4 Mistakes to Avoid When Hiring Subcontractors
Choosing the right subs is critical to your company’s success.
Hiring good subcontractors isn’t just a matter of the success or failure of one project. Your company’s overall success and reputation are based in part on their performance. If your subcontractors do quality work, your choice reflects well on you. If they don’t, owners may question your judgment in hiring them.
To avoid getting stuck with a subcontractor that’s not up to your standards, avoid these four hiring mistakes.
Rushing the review process
The saying “Act in haste, repent at leisure” applies here. It’s tempting to skip some of the qualifying procedures when the owner is anxious to get started and you need to line up subs fast. But you may pay (in more ways than one) when you don’t take the time to follow good hiring practices. If you haven’t worked with the sub before, ask for and check references. Pose hard questions about whether they have enough workers and access to the right equipment, in good working order, to finish their work in the required timeframe given the other projects they’ll be handling, and about how they screen their workers.
Not checking financials, licenses and insurance
The Hartford Insurance Company recommends checking a sub’s financial statements from the previous two years.1 Does the sub have enough working capital to complete the job? Also look into their bonding and insurance coverages. Ask for proof of insurance for workers’ comp, general liability coverages, vehicles coverages, etc. If a license is required, verify that they have a current one.
Not giving enough information about the project
If you want your subcontractors to perform well, you’ll have to give them everything they need to be successful. That means laying out the project in detail when you’re asking for a price and time estimate, including:
The scope of work
Any special materials that may require longer lead times
Site conditions that will make it harder for them to get people and equipment into the site
Special requirements from you or the owner, such as holding regular safety meetings or, as with many government projects, requiring all workers to be U.S. citizens
Any specific quality assurance and/or safety programs required for the job
Hiring a sub who doesn’t share your safety culture
You don’t want to work with a company that takes a less aggressive approach to safety than you do. Research their OSHA 300 and 300A records online and ask about their safety practices. Does the company provide workers with PPE or are they expected to supply their own? What do they do on the jobsite every day to ensure their workers go home safe?
You might also check their Experience Modification Rate, which you can find through their state’s rating bureau. A higher-than-average number may indicate higher-than-average worker compensation claims.
It takes some time and effort to find the right subcontractor, and you may have to pay more for a good one. But when you do, the result can be a long-term relationship that continues through many projects and contributes to the success of both companies.
Freelance writer Mary Lou Jay writes about business and technical developments in a variety of industries. She has been covering residential and commercial construction for more than 25 years.