How to Get the Most From Your Subcontractors
To grow water damage restoration business contractors must get the most from their subcontractors!
Most contractors can use some help with subcontractor relations. Dependable subs who do quality work for reasonable pay are essential to the success of your full-service restoration company. How do you find them, work with them and keep them?
Get the most from your subcontractors by doing a better job vetting them.
During my ownership I did a lot of hiring of subcontractors through several sources including Craigslist ads. I always had 5 or so ads running all the time. I was continually looking for quality subcontractors for drywall, painting, carpentry, decking and flooring installation. My ads for drywallers and painters for example would ask; can you float drywall with no visible seams, can you feather texture so the match is unseen, can you paint straight cut in’s. If they couldn’t do these three basic tasks that are required on nearly all damage repair rebuilds I couldn’t use them.
I asked about their tool cache, their transportation, if they were felony free, had a good MVR, and could pass a drug screen. If everything came back positive, along with a reasonable employment history and personal photo I would arrange either a phone or personal interview where I could talk about each area in greater depth and I checked references at this time.
I set up a special email that I used in Outlook so that the ad reply came to a special inbox and when I replied I could maintain my anonymity. Some positions I didn’t want my staff to know I was looking. So I set up several different domains that typically cost $9.95 a year through GoDaddy. One was email@example.com and another firstname.lastname@example.org. The point is that you may want to maintain anonymity and may want to reply to an email received requesting follow up information without revealing your company identity. These unique emails allow you to remain anonymous until you are ready to inform the potential sub of your company identity.
Get the most from your subcontractors by having a project manager meet the sub on site the first day of work to line them out and insure instructions are clear.
The subcontractor had a scope of repair that detailed specifically what they were to do and instructions regarding what to do if they found additional work that needed to be done. A material list accompanied the scope of repair to insure the grade of material, quantity and unit price were clear and would not be exceeded as materials were purchased. My PM would return 2 hours later to inspect the first hours of the work in progress and again the next day. I needed to confirm the subcontractor had the level of skill they claimed before fully releasing them on the job. If I found they didn’t have the skill claimed I terminated the relationship on the spot.
You always want to treat your subcontractors well and expect the same from them. Punctuality, communication, cleanliness, and conscientiousness are key elements of a good working relationship between contractor and subcontractor.
Weed out the bad and hold on to the good entrusting as much work to them as you can. Keep them tethered to you so they don’t wander off in search of work elsewhere.
Get the most from your subcontractors by developing a good subcontractor contract which requires your company to be added to the subcontractor’s insurance policy as an additional insured.
The contract included every expectation I had including no personal cell phones on the job site, no visible tattoos, no direct communication with my customer, and they had to give up their lien rights to work for me on my jobs. Since I paid by the job if a punchlist or call back occurred the subcontractor did this on their time and nickel. Don’t pay twice for shoddy or incomplete work. There were more items addressed than these that I have mentioned that dealt with every important issue I faced working with subs. They knew exactly what was expected including how and when they would be paid before they began their first job.
Get the most from your subcontractors by never buying tools for construction workers whether they are employees or subcontractors.
Nearly all construction workers worth their salt own nearly every tool known to man and if they didn’t I couldn’t use them. That took care of the constant loss of tools that was typical during the early days of my construction experience when I used to provide tools to construction workers.
However, on occasion as a show of goodwill if a flooring installer for example needed a flooring nailer and didn’t have one or his broke I would pay the Xactimate amount for equipment usage for the nailer on that particular job. My contribution made more affordable the purchase of a used nailer from the pawn shop where most construction hand tools are bought. He was happy and I avoided buying tools.
Get the most from your subcontractors by never paying them hourly – always pay by the job. Hourly workers are notorious for milking the clock.
Making multiple daily runs to the store, working slowly, and leaving early become the norm. Hourly workers too often fill their day with time killers. Workers intuitively understand that when they are paid by the job they can earn more per hour by working faster and smarter. They become more efficient with their time and their decisions. Get it done and get on to the next job earns them a higher hourly return than a paying hourly.
I did a study not long ago regarding Xactimate labor charges and local wages in Denver and St. Louis. Here is what I found in terms of the hourly rate Xactimate uses to calculate contractor pay:
- General Carpenters – $57 and $56
- Painter – $50 and $54
- Drywall Installer – $48 and $57
- Demolition labor – $42 and $42
- Carpet installer – $56 and $47
There is not a contractor anywhere in the U.S. who pays these prices to workers. When workers milk the clock you might end up paying these prices, but if you challenge your workers to make more money working by the job they will discipline themselves to work efficiently. Why not give them a scope of work and a labor number that is a percentage of the Xactimate labor charge for the work you assign to them? Lock in your profit at the outset of the job. Let them manage themselves so if they do take longer than is needed you don’t get stuck with the bill. This is the only way to pay subs. You need to make that change today!
If you find that some workers still take too long diminishing their potential average pay per hour sit down and help them assess how they organize and manage themselves for work. Have them unpack a day’s work and then coach and train on how to be more efficient. Many workers don’t know any other way than to work inefficiently. You can help them see that making a single run to the store in the morning is more efficient than leaving the job site for multiple trips. With a job specific material list they can buy most of what is needed the very first trip as the job begins. Look for time wasters and train your workers how to avoid them so they can make the money they really want on each job by working more efficiently. You, the worker, and the customer all come out the better when work is done well and quickly!
You can take control of your subcontractor relationships and protect your profit and your customer!
One final thought – my most debatable requirement was that my subs had to give up their lien rights.
They could take me to court if a dispute arose or take any other action they wanted but they could not hassle my customer with threats of liens. As an insurance contractor much of my work came by direct assignment from the carrier or through TPAs. I could not allow a dispute between my company and a subcontractor to spill over into my relationship with my customer or the assigning agency. I couldn’t accept that risk and therefore required that the dispute stay between the two principle parties and leave my customers out of it. When I explained this, and the fact that I never had a history of a single incident that would otherwise have led a sub to impose a lien, I found that nearly every sub agreed to this requirement. In fact, over the years of my ownership only one subcontractor walked away rather than agree to forfeit their lien rights. Subcontractors reading about this practice will strongly disagree and I understand that. In my world it was required and no subcontractor was ever hurt because of it. I demanded the assurance that my customer was not going to be hurt or used as a pawn to pressure me by an unhappy subcontractor. When issues arose we worked them out. I treated all of my subcontractors with respect and honesty, and never once had a sub threaten my customers with a lien in order to pressure me to do something for them.
My company relationships with subcontractors worked well and many of them worked with my company on a near fulltime basis for years. They liked working with us, we paid well, we were well organized and we kept them full of work.
Restoration contractors must take charge of this relationship. If you cover all the bases as I have described you can create quality relationships that can last for years. You can protect your company, your profit, your customer and your subcontractors when you are both strong and fair!
Visit my website for more valuable information to help you grow your restoration business at http://www.growmyrestorationbusiness.com
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