by Mark Broadly
If you’re hiring a contractor for any kind of construction or remodeling project, you’ll hear the terms "contractor" and "subcontractor" used a lot. But what do these terms actually mean, and what functions do they perform in a construction project?
Contractors and subcontractors are both key elements of the construction industry. They work together to get construction jobs done right, using the most skilled individuals available. However, a contractor and a subcontractor have substantially different roles.
In this piece, we’ll discuss the differences between contractor vs. subcontractor and examine the roles that both play in construction. We’ll also talk about what you should look for from a contractor or subcontractor, including licensing and surety bonds. What is a Surety Bond. Knowing these concepts will empower you to make smart decisions about construction projects and give you a better understanding of how the construction industry works.
Contractor vs. Subcontractor: The Basics
Here’s the essential difference between contractors and subcontractors:
***A contractor can be any business entity that performs work on a contract basis. In construction, a contractor is a company that accepts contracts to provide any of several types of construction services to clients. Contractors may also be referred to as general contractors, GCs, or primary contractors.
*** A subcontractor is a type of contractor that works for other contractors rather than directly for clients. Subcontractors usually have some kind of specialized expertise such as roofing, drywall, or electrical work. Subcontractors are often referred to as subs for short.
The difference is relatively clear, but it has many important implications for construction projects.
How Contractors and Subcontractors Interact
For many contractors, managing subs is a big part of the job. The GC has to make sure that each subcontractor gets their work done on time so that their other subs can stay on schedule. They have to carefully inspect their subs’ work to ensure that it meets building codes and client expectations.
Some contractors use more subs than others. On one end of the spectrum are managerial contractors who outsource almost everything to subcontractors. These contractors excel at recruiting quality subs and coordinating their work to facilitate a smooth building process. Since this type of contracting outsources most of the physical labor, some property owners choose to act as their own GC, vetting and coordinating subcontractors using their own time and resources.
On the other end are totally in-house contractors who have their own teams for almost every step of the building process. These contractors have taken the time to hire workers who can take a building from the foundation up to the roof. However, even in-house contractors will typically outsource the most specialized tasks (such as electrical work) to subcontractors.
Neither type of contractor is necessarily better than the other, and each can be an effective and well-run business when managed according to the right principles. For managerial contractors, having a wide network of sub contacts is a critical component of the business model.
In-house contractors, meanwhile, need to concentrate on recruiting and retaining the best talent to create an in-house team that works smoothly together. And if you’re acting as your own contractor, be prepared to spend a lot of time interviewing contractors, coordinating schedules, and learning about construction best practices.
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