Next Insurance
Effective subcontractor management: How to hire and manage construction trades

Effective subcontractor management: How to hire and manage construction trades

By Kim Mercado
May 30, 2022
10 min read
Linkedin

The work your subcontractors do on your construction projects reflects on you. Effective subcontractor management and good work can lead to repeat business, referrals and positive online reviews, while subpar performance can negatively impact your business.

So, how do you make sure the subs on your projects keep your clients happy?

It starts with hiring the right people and setting expectations before the job even begins. Once construction starts it’s essential to keep the lines of communication open so that you can address any bumps in the road quickly.

How to find subcontractors: 4 tips to try

Hiring the right subcontractors from the get-go can make managing the construction phase of the project a lot easier. Here are some tips for getting the right people with the right skills on board.

1. Ask for referrals

If you were looking for a doctor or real estate agent, you'd probably ask your friends and family if they had any recommendations. You can use the same strategy when hiring construction subcontractors. 

Start with the subs you've worked with in the past to see if they can recommend anyone who's looking for work.

2. Keep a list

You may not need to look outside your organization to find the right person for the job.

Kyle Shirley, owner of Sol Vista Roofing, says many subcontractors contact him looking for work. He keeps a master file of subs he may be able to use on future projects.

But before hiring someone who contacts you (instead of the other way around), it's important to make sure they're legit. Shirley says that’s not difficult. 

When someone contacts him, he asks for their business name and whether they have insurance. "They may appear really legit, but if they don't have a business entity name, and they don't have insurance, they don't get called," he said.

If everything checks out and a job matches their skill set, they get a trial run. 

"We want to see how they operate before we use them on a regular basis. We'll test them on a job or two to see if they make the cut of becoming a regular part of our subcontractor network," Shirley said. 

They get added to the regular rotation if they do a good job.

3. Do your own vetting

You don't want workers on your project if you can't count on them.

Bill Samuel, owner of Blue Ladder Development, says you should evaluate subcontractors from your first interaction to assess their responsiveness and reliability. 

He also recommends asking potential hires about current projects they're working on, so you can visit the site and see their work for yourself. 

Checking online reviews and asking other people about their experience working with a specific sub can also help you decide whether a subcontractor is right for your project. 

4. Check licensing

Cities and towns often require certain types of subcontractors, such as plumbers and electricians, to have a license before beginning work. 

You need to make sure any subs you want to hire have the appropriate licenses before hiring them to avoid fines and other penalties.

Cities and counties often have lists of registered contractors who are licensed, insured and bonded, which can help make finding qualified subs easier. 

Samuel contacts the building department in his area when he needs a licensed contractor. 

"I'm using a short list of people that I know for sure have the appropriate qualifications to get the permit to perform the work properly."

There’s no standard department across the country that gathers this type of information. But if you find out who is responsible for permit applications in your area, that person will be able to give you a list, Samuel says.

Or you can do a Google search for “registered contractors” in “city name.” 

Managing subcontractors effectively

Finding the right person for your job is just the beginning. Throughout the project, you need to keep up with the subcontractors’ work to ensure they meet deadlines, complete quality work and stay on budget.

Here are some tips to help make sure that happens and you're managing subcontractors well.

Set up an independent contractor agreement

Whether you call it an independent contractor agreement, statement of work or something else, it's important to get the project details in writing to help avoid confusion down the road. 

Here's what the agreement between you and your subs might include:

  • Scope of work. Provide as many details as possible when managing subcontractors. Clearly outline what you will handle and what the sub will be responsible for. If it's not in the agreement, the subcontractor may require you to submit a change order, which costs more and could slow down the job. Have your subs review the agreement in advance, so you can address any questions or concerns before the project begins.
  • Payment terms. Outline how much you will pay your subcontractor and when you will release payment. Samuel also includes a financial penalty if the project isn't completed on time. Be sure to pay on time. If you don't, the sub may not want to work with you in the future.
  • Timeline. The work agreement should include the deadline for completion. If it’s a large job, include checkpoints to keep the project on track.

If you have questions about developing an agreement or statement of work and what to include, consult with a legal professional. 

Incentivize good work 

General contractors depend on high-quality work to maintain a good public image with their customers.

Shirley offers incentives to his subcontractors to help maintain that public image and encourage his subs to do their best work on every job.

His company uses a perfect 10 checklist. At the end of each job, someone from his team inspects the work, and if all 10 boxes are checked, the crew chief earns a bonus payment.

"That lets them become a partner with us in making sure quality is not compromised," Shirley said. "But we're also looking for things like speed and efficiency while maintaining that quality."

Make sure they carry insurance

Verifying your subcontractors’ insurance coverage helps protect your business. Subcontractor rules and regulations vary depending on where you live. The law may require subs to maintain certain types of insurance, such as general liability and workers' compensation.

Even if the law doesn’t require insurance, it can help protect you, your business and your subcontractors. 

Get a copy of the sub's certificate of insurance to verify the coverage terms, and make sure the coverage applies to the project they'll be working on.

For example, if a sub only has coverage for residential projects and you have a commercial job coming up, they won't be covered if something goes awry. And you could be responsible.

While checking their policies, it's a good idea to make sure your insurance coverage is up to date.

Manage communications

Keeping the lines of communication open between you and your subcontractors is critical.

Why?

Because if something isn't going according to plan, you need to know as soon as possible. In turn, you can let the client know and take the necessary steps to get the project back on track.

Shirley gives his subcontractors a single point of contact for every job to streamline communication on a project. "If they have any issues with the schedule, the materials, property access or anything, that point of contact is who they call at our company."

He also uses a cloud photo app called Company Calm. When a subcontractor takes a photo in the app, the general contractor can see it instantly. "That has become a very helpful part of communicating with our subcontractors," he said.

At a minimum, Shirley requires a daily check-in to stay on top of what’s happening on site. Since residential roofing projects usually only take a day, his subs must send a “job complete” notification at the end of the job. 

For larger commercial projects, subcontractors must provide a one-sentence recap at the end of each working day.

Check-in regularly

Having a way to communicate with your subcontractors when you’re not at the job site is essential to keep projects moving forward. However, there’s no substitute for seeing things in person.

"You have to be on-site regularly to see kind of what's going on," Samuel says. At a minimum, he visits the job site a couple of times a week and adjusts his schedule based on how much he trusts the subs working for him and the type of work that’s taking place.

"We have times when there are five different trades over there at the same time, working on the house. You'll probably go over there every day," Samuel says.

When he's not on-site, he favors FaceTime for keeping in contact with his subcontractors.

Use visual reminders

An easy way to minimize mistakes is to post the plans on-site in a prominent place for everyone to see. 

Samuel also posts a reminder on the door with a list of things the subcontractors need to do before leaving each day. Tasks such as turning off lights, locking doors and windows, and plugging in the sump pumps are included on the list.

Inspect the work

Shirley and Samuel hold their subcontractors' final payment until inspecting the work to make sure the sub completed it properly. Holding back the final payment gives the subs an incentive to complete the work on time as agreed.

How NEXT helps contractors get coverage

NEXT makes it easy to get the general contractor insurance you need to protect your business.

Choose from general liability, workers' compensation, professional liability, commercial auto and tools and equipment insurance. Mix and match policies to fit your business’s needs.

You can complete an online application, review policy options, get a quote and purchase coverage — all in less than 10 minutes.

If you have questions at any time, our licensed, U.S.-based insurance professionals are available to help.

Get started with your free online quote today.

Effective subcontractor management: How to hire and manage construction trades

END

About the author
Kim Mercado is a content editor at NEXT's blog, where she writes and edits posts for small business owners. She is an experienced marketing professional and loves helping entrepreneurs solve their business challenges. You can find Kim trying new recipes and cheering the 49ers.
Linkedin
Are General Contractors Responsible for Subcontractors?
Grow

Are General Contractors Responsible for Subcontractors?

Can a subcontractor hire another subcontractor?
Grow

Can a subcontractor hire another subcontractor?

6 common construction claims for general contractors and how to avoid them
Protect

6 common construction claims for general contractors and how to avoid them

What we cover
Chat with Us

Mon – Fri | 8 a.m. – 5 p.m. CT

FacebookYoutubeLinkedinTwitter
© 2022 Next Insurance, Inc. 975 California Ave, Palo Alto, CA 94304, United States
Better Business Bureau
Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.