Hiring the wrong subcontractor can create a variety of consequences, especially for small contractors. Here are six points to consider when hiring subcontractors.
1. Be Selective When Hiring
Never settle for a subpar subcontractor. Vetting ahead of time is critical to success. Find out:
- if they have the same goals as the company;
- how ambitious the subcontractor is to get the job done;
- if the subcontractor is known in the industry and has a good reputation;
- what their capabilities are;
- whether they can follow simple directions, e.g proposal submission procedures; and
- if this just another job or will they engage in connecting with the project.
Screening potential subcontractors is crucial. Ask subcontractors to provide proof of a number of years of experience doing similar work, then look at those projects and check their references. Hire the subcontractor that has its next jobs lined up. If this subcontractor has a waiting list, it is more than likely that they know what they are doing.
2. Define scope of work
Outline a clear, detailed, scope of work so that when evaluating the subcontractor there is a well-defined set of requirements to check their qualifications against. Define the scope of the project verbally and in writing. Not only does this serve as a record, but it allows the subcontractor to look at each piece of it. The process of defining the scope of work as an opportunity for the subcontractor to:
- identify conflicts or challenges associated with their scope of work;
- speak about the proposal; and
- come to the table with solutions, ideas and problems that could occur.
3. Complete a Pre-Qualification Evaluation
Create a checklist of the expectations of potential subcontractors and evaluate each subcontractor against multiple criteria. This is an opportunity to look at each separate criteria to determine the subcontractor that is the best for the project. Try not to focus solely on cost. While cost can make or break a deal, there is much more to consider. Eight of the most common benchmarks for evaluating subcontractors are:
- safety record;
- quality of work;
- technical skills;
- proposed team members;
- execution plan;
- schedule; and
When reviewing the checklist, ask pertinent questions to help decide whether the subcontractor shares values, as well as to get a good sense of their work ethic. Other tips are to evaluate past EMR Rates, OSHA recordables, balance sheets or income statements and bonding capabilities.
There tends to be a limited sub pool in the construction industry, so it is so important to be proactive. Be open to forming new connections with all types of subcontractors, even ones the company might never need. Network through word of mouth, Linkedin, construction forums and construction trade associations.
5. Get To Know the Team
Get to know more than one person from the subcontractor’s team before making a hiring decision. Focus on forming relationships when hiring new subs. Meet their team, find out who they propose as their PM or onsite foreman and get a feel to see how engaged the actual people performing on the project will be.
6. Learn from experience
Even if the subcontractor received good references, subcontractors are not “one size fits all,” meaning that just because they worked on other types of projects and for other companies does not mean that they can perform on just any project. Be diligent, and if the subcontractor does well, hire them again. Hiring reputable and dependable subcontractors can be a challenge, but it is a challenge that can easily be met.