Subcontracting is a common occurrence in residential construction. According to a survey by the National Association of Home Builders, companies use, on average, 24 different subcontractors when constructing a house. If you’re starting a home building business, subcontracting some tasks can significantly boost your company’s experience, skills, and time. But how can you outsource in a way that helps you grow your business instead of harming it? Below are tips on subcontracting jobs for your home building business and the many benefits you can reap.
Know When to Hire a Subcontractor
When starting a home building business, subcontractors can benefit your company in many ways. For example, they can offer you the expertise you don’t have, help land big jobs with a tight deadline, eliminate the cost of hiring and training new employees, etc. However, not every task will be worth hiring a subcontractor. Therefore, the trick is identifying the best time to outsource your jobs.
One of the top scenarios where a subcontractor can help you is when you don’t have the necessary expertise to complete a job. For example, with your new home building company, you might not have found good roofers to add to your crew. In such a case, handing the job over to an experienced roofing company can help you deliver excellent results for your client.
Another top way to benefit from subcontracting is to outsource smaller jobs on your large project. For example, when building a home, you can hire a plumbing subcontractor instead of doing the job yourself. Consequently, you’ll have time to focus on other jobs, which can help you complete the project faster. In addition, you can save your company the cost of hiring, training, and paying full-time plumbing employees.
Sign a Clear Agreement
According to Marsdens Law Group, subcontracting can get messy, resulting in disagreements and lawsuits. Not only can this lead to considerable delays in your projects, but it can also damage your company’s reputation. Therefore, when starting a home building business, it’s vital to ensure that you sign clear agreements with all subcontractors you hire.
One of the top agreements when subcontracting jobs is how the tasks will be carried out. For example, say you need affordable house painter services for your home building company. Then, you need a solid contract that specifies the scope of the job, when to deliver, the materials and supplies to use, and the expected quality. In addition, your agreement needs to include accountability in case of mistakes and payment for the job.
Lastly, you also need to protect the interests of your home building company when hiring outsourcing jobs. For example, some subcontractors can poach clients from their general contracting companies. Therefore, you need legally binding contracts such as a non-disclosure agreement, non-compete clause, and non-circumvention agreement to prevent this. These will allow your business to enjoy the benefits of subcontracting while reducing the risks involved.
Look for Contractors With Experience
One of the top benefits of hiring subcontractors when starting a home building business is that it adds skills and experience to your company. Instead of hiring and training employees who might take longer to gain experience, you can get instant access to professionals with a wealth of skills and expertise. Therefore, another top trick to succeeding with subcontractors is finding experienced people.
Experienced subcontractors are especially vital for jobs that require specialized skills. For example, if you’re hiring a metal fabrication service, you must find someone who can do a perfect job. After all, everything they do will reflect on your company’s image. As such, you should shop around and take bids from several contractors, then select the most experienced one who fits your budget.
Doing due diligence on a subcontractor’s workmanship before hiring them is also a good idea. For example, you can check how long they’ve been in business and ask them to offer portfolios of past projects. In addition, you should find other companies they’ve worked for and give them a call. Consequently, this can give you a first-hand insight into their level of skills, experience, and ease of working with them.
Ensure Your Contractors are Licensed and Insured
According to Legal Zoom, you may be liable for any mistakes when using subcontractors. Such liabilities can lead to substantial financial losses for your company or, worse, sully its reputation. Therefore, another top tip for success when subcontracting is to use only licensed and insured professionals.
Where licensing is concerned, several jurisdictions may require that a home contractor be licensed. For example, according to California’s Contractors State License Board, all electrical professionals need a C-10 license. In such cases, working with unlicensed subcontractors can land you in trouble with authorities, leading to hefty fines. In addition, it can void your (and your clients) insurance policies, leaving you in a difficult position should something go wrong on a job site.
Besides a license, it’s crucial to only hire insured subcontractors, especially for jobs with substantial risks, such as tree removal. After all, you can be liable for any injuries or property damage on the site if your subcontractors aren’t insured. Therefore, working with insured professionals can help to insulate your business from financial liabilities and losses.
Check for Safety Training and Records
According to OSHA, construction is a high-risk industry, with as many as one in ten workers injured yearly. These injuries can lead to huge financial liabilities for your business. In addition, they can affect your safety record, severely damaging your company’s reputation. Therefore, safety is one of the most crucial considerations when hiring subcontractors, especially if you’re starting a home building business.
One of the top things to note about safety is that subcontractors are subject to the same safety requirements as contractors. Therefore, before hiring a contractor, you must ensure they’ve undergone the safety training that OSHA and other regulatory bodies require. In addition, you should ensure that your subcontractors have the necessary safety equipment. For example, any roofing contractors you hire should have access to personal protective equipment and fall protection systems.
Besides safety training, you should also do due diligence on your subcontractors’ safety records. After all, an individual with several safety incidents in the past is likely to cause similar issues on your job site. So, be sure to check whether there are any records or accidents they’ve been involved in. On top of that, you should ask companies and other contractors they’ve worked with about their safety practices.
Hire Subcontractors Who Can Handle the Job
When starting a home building business, subcontracting can allow you to complete large projects with tight deadlines. However, it can also lead to lengthy delays, shoddy workmanship, and even failed projects if you hire the wrong person. Therefore, finding a subcontractor who can handle the assigned tasks is vital.
One of the top tips for hiring the ideal subcontractor is to ensure they have the right tools and equipment for the job. For example, if hiring excavating services, your chosen contractor must have the necessary construction vehicles. This will ensure that there are no delays, which could spill over to other tasks, thus severely affecting the timeline of the entire project.
Besides tools and equipment, your subcontractors must also have the necessary skills to complete the assigned job. As a result, you will avoid a situation where the professional you hire subcontracts to another third party. According to a study by Science Direct, this is a common problem in the construction industry, and it can lead to issues such as poor quality jobs, delays, financial liabilities, and disputes with your subcontractors.
Lastly, you should only hire a subcontractor with an adequate labor force to complete a project. Using only one contractor or a small company might not be ideal when subcontracting a large job. That’s because it will overburden the subcontractors, causing delays, or force them to use third parties, which can cause several problems on the site.
Take Charge of Quality Control
Monitoring your subcontractors is vital for quality control. However, this is an area that many businesses fail at. According to a survey by Deloitte, up to 57% of companies and businesses don’t have enough knowledge or visibility of the subcontractors they use. This is a dangerous situation as it can lead to delays, legal problems, and financial liabilities.
Therefore, when starting a home building business, you need to regularly monitor the work done by your subcontractors to ensure it meets the expected standards. For example, when outsourcing to concrete companies, you’ll want to closely monitor the material used, hours worked, and work progress. This is especially vital when working with a new subcontractor; you can give them freer reign once you gain their trust but maintain regular check-ins.
One thing to note is that it might not always be easy to follow your subcontractors around to check their work progress. Therefore, you should develop a daily reporting and accountability plan where each contractor you’re working with briefs you on their progress. This can be either in person or through construction management technologies. In addition, you should have a point of contact for all your subcontractors, whom they can go to for any requests, queries, or to report a problem.
Build Relationships with Your Subcontractors
When starting a home building business, finding a good subcontractor who can deliver quality workmanship that meets your expectations is difficult. On top of that, the hiring and onboarding process can be time-consuming. Therefore, you should take significant measures to retain excellent contractors instead of starting your search again when you have a project.
One of the top ways to build a great relationship with subcontractors is by being fair and honest. For example, if outsourcing the building of decks, you should offer your subcontractor a fair contract that guarantees they are paid for their services. In addition, offer them enough time to complete the job and maintain open lines of communication. This way, you’ll quickly become your subcontractors’ preferred home building company; hence, they’ll be more than happy to work with you in the future.
Another top way to retain subcontractors is by creating a positive work environment. Like employees, subs will not want to work with a company with a toxic culture. Therefore, you must create a safe, friendly, and open environment for your subcontractor. It’s also a good idea to let them know you value their services and reward them accordingly when they do an excellent job.
Be Honest With Your Clients
You’ll need a lot of subcontractors when starting a home building business, and you may even continue with the practice as your business grows. Therefore, you’ll need to devise a way to manage the interactions between your clients and subs. And the best way to do this is to be honest with your customers about using subcontractors.
Unless explicitly stated otherwise in the contract, most clients will be okay with you using subcontractors. Therefore, you may not even be legally obligated to inform them. However, mentioning to your client that you’re using a subcontractor, for example, for their HVAC repair can help build a strong, honest, and transparent relationship.
Informing your clients about using subcontractors can also be helpful in disputes, especially about payments. After all, a subcontractor can file a construction lien against your clients’ homes. This can be awkward if they’re unaware of the contractor’s status. However, if you’re honest from the start, you can navigate the situation more quickly and help your business maintain a professional image.
Even as you inform your clients about using subcontractors, you should reiterate your overall responsibility for the quality of work delivered. This way, the client will not feel like you’re shifting accountability or handing them over to another contractor. And as a result, you’ll have a happier client who’s at ease, leading to a smooth project.
Starting a home building business can be tricky, especially if you don’t have experienced employees on your payroll. However, finding good subcontractors allows you to compete favorably against other companies and grow your business. If you’re considering subcontracting, the above are top tips to help you enjoy the benefits while avoiding potential pitfalls that can harm your company.