Finding Good Subcontractors for Your Construction Business
Finding good subcontractors for your construction business can feel like trying to find a needle in a haystack.
Finding good subcontractors to work with a construction business is a skill that the general contractor needs to develop and master. Given all the hats the general contractor has to wear—salesperson, designer, estimator, project manager, and customer service representative—developing a list of trusted subcontractors can often feel like trying to find a needle in a haystack.
How to find good subcontractors for your construction business?
The problem with developing a solid list of the right subcontractors for your construction business involves knowing the answer to the two questions below:
1. Where do I find good subcontractors?
2. How do I keep the right subcontractors?
Where do I find good subcontractors?
The answer to this question is simple.
Good subcontractors are everywhere.
In fact, they are right where you are.
But they are busy. They are booked. They don’t necessarily market to the general public. They work for builders with whom they have built a relationship.
You can find the good subcontractors by establishing a very simple habit.
Every time you see a tradesperson at the lumberyard, at an industry event, or fueling up a company truck at the gas station, ask him about the work he does, the company for which he works, and who would be the best person to discuss the upcoming project you have.
Every time you pass by that huge job that you wish you could do, take note of the subs working there. Call them and ask if they would be interested in working with you.
Reach out on social media. Follow, comment, and engage with subcontractors on social media. This is where the needles are hanging out.
Don’t be shy. Be confident. You have nothing to lose by just asking.
How do I keep good subcontractors?
The answer to this question might require changing your view of your subcontractors.
You should not view your good subcontractors as independent entities that need to be managed, but you should view them as you would a valued employee.
Now, I realize that these subcontractors are absolutely independent businesses, separate from your business operations, but you depend on them to perform your work.
They depend on you for the success of their businesses also.
So the relationship between a general contractor and its subcontractors is a two-way street.
Ensuring good subcontractors are available for your jobs and working toward the same goals requires treating them like you would treat your employees.
Here are a few examples of how to keep good subcontractors:
1. Clearly communicate the scope of the job you need them to perform.
2. Ask for their input.
3. Pay them on time and in full.
4. Go the extra mile for them.
5. Hold them accountable for their duties and commitments.
If you practice the actions listed above, just as you should with your employees, then you will start to build a relationship with these professionals built on trust.
When you show trust to your subcontractors, then they will trust you in return. They will show their trust by referring business to you.
Maintaining a high level of trust requires great communication between you and your subcontractors.
Communicating with your subcontractors
In the early stages of building a relationship with a subcontractor you need to establish the channels of communication.
These channels of communication can take many forms, but they must be specific, documented, and up-to-date.
Standard Subcontractor Agreement
Develop a standard subcontractor agreement that you use with all your subs. The subcontractor agreement will be a broad in nature and language. This subcontractor agreement should cover all the specific legal requirements for your state or jurisdiction as well as the operational policies for working with your company.
First, a good subcontractor agreement will also include the specific insurance requirements, licenses required, submission procedures, and payment terms.
You can even add a section that describes the General Terms of the relationship. These items might include:
– No smoking policy
– Drug abuse policy
– Cleanliness of each sub’s work
– Communication and Change Order policies/procedures
– Level of quality
– Standard Payment Application/Invoice
– Lien Waiver Policy
– Privacy Policies – sharing of company information or homeowner information
– Social Media Policy
The best subcontractor agreement for your company should be written in a way that meets or exceeds not only the legal requirements for your construction business, but also clearly defines the nature of the professional relationship.
The second part of the Subcontractor Agreement will be the actual Subcontractor Work Order for each specific project.
Standard Subcontractor Work Order
While the Subcontractor Agreement covers the broad terms of the working relationship, the Subcontractor Work Order will detail the specific scope, price, quality, and schedule the subcontractor will perform on each project.
The Subcontractor Agreement may be written so that it covers all the work performed by a sub in a given time period, and each Subcontractor Work Order is written to specifically describe the work performed on a given project. The Subcontractor Work Order should be written so that it ties back to the Subcontractor Agreement.
Consult an attorney to help you produce these documents.
When you find good subcontractors by asking around, treat them like a valued member of your team by making it easy to work with your construction business.
Establish clear and open channels of communication through your documentation process.
Include your subcontractors in your schedule updates, and ask them for their input and advice.
Develop a System to Recruit Good Subcontractors
Using a system that is built on trust, well-documented, clearly communicated, and benefits both the general contractor and the subcontractor will ensure that you will always have the right subcontractors available and eager to do your work.
Finding good subcontractors can be a chore for many construction businesses. But with a well-developed system for recruiting and growing your subcontractor base, you can stop looking for a needle in haystack and start picking the right needle in a pile good needles.