Among the most valuable assets on a job site are your subcontractors. They are important resources with specialized skills and experience you use to complete projects. They help you stay profitable and you provide them much-needed jobs.
Managing your subcontractors can sometimes be a challenge though, particularly if you are not well organized. To help you stay on time, on budget, and able to deliver with high quality, here are six keys to keep in mind:
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KEY #1: CLARITY IS THE STARTING POINT
Clarity is crucial for success. Make sure everyone knows what the expected outcome is, and you are more likely to achieve that result. Eliminate the guessing games by providing realistic expectations and guidance that is supported with sample images when possible. A written scope of work with a clear timeline, milestones, and expected outcomes will make working with your subcontractor simple, clear and free of drama.
KEY #2: PROPOSALS NEED TO BE IN WRITING
Protecting your business requires making sure to memorialize agreements with the use of written proposals. By outlining the agreed-upon terms, and including signature lines for you and your subcontractor, you give yourself legal protection in case things go sideways. Make sure your proposals are dated, clearly spell out the cost of the work, outline everything that needs to be completed, clarifies which materials need to be supplied, and include the time frame for completion.
KEY #3: INSURANCE IS MANDATORY
This seems like a no-brainer, but insurance is mandatory to protect you and your hard-earned money. Every project requires a certificate of insurance. Make sure it comes directly from an agent to ensure legitimacy. Requirements may vary from state to state, but here are the minimum things that should be included:
Minimum Liability $1,000,000
Agent’s Information
Subcontractor’s name and address
Your name and address
KEY #4: HAVE A SUBCONTRACTOR AGREEMENT
Using the data from your proposal as a starting point, flesh out the remaining details for everyone with a subcontractor agreement that also includes payment terms and working expectations, like end of day clean up policies, dealing with delays, inspections requirements, and warranties. Spell everything out to avoid unexpected unpleasantness which can creep up when you just assume both sides are on the same page.
KEY #5: ALL CHANGES REQUIRE A CHANGE ORDER
It’s inevitable… something is bound to change during a construction project. Perhaps something was incorrectly estimated, or you ran into unforeseen complications No matter the cause, whenever work is added or deleted from the original scope of work, use a change order to track things. Remember that any change has the potential to alter the original contract amount or completion date. Change orders should define the complication, outline the impact on the schedule, spell out implications to the cost of the project, and be signed by everyone.
KEY #6: NEVER PAY ANYTHING WITHOUT A WAIVER
Don’t take no for an answer when it comes waivers. Before you put a check in a subcontractor’s hand, require the contractor to complete and notarize a waiver. It’s just that simple. Tell them "no waiver, no check" and just watch how fast your subcontractor produces a notarized waiver.
These six keys are helpful to managing successful subcontractor relationships. Frankly, you can sum them up in one of the lessons we learned way back in kindergarten: play nice in the sandbox.
By leveraging clear processes, tracking progress via checklists, and putting everything in writing, you are professionalizing your business and minimizing hard discussions. Your subcontractors will respect you more as they see how much you value them and are working to protect the relationship, your projects will be completed faster and with higher levels of quality, and everyone will have a great time along the way.