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Home > Lowe's for Pros > Hiring Subcontractors: What You Need to Know

Hiring Subcontractors: What You Need to Know

Hiring Subcontractors: What You Need to Know

By Arianna Hermosillo

When most general contractors hire within their businesses, they take the proper steps to ensure the candidate is qualified, has credible references and will deliver the quality of work clients have come to expect.

Business owners should apply that same deliberate process to hiring subcontractors. Contractors oversee all levels of a construction project, and they are relying more and more on hiring subcontractors for specialized trades, such as electrical, plumbing and roofing.

"The general contractor puts the team together and oversees the game to ensure the work gets done accordingly," says Clive Thurston, president of the Ontario General Contractors Association (OGCA).

Depending on how many projects you’re taking on at one time, managing subcontractors can be a challenge. You can hire staff to manage different job sites, but responsibility ultimately falls on your shoulders. That’s why it’s important to properly vet subcontractors and make sure they are a good fit for your team.

Whether you’re just starting out or you’ve been working with subcontractors for years, there are a few things to consider as you search for the perfect subcontractor for your next project.

Find out subcontractors’ work history

The first step in the vetting process is to ask the right questions. These questions should delve into experience, tools and technical expertise, and the business and interpersonal skills needed to complete the work.

Key questions include:

  • • Does the subcontractor have the proper experience?
  • • Can they provide examples of past jobs to demonstrate they can complete work on time and within budget?
  • • Does the subcontractor have current or past litigation with former clients?
  • • Do they have references? Thurston recommends asking for at least three.

Seek out specific, detailed bids

If you’re satisfied with subcontractors’ answers to the questions above, you can move on to getting bids. A bid should let you know if the subcontractor has the manpower and resources to complete the work on time and on budget. Clear, specific bids that outline all the details of a project, including specifications and drawings, will help you determine if a contractor is prepared for the job.

Project prices will vary based on the subcontractor’s labor rate, estimated installation time, delivery time and cost of materials, says Daryl Sharkey, director of member services for the Mechanical Contractors Association of Canada. Some subcontractors may estimate that they’ll need more time for a project or that material costs will fluctuate based on available inventory and market conditions.

In an invited bid process, you can choose subcontractors you know and trust, Thurston says. In a low-compliant bid situation, however, you have little choice and virtually no room for negotiation, as the project calls for the lowest-priced bid that meets all the terms of the project. You also might receive bids regardless of whether you sought them out.

"These days, more and more sub-trades will find general contractors online and submit bids to the general contractors themselves," says John Mollenhauer, president & CEO of the Toronto Construction Association.

Focus on the contract

Proper due diligence also requires contractors to look into subcontractors’ licenses and insurance. In Ontario, all subcontractors and general contractors need to register with the Workplace Safety and Insurance Board and have up-to-date clearance certificates. Check with your local jurisdiction to determine insurance requirements for you and your subcontractors. Your local jurisdiction will help determine if licensing for certain trades is required.

"Current licenses are important, and one way you can check that is with your municipality" through the building or licensing department, Mollenhauer says, adding that the type of work and the city you live in will help determine whether you need a license.

The most important piece of paper in dealing with subcontractors is the contract. Standardized contracts from organizations such as the OGCA outline key stakeholders involved and their roles in the project, as well as legal and insurance considerations, Thurston says.

Specifications may change as the project develops, but all contracts cover the most important issues related to working with subcontractors on a project. As terms of the deal change, including extra equipment needed to do the job, costs and timelines, it’s important to update the contract accordingly. The Canadian Construction Documents Committee has contract templates available for purchase.

Don’t hire subcontractors ‘off the grid’

If you follow these guidelines for hiring a subcontractor, you should be able to avoid running into subcontractors looking for an under-the-table deal without the necessary paperwork and typical terms of an agreement.

Thurston warns that hiring subcontractors "off the grid" puts you at higher risk for low-quality work and injuries. Of course, there’s always the likelihood they could take the money and not work a single day on the job.

As the general contractor, it’s important to carefully choose the subcontractors with which you decide to do business. Like your own employees, subcontractors are a reflection on how you run your business. Taking all the proper steps to vet and hire a subcontractor will help ensure a safe, efficient project.

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