Finding Good Subcontractors for Your Construction Business
Finding good subcontractors for your construction business involves establishing two key systems. The first system to develop is based on the relationship you will have with your subcontractors or specialty trade partners. This system is based on trust. The second system to develop within your construction business is one that is purely transactional. This system is based on clear communication with your subcontractors or specialty trade partners.
Finding good subcontractors can feel like looking for a needle in a haystack.
In this article on FineHomebuilding.com, I discuss how to develop a system for finding and recruiting good subcontractors for your construction business.
A general contractor can develop a system for finding good subcontractors by answering these two questions:
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 which they have built a relationship.
You can find the good subcontractors by establishing a very simple habit.
Don’t be shy. Be confident. You have nothing to lose by just asking.
(See this post that describes a recruiting system for finding your next team member.)
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.
Ensuring good subcontractors are available for your jobs and working toward the same goals requires treating them like you would treat your employees.
Click here to see a few examples of how to keep good subcontractors.
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, submittal 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 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.
Trust and Communicate with your 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. It can be like trying to find a needle in a haystack.
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.
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Shawn Van Dyke is a construction industry consultant, business coach, and mentor to skilled trade business owners. He is a Brand Ambassador for Fine Homebuilding, travels across the US as a keynote speaker, seminar presenter, and the author of The Paperwork Punch List: 28 Days to Streamline Your Construction Business. Contact Shawn to have him speak at your event or invite him to train your team.