Pros and Cons of Subcontractors
Hiring work out to subcontractors has a lot of advantages but a few drawbacks as well. It’s particularly important to be aware of these factors if you’re considering acting as your own GC. Here are some of the major pros and cons of using subcontractors on a project:
Pros of Subcontractors
A. Good subcontractors can provide an unparalleled level of expertise. Their specialization sometimes means that they do higher-quality work than general contractors.
B. In some instances, subcontractors are necessary to perform specialized work. Highly technical skills like plumbing and electrical wiring must almost always be done by specialized subcontractors.
C. It may not always be feasible (depending on your location) to find a general contractor who does all of their work in-house.
D. Being your own GC and hiring out to subs can potentially save you a substantial amount of money.
Cons of Subcontractors
A. A contractor must be good at managing relationships with their subcontractors. Personal tensions can quickly become time-consuming disputes if a GC and their subs can’t get along.
B. Since subcontractors are hired through GCs rather than by clients, it may be challenging for a client to find out more information about a subcontractor. A client needs to be able to trust that their GC will hire only licensed and bonded subcontractors with good reputations. For those acting as their own GCs, mastering the process of vetting a subcontractor is crucial.
C. Subcontractors may not have the customer service capabilities that primary contractors do. A primary contractor’s job involves working directly with the client and attending to their needs, but a subcontractor may not be used to dealing with clients.
Licensing and Bonding for Contractors and Subcontractors
In most states, both contractors and subcontractors must have a contractor’s license from the state and have a contractor surety bond that protects their clients from financial harm. (What is a surety bond? Basically, it’s a binding contract that ensures that a business will fulfill its obligations via a financial guarantee from a neutral third party.)
These requirements help ensure that contractors operating in the state are legitimate and responsible businesses and protect clients from unethical contractors. Some local governments also have their own requirements for contractor or subcontractor licensing and bonding that have to be fulfilled on top of state requirements. In some states, local governments license contractors rather than the state government.
Usually, it’s easy to check a contractor or subcontractor’s licensing status online. In most states, the Secretary of State or Department of Labor office maintains a list of licensed and bonded contractors and subs. Many of these databases also include the option to search for complaints against a contractor or find out if they have ever had their license revoked.
Despite (or because of) their differences, contractors and subcontractors are equally important in the construction process. When working together correctly, contractors and subcontractors will lock in together to produce great results.