Businesses often require subcontractors, most especially in the construction industry. General contractors get assistance for specialized or diversified projects from subcontractors when they do not have the right skills or resources on hand. Sometimes they get subcontractors when they need additional expertise. During these instances, getting experts to work on one or more short-term projects can be beneficial in terms of cost, quality, and efficiency.
What Subcontractors Can Bring to the Table
There are so many reasons why a general contractor will need a subcontractor for his project. Some of the indispensable reasons why subcontractors are a must in a construction site include:
1. Subcontractors Offer Useful Help With Larger Projects
When you’re planning to grow your business and take on bigger projects, it is just right to take a subcontractor to help you with a couple of tasks at the site. Subcontractors are team partners of general contractors who provide them with valuable resources so that the latter can take on larger clientele. They take a huge part of the workload out of the shoulders of the general contractors, making the job faster and of higher quality. Besides, some tasks are better outsourced than hiring tons of full-time workers.
2. Cost-Efficient and Risk of Adverse
As mentioned, it is often more cost-efficient to hire subcontractors who are already experts in doing certain tasks compared to hiring new full-time workers. This will also help general contractors avoid life-threatening risks or risks to the overall success of the project when they can find a reliable firm with substantial niche experience.
Although there are subcontractors who are typically more expensive than self-performing in-house staff, it is still more cost-effective in most cases. When subcontractors are sourced, general contractors are freed from giving them costly benefits, office space, or equipment. Hiring a subcontractor is about 20 to 30 percent more cost-effective than hiring full-time additional staff.
3. Expertise Unmatched by Self-Performing Workers
Subcontractors are committed to offering superior service as their profit depends on how well they finished the job assigned to them. They focus on one work niche so you can be rest assured that they will offer the expertise that you cannot get from your staff. An example of this is masonry, tiling, floor works, and so on. The most efficient ones are those who have been working in a specific field for several years and have had ample opportunity to hone their skills. Hence, they are already able to get the job done quickly and efficiently.
The biggest benefit in sourcing work from third party teams or subcontractor is the increase in productivity. Rather than having to spend a week or two to train your employees for a new task they don’t have any idea about, contractors outsource these projects to subcontractor. General contractors are then able to get quick turnaround of output and the crew members can focus on their own assigned tasks, hence increasing the productivity rate at the site.
4 .No Long Term Commitment
Subcontractors give general contractors and project owners more flexibility in their contracts than when hiring full-time crew members. Rather than bringing them on for long term work, subcontractors will be paid on a project basis so there’s no problem like paying workers when they’re doing nothing, which is the usual scenario in offices. But there are cases when a general contractor loved working with their subcontractors so their business relationship turns into a lifetime partnership.
5. Fewer Legal Obligations
Subcontractors are the owners and operators of their own business so they aren’t entitled to the regular legal protection that full-time, regular employees enjoy. For general contractors and employers, this means that they have fewer obligations to subcontractors than they do to their employees. There are no taxes to pay on their behalf and other deductions to the government. This then lessens the risk of litigation in the construction site.
These are just some of the reasons why general contractors source subcontractors in the construction site. Considering the shortage in manpower, too, subcontractors make up for the productivity that’s missing at the site due to lack of workers.
How to Become a Successful Subcontractor this 2020
Although there is a shortage of labor in the construction industry and hiring a Subcontractors is the general contractor’s best option to fill the gap, there is still plenty of competition when it comes to winning bids. They want to make sure that they are investing a huge part of the budget to the right people so you need to make sure that you have everything in check.
If you want to get ahead of your competitors, show that you are prepared to take on the job. Referrals still play a big role in a general contractor’s decision and this is why you should build a good reputation from the start. But there is more that goes into a subcontractor’s bid so be ready for the presentation. Show that you have all the pre-qualification assets in order. Plan the best strategy you can offer to cater to the project’s unique needs. When you win the bid, evaluate and negotiate Master Subcontractor Agreements, and take advantage of modern technology in your processes like using automation in your equipment or construction project software in your crew monitoring.
To give you an early present this new year and help you come up with your resolution for 2020, here are our foolproof tips on becoming a successful subcontractor:
1. Organize your pre-qualifications before going to project bidding.
Pre-qualification is setting all of your winning assets so you can stand out among your competition and nab the project. General contractors want the bidding subcontractors to show their competency and efficiency by having them fill out pre-qualification forms. These serve as a background check assessment process that determines a subcontractor’s capability, capacity, management processes, performance, and resources.
Each GC has its specific requirements for pre-qualification. Generally, they create branded forms that bidding subcontractors have to fill out. Pre-qualification statements tend to include requests for financial records, safety information, proof of insurance, and contractor certifications.
2. Analyze and Negotiate Agreements
The Master Subcontractor Agreement (MSA) is a document highlighting all the expectations of a GC on a subcontractor. It is much like a project contract orchestrated between the GC and the sub. For the subcontractor to receive his total compensation, he and his team should follow all requirements that are outlined in the MSA.
The MSA usually includes the compensation, due dates, supplier of materials, safety requirements, and other specifications. When a subcontractor signs an MSA, he is committing results, so understanding exactly what the deliverables are is imperative.
Subcontractors can negotiate in an MSA when he thinks the compensation is too low or the due dates are impossible to achieve. These agreements should not be all about what the GC wants. It should also be agreeable with the Subcontractors so he can deliver higher quality work.
The MSA document determines your guidelines for an entire project. So remember that any mishaps can ruin the chances of getting repeat business.
3. Use construction technology in your project
Among the best strategies to get ahead of the competition and prove that you can stand out in the modern era of construction is to be proficient with using the latest technology designed specifically for construction. Competency in the tech area is still considered rare among subcontractors but this is because most GCs do not require them to use technology. It is just up to the subcontractor if he wants to use one or not.
Today, wearable tech devices like AR and VR glasses are already becoming common on job sites. They are usually used for tracking, training, and safety. Drones are used for monitoring. Construction project software like Pro Crew Schedule is used for planning, scheduling, communication, and tracking. While it’s not required to use all of these, it will be wise to incorporate technology in your operation to make the job cost-efficient.
The use of construction project software can be a great investment as it connects you with the GC effortlessly, making the flow of information more accurate, smoother, and faster.
By being able to show a GC that you are skilled with software programs and digital tools, you automatically get a leg up on the guys who still write everything down with pen and paper.
Subcontractor Success this 2020
These three steps to becoming a successful subcontractor can be useful individually but when you combine them, you can be miles ahead of your competitors. So this 2020, prioritize getting your pre-qualification documentation in order, learn to negotiate the MSA so you won’t need to rush and deliver poor quality work and find some new construction technology to test and employ in your operation. With these and putting the best foot forward in every project bid you win, you are set to succeed in this new year.
The construction industry is progressing rapidly. You should start this new year on the right foot, prepared with an arsenal of knowledge to bring with you when bidding for projects. Your experience is a solid foundation of your success, but by adding on these three more tricks, you’ll be well on your way.
