Subcontracting is a fact of life for almost all builders and remains the most practical way of building homes, especially for small-volume builders.
Even large-volume builders usually find it difficult to justify keeping a wide variety of skilled tradespersons on their payroll. But the subcontracting process can be altered to the mutual benefit of all parties, particularly to the benefit of the customer who demands a quality home.
First, it must be understood that the lowest bid does not guarantee the lowest possible cost. On the contrary: when schedule disruptions, rework, callbacks, dissatisfied customers and lost sales are factored into the equation, lowest bids often result in higher costs. The low bid is often a luxury that quality builders cannot afford.
A systematic approach to selecting subcontractors and vendors can weed out those who cannot or will not measure up to quality standards. It is much better to spend extra time looking for the best than to discover that the selection process results in lower-than-acceptable quality. The approach to subcontractor selection should include the following:
Check subcontractors for quality
Too often, subcontractor selection takes place only in the builder’s office. Obtain references and investigate them thoroughly. Talk to the builders for whom candidate subcontractors have worked. The most highly qualified subcontractors are probably in greatest demand; therefore, if the subcontractor is unemployed – especially during a period of high construction activity – try to determine why.
Check for financial stability
This is a sensitive subject that may never be completely investigated, but it is important to know if the subcontractor will be able to complete the job and if he/she will be around to honor service warranties that may be part of his/her contract.
There are indicators that allow a builder to draw reasonable conclusions about the subcontractor’s financial condition. One indicator is business longevity. Another is the subcontractor’s reputation for the prompt payment of worker salaries and supplier invoices. Ask suppliers about the subcontractor’s reliability. Check the subcontractor’s standing with the Better Business Bureau.
Another indicator of financial stability is the condition of the subcontractor’s tools and equipment, vehicles and office. Often, a financially strapped company defers maintenance and upkeep until “things get better.” When on the job, ask the subcontractor’s employees how long they have worked for the subcontractor.
Check for schedule compliance
Determine if the subcontractor employs enough people to ensure your job can be completed on time. Remember, that it is your responsibility to develop a reasonable schedule that the subcontractor can rely on. If you do not adhere to the schedule, the subcontractor cannot be expected to keep a crew waiting indefinitely until workers are needed.