Why you should hire a subcontractor as your first line of defense
Reason 1: Protect your margins based on planning
Though subcontractors are typically more expensive than completing a project in-house, you will need them ready to be deployed at a moment’s notice if you are accunting for all possible situations. If your project budget does not reflect this, it could have a damaging impact down the line.
will be able to get their 20% of GPM by the end of the job. What happens when that team is not available? Are you able to keep a healthy GPM?
Our customers engage us multiple times in requests to perform a job under a certain budget, but if we subcontractors have limited availability, we’ll choose who to work with based on that same budget and our relationships. Some customers will ask us for estimates for every single opportunity they receive. They are saving their estimators/PMs a lot of time – and it’s risk free.
Reason 2: The SWAT Team approach
Though it might sound counterintuitive, planning to use subcontractors at the outset of your project and keeping your team on reserve will provide you with more flexibility and ensure that the project is completed in time and on budget.
If you are used to working with your technicians internally, opting for subcontractors can sound both risky and like a waste of money and resources. The benefits of in-house technicians are obvious: they are already on the company payroll; they are invested in seeing that the job is done properly; and you already know their workflow and quality standards. Can subcontractors be trusted to deliver the same high-quality result? And how much will it cost to outsource that work?
When budgeting for a potential million-dollar project, it is best to estimate as conservatively as possible by giving yourself a large budget that anticipates all possible costs and scenarios – this includes hiring subcontractors.
If you budget for a subcontractor, your worst-case scenario is you will have a surprise surplus once your project is completed. However, the inverse is also true. If you budget internally and realize that for whatever reason, you cannot complete the job as planned, you will likely have huge, unexpected expenses pivoting to subcontractors at the last minute.
There are many steps to hiring a subcontractor, and if time is not adequately allowed, it can derail the whole project. Initiating work with a subcontractor can take between three to six months before the project is even deployed. First, the subcontractor will need to determine the scope of work, followed by a site visit by an engineer who will provide a solution and technical proposal. The subcontractor will then likely provide an economic proposal, which is where the customer decides whether to hire them. It is much more efficient to allocate time for this before a project instead of in the midst of one.
If you want to keep a subcontractor as an option, you need to plan on them being your first line of defense. Between site walks, estimates, logistics, deployment and signing off on the project, there is a lot of room for error such as construction delays and supply chain hiccups. In this scenario, it is best to think of your team as the SWAT team. When things go wrong, you have your most trusted and dependable players on the field, ready at a moment’s notice to pick up the slack.
However, if you plan to use a subcontractor as a backup, swift deployment isn’t likely. Large jobs require a lot of people, and expecting subcontractors to be able to mobilize once you realize your team will not be able to complete the job is too big of a gamble.
External factors inhibiting your project cannot be fully predicted when you plan to do your project internally. To ensure an orderly and efficient timeline and budget, the best course of action is to call a subcontractor beforehand and get a quote.