricians and electrical plan, and so on.
For example, framers need to know where you will need a thicker “plumbing wall” to accommodate drains and vents, or where you will need blocking in the wall to secure a grab bar, wall-hung sink, or other equipment. If you are working with a designer or architect, have them clearly mark any special framing requirements.
Also have your plumber, hvac contractor, and other subs review the plans to tell you what they need to do their job correctly. For example, plasterers need plaster “grounds” to guide their trowels, ceramic tile installers may need heavier floor framing and underlayment, plumbers need chases to run their pipes, and so on. If these things are not well planned in new construction or remodeling, bad things can happen on the job site. Plumbers and hvac contractors are notorious for pulling out their reciprocating saws and large drills and cutting away at the those pesky pieces of framing that are in the way of their ducts or pipes. Unfortunately those pesky pieces of framing may be critical to properly support the structure.
POTENTIAL PROBLEMS WITH SUBS
For the most part, I have had good luck with subs over the years with a few notable exceptions. A few examples of problems I’ve and others I know have experienced are listed below:
Problem: Not showing up on time. Not all subs are the greatest schedulers and when there is a conflict, you’re probably not at the top of their list. Also, they may be out of town or out of business by the time you need them.
Solution: Give them a heads up a few days to a week before you will need them. Let them know right away if there are any schedule changes. Pay them promptly (and they’re much more likely to show up promptly next time).
Problem: Speed vs. quality. Most subs are highly competent and efficient at their trade. However, in some cases, they user cheaper material than specified or work faster than they should and cut corners, producing substandard work.
Solution: Hire reputable subs, who may not be the cheapest. Discuss quality standards with them and write specifications and quality standards into your contract with them.
Problem: Collateral damage. In my experience, many subs have a kind of tunnel vision. They focus on their work and don’t necessarily see what else is around them. Examples from my work as a contractor include a plumber who put his greasy toolbox down on a $30,000 Persian carpet, and another plumber who cut large notches in the floor joists across the middle of a room, nearly collapsing the floor. In that case, I had to call in a structural engineer to undo the damage. I’ve seen similar structural problems with cuts made for ductwork. Also, I’ve seen mechanical subs run pipes or ducts through a living space when they were supposed to be buried in the wall or ceiling.
Solution: Plan ahead. Discuss the job ahead of time – at a meeting on the jobsite if possible. On a remodeling job, communicate any special requirements regarding access to the work-site, protection of surfaces, and cleanup. With mechanical subs, ask where they plan to run their pipes, wires, or ductwork. Ask if they anticipate any problems or will need to cut, drill, or notch any framing. If the amount of notching seems excessive, get an expert opinion from an experienced framer, or if necessary, a structural engineer. See rules-of-thumb for the safe notching and drilling of framing.”