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Why Do Contractors Hire Subcontractors? 4 Reasons

Hiring permanent employees is a necessity for any construction project. However, subcontractors also play a crucial role in the construction industry. That’s why general contractors opt to hire subcontractors to complete certain jobs, which ordinary workers cannot perform. This post shall discuss the reasons why contractors hire subcontractors. 

But first, how do contractors and subcontractors work together?

Contractors hire subcontractors to complete jobs that require specialized skills. Thus, the subcontractor works under the contractor, while the contractor is answerable to the project owner. The general contractor acts as the manager for the construction project, while the subcontractor is a “worker” who offers specialized labor and materials needed for the construction project. 

So, what qualifies a subcontractor?

Every contractor desires to hire the most qualified subcontractors, with the required experience in the project at hand. With that, let’s look at some of the things that a contractor should consider when looking for a subcontractor:

  • Experience
  • References from previous contractors whom they’ve worked with
  • Ability to complete work within the set timelines
  • A good history with other professionals in the construction industry like general contractors, material suppliers, and bankers, among others. 

Reasons why contractors hire subcontractors

To get specialized labor 

Typically, large construction projects are very complicated. Because of this, such projects require different skill sets, some that a general contractor cannot provide. Therefore general contractors hire a subcontractor to complete some important parts of the project that they cannot do. During a construction project, it doesn’t make sense for a contractor to hire additional staff to complete a job they are not qualified to perform. 

Further, subcontractors work on an as-needed basis only. That means, the contractor will bring them to do a particular job, and then leave once that job is completed. Also, subcontractors are answerable to the general contractor, not the client. Some of the jobs that subcontractors specialize in include roofing, electrical installations, and paint job, among other tasks that require specialized labor. While some of these tasks aren’t directly involved in a construction project, the project cannot be completed without these tasks. 

To control costs

According to the contractors at AFS General Contracting, large construction projects are susceptible to having large cost overruns. And, that’s why contractors will hire subcontractors to keep the overall cost under control. So, when a general contractor hires a subcontractor, they pay them on a per-project basis, instead of an hourly basis. Because of this, the contractor can avoid the foreseeable cost overruns that come with large construction projects. 

Just like all other industries, the construction industry also operates under the optimism bias principle. This principle states that the predictions of the time that’s required to complete a project are mostly underestimated. So, when a general contractor is paying workers on an hourly basis, it can lead to high-cost overruns. 

However, since general contractors work with subcontractors on a per-project rather than an hourly basis, the subcontractor bears the weight of time and cost estimation, instead of the general contractor. 

If they don’t want a long-term commitment

By hiring subcontractors, general contractors get to enjoy more flexibility than if they were to hire new employees. So, instead of hiring the subcontractors for long term work, they will hire them to work on short term projects, before closing their contract. However, this is always based on each project, as contractors and subcontractors tend to develop a lifetime relationship. 

Less legal obligations

Legally, a subcontractor is the owner and operator of their business. With this, subcontractors don’t enjoy the same legal protections as employees. That means a contractor has fewer legal obligations over a subcontractor than they do to their staff. Moreover, this also means the contractor doesn’t have to send the subcontractor’s tax information to the government. 

Bonus point: increased productivity

General contractors also hire subcontractors to increase productivity in the workplace. By hiring subcontractors, a contractor doesn’t need to bog down their employees with tasks that they can outsource to subcontractors. This, in turn, allows employees to focus on the core needs of the project, which means it will be completed faster. 

Final thoughts

General contractors rely on subcontractors for both small and large construction projects for assistance in areas that require specialized labor. Hiring subcontractors comes with numerous benefits, which include completing the project in a set time and satisfying your client. However, contractors need to assess subcontractors before hiring them, as this will ensure that they get the best subcontractors for the project at hand.

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