A Contractor’s Guide for Hiring Subcontractors
Whether you do not have enough permanent staff members for a job or need someone with a special skill, hiring subcontractors is a routine part of the contracting business. Outsourcing helps you expand the services you offer and increase your business capacity, but that’s not to say it comes without a cost.
Substandard work, poor project management, legal disputes, and financial insolvency are among the main risks of using a subcontractor. You can, however, mitigate these risks by finding the best person for the job with a thoughtful hiring process. So, do your due diligence before a project starts to save yourself a headache later. Read on for our top tips on avoiding duds.
How to Find Reliable Subcontractors
In the same way you would find an accountant, ask around and talk to people to get a sense of the local subcontractor scene.Not all contractors may fit with your business nor will they be available nor will their bids be satisfactory, so aim to compile a list of subs — four or more per trade — to then widdle down in the hiring process. Your industry friends, wholesalers, local trade schools, and previously used subcontractors are all potential sources for quality subcontractor recommendations — even a neighbor may be valuable. Note that competing contractors may be reluctant to share information, so finding out which subcontractors they use may require a bit of digging. The same can be true for previous subcontractors, as they may sense their job is in jeopardy. Further, if you are looking for a specialty contractor, a good place to check would be with specialty suppliers. Bottom line: be considerate and deliberate when soliciting advice.
Key Considerations for Hiring Subcontractors
Now you have a list, it is time to begin the hiring process and start sorting. Before meeting with potential subcontractors, it is important that you have a clear idea of what you want so that you know what you are looking for and potential hires know what they are getting into. Ask yourself what tasks you need the subcontractor to complete and on what schedule. Clearly define the scope of work and communicate that. If a contractor says or seems that they are unable to meet the project’s expectations, that spells the end of their hiring process.
Now is the time you cross your t’s and dot your i’s and validate the sub’s qualifications and record. Ask for references and pay attention to any patterns, like repeated complaints or praises. To ensure that the subcontractor has a history of safe work, look through safety inspection reports from previous projects for Occupational Safety and Health Administration (OSHA) violations. Finally, you want to ensure, at a minimum, any subcontractor you work with have general and auto liability coverage. There have been countless Arizona court battles, with varying verdicts where uninsured subcontractors try to take advantage of a general contractor’s policy — so, request a certificate of insurance from your subs.
While careful hiring can dramatically reduce risk, it does not eliminate it entirely. Likewise, even with a clear contract and active management of the subcontractor during the job, risk remains. As the overseer of a project, you may, not only, be slowed down by a faulty subcontractor, but held liable for the subcontractor’s negligence. Make sure your business is adequately protected by securing strong coverage, and aim to mitigate risks such that you never need to use that coverage.