Subcontractors add value to your company
Trades, or subcontractors, can be great assets to your company. They remove some of the burden you carry when you employ a typical employee. When you have an employee, you are responsible for keeping them steadily employed. You have to train and educate them. You pay for their Worker’s Compensation and other insurance. And they add to the complexity of your payroll system.
There are several advantages to using subcontractors. For one, you are not responsible for keeping a subcontractor continually employed. Their training is the responsibility of the subcontracting company owner. They are specialists at their trade. They have specialized tools and are capable of carrying out their tasks efficiently, which means you can count on getting your projects done on schedule.
Let’s examine the subcontractor process. What’s the best way to manage subcontractors?
The basic Subcontractor Process
Here’s a summary of a basic subcontractor process:
- Write a scope of work for the trade
- Send Request for Quote (RFQ) to the trade
- Plug the quote into the estimate
- Create a job schedule
- Award the project to the trade
- Write a Work Order, sign, and send to the trade
- Notify the trade when the project will start
- Continually update the trade on the job start up
Knowing your job costs
There are many advantages to using subcontractors. One of the biggest I think, is getting a single price for their part in a project. As long as you are very specific with their scope of work, you’ll know exactly how much their part in the job will cost.
Let’s start with the scope of work used in the RFQ. For this example let’s use a plumbing subcontractor. The project is to remodel an existing kitchen. The basic scope of work involves:
- Disconnecting all plumbing fixtures and the dishwasher
- Rough-in the sink
- Rough-in the dishwasher
- Rough-in the ice-maker
- Rough-in the water purification system.
During the Trim Phase:
- Install the sink
- Install the dishwasher
- Assist with refrigerator installation
- Install the water purification system
The same scope of work used in the RFQ will be repeated in the proposal, so that there is no ambiguity about what will happen on the job. Make a line item for each of the plumbing tasks at a $0 cost so that all plumbing tasks are well documented. If the plumber is doing the entire plumbing phase, then the price quoted will be a single line item for the Plumbing phase.
Award the project using a Work Order
Once all the scopes of work have been written and all of the RFQ’s have been collected and plugged into your estimate, you are ready to submit your proposal. If the proposal is accepted by the prospective client, then all subcontractors should be notified and scheduled. This is done by sending out a Work Order. The Work Order is merely a copy of the RFQ that is signed by both the general contractor, accepting the quote, and the subcontractor.
The sooner the notifications go out the better. I suggest informing each subcontractor that they were awarded the job as soon as the proposal is signed. The next notifications should go out 30 days prior to start up, then 15 days, 7 days, and 2 days. This may seem excessive, but it ensures that your trades will show up on time, exactly when they’re needed. The closer your job stays on schedule, the higher your profit margins will be and the happier your clients will be. This is a small price to pay for running an efficient project.
A simple but effective process
This is a simple process for managing your subcontractors. You’ll know exactly how much each phase costs and it simplifies your estimating. The end result is that your jobs will run smoother, they will come in on budget, and you’ll finish your projects on schedule. Using subcontractors can be a great benefit your company, as long as you have a well-defined process.
Take your business to the next level with better processes
If you’d like to learn more about procedures that can make a huge difference in your business, yet are simple to implement, visit Scientific Remodeling System. You’ll find scores of great articles and wise tips. Sign up for the Premium Membership and you’ll get my entire eCourse on every important aspect of a successful remodeling company. Learn more…