Getting a Great Subcontractor

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If you have a Michigan contractor’s license, you’ve almost certainly worked with subcontractors, and maybe even selected them. But how do you choose the best subcontractors to work with? Do you always take the lowest bid, or is the highest bid a reflection of the quality of work? Do you go with someone you know, or keep the relationship strictly business?

As writer Peter Quince explains in his article, many seasoned subcontractors moved into other career paths when construction activity slowed from 2006 to 2011. Younger workers, Quince notes, are often lacking in not only the hard skills of their trade, but also “soft skills” such as the ability to “get up, dress up, show up, shut up, and never give up.”

Hiring a subcontractor with poor workmanship, attitude, or ethics can affect your work and reputation as well. This year, Mercedes-Benz banned a subcontractor from working in their plant on the basis that the visas of their foreign workers were not appropriate for the work they were doing. As a result, Mercedes-Benz was compelled to issue public statements and conduct audits of all contractors and subcontractors.

With a 10% projected growth for the construction industry in the next decade, it’s going to be increasingly important to use the best subcontractors. So how do you ensure quality when selecting them?

Luckily for us, a research study funded by the Housing and Building National Research Center (HBNRC) was designed with the objective of determining the essential criteria related to the selection of a subcontractor. In this study, they examine and evaluate the extent to which these criteria contribute to a “successful” project, and establish models on the contractor selection criteria, which predict contractor performance and overall success in projects.

In the U.S. and Canada, the HBNRC study notes,

“Usually, maximizing profits and minimizing costs come as crucial objectives of a contractor. Consequently, setting price as one of the criteria of choosing a subcontractor is essential; in the real world a subcontractor who offers the lowest price is likely to be selected.”

This is not necessarily the case in other countries. Denmark, Italy, Portugal, and South Korea regularly reject the highest and lowest bids in favor of an “average” bid.

The HBNRC study used 34 factors, grouped into categories such as cost, quality, staff behavior,  and safety, to find out what qualities contractors value the most. Although every category had some factors ranked highly, the factors that were ranked most highly were “flexibility and cooperation when resolving delays” and “reputation”. Quality, delivering materials on time and whether or not the contractor complied with the job specifications also ranked highly.

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The results of the study were processed further using statistical software. The researchers came to this conclusion that cost isn’t everything:

“Therefore, cooperation and flexibility are essential for the project’s success; according to Hartmann et al. [4] the extent to which sub-contractors “fulfill agreements” and the extent to which they “proactively solve and prevent problems” has its direct impact on the project’s “operational efficiency”...as highlighted by many of the previous studies, the tender price should not be the main criterion based on which the selection process occurs.”

The truth is that a great attitude and problem-solving mindset, among all parties, are essential to a successful project. Since one of the paramount considerations is reputation, the best way to find a great subcontractor, is to ask around. Once you have some names, narrow down the list by investigating a few key points:

• Experience: The subcontractors should not only have experience in their field, but also experience of the same type, scope, and size of the job they are being considered for.

• Accountability: What is the supervisory structure of the company? Are the workers managed by a qualified person on site? Who will resolve the inevitable problems that arise?

• Insurance: Confirm that the company is bonded and insured to the appropriate amount for the job.

• Litigation and Compliance: Find out if the company or individual has a history of conflict, safety issues, or litigation. Can they work with others to resolve conflict? Do they have safety training and a clean record? Are they up to date on their continuing education?

(and, hey, are you?)

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Finally, much of what you get out of your subcontractors is determined by what you put in.Taking some time up front to organize a job so that it runs smoothly is an investment - and your return on that investment will be worth it. Practical strategies for getting the most out of your subcontractors and finishing jobs on time include:

• Have a clear description of the work scope and specifications

• Include details such as the schedule, clean-up requirements, and a warranty in their contract

• Build some slack into the project schedule - expect delays

• Listen to subcontractors’ suggestions, but don’t agree to cut corners

• Communicate - keep everyone informed of delays or issues as soon as possible

• Be clear about the scheduling sequence of various trades

• When working with remodels, be aware of collateral damage issues, and be clear with subcontractors about site protection and cleanup

Selecting the best (not necessarily the cheapest) subcontractors, and applying these practical strategies, will go a long way towards achieving quality jobs that are smoothly run, and finished on time.

And that, friends, is a reputation YOU want.

Elisa Meyer is a writer with At Your Pace Online, who offers Michigan builders’ license classes online with a payment schedule. AYPO also offers pre-licensing courses for Michigan contractors and builders in other states.