TIPS FOR EFFECTIVELY MANAGING SUBCONTRACTORS ON THE CONSTRUCTION SITE

Subcontractors are common on jobsites; they are resources to help you complete projects and provide specialized skills when needed. In other words, they are a flexible solution to labor.  They keep you profitable and, in return, you keep them in business.

However, they can also bring risks to the jobsite if they are not managed properly. What they do (or do not do) reflects directly on your business.

Pay attention to these five areas for successful subcontractor management.

QUALIFY YOUR SUBCONTRACTORS
Check out your subs ahead of time so you know what you are getting. Check out their previous projects; confirm required licensing and insurance before they start any work; and learn about any previous worker’s compensation claims.

Screen thoroughly. Look at:

Previous work experience
Previous supervisory experience
Safety records
Business management
Legal history
Their processes on and off the jobsite
If you use subs from previous projects be sure to requalify them by checking for expired insurance or any changes in safety records.

SET EXPECTATIONS IMMEDIATELY
Once you have everyone signed on you need to make sure all subs know how you want the jobsite run and the standard of quality you require. Don’t just assume subcontractors know exactly what to do. If they cause problems, they can expose you to legal and operational issues that could cost you dearly.

Use written contracts so the documents are binding and enforce accountability.

Have a statement of work that specifies:

Each party’s responsibilities and authority
Detail of deliverables
Quality standards and acceptance-of-work processes
Constraints on the sub
Definitions of services
Terms and conditions for all parties
Talk to your legal counsel to see if anything else needs to be included for your specific project.

You also want your customer to understand who the subcontractors are and the roles they play. Make it clear that you are the point of contact for the project.

As far as the subcontractor is concerned, you are the sub’s client and you should be treated as such.

Detail, in writing, the job the sub has been hired to do and the support efforts you will provide. If the sub will be supervising other workers, make sure that is part of the contract as well. Let the sub know how to handle client-driven changes and unforeseen problems.

Once the contract is written, you and the sub should review and sign it annually.

PLAN, PLAN, PLAN
First of all, a well-prepared jobsite will help get the most out of your subcontractors. Make sure you walk the site before work begins so everyone is familiar with the area.

Include the subcontractors in:

Safety talks
Workflow planning
Material deliveries
Anything else impacting the sub’s work.
Scheduling
Everyone needs to understand how they fit into the whole project. This is an area where a good software solution can ease the pain.

Create a project plan that includes a specified scope which is then backed up by an appropriate schedule. The schedule should include restraints such as due dates for deliverables. It should also show contractual and other milestones so you can account for progress.

Larger construction projects may require supplemental schedules keeping all dependencies visible and to provide more documentation on how critical parts of the project will get done. A signed work authorization can help you keep track of when and where a sub works on a given day. It also helps ensure previous work has been completed to the required standards.

Supplemental schedules include:

The assigned cost account
What budget it’s paid from
All scheduling constraints
All deliverables for that stage of the project
The responsible manager’s name
The names of reviewers
The names of those who accept deliverables
Team building
Team building is another way to keep everyone on the same page and feeling like part of a single crew. Start with an icebreaker so everyone gets to know one another. Then have them work on brief exercises to get them used to working together.

Don’t let this disrupt any schedules. If needed, you can hire someone specialized in team building to give you a hand.

Customer service training
Don’t assume subcontractors know how to handle customers in a way that reflects well on your company. Subs appear to everyone else as though they are your employees. What they do matters to your reputation.

Good customer service also includes clean up, site protection, and a record of the schedule so make sure that happens as well.

COMMUNICATE EARLY AND OFTEN
You need to identify a single point of contact (such as yourself) for each subcontractor and offer all the information they need in order for them to fulfill their contract. Subs need to communicate with other subs as well; help them get together on communicating progress and needs.

Establish and include communication channels as part of any supplemental schedule and publish a current project contact sheet for each sub involved.

At the start explain the project in detail, obtaining feedback as you go. Open communication keeps the project organized. Make it your business to know your subs other projects to keep things coordinated and ensure availability. Have frequent meetings to review upcoming work and to keep the focus on the interdependency needed for the project.

Establish progress reporting
You can use an informal poll of each subcontractor to note into the daily logs. However, you must also establish a formal reporting structure including weekly meetings with each sub that drills down to the cost account level.

Include:

Progress made against authorized work
Milestones achieved
Accounting of costs billed
Estimate of time remaining
List of unplanned work and time spent
Descriptions of any problems
You or your project manager (PM) can then use the information to compile monthly reports that are itemized down to the work breakdown structure level.

At each meeting:

Ask about potential issues
Give feedback on work
Include client evaluation
Deal with problems immediately; don’t let them grow or fester.

Put explanations in writing and be specific about what the subcontractor must do to get back on schedule. You may need to spell out intermediate milestones for daily work and reporting. Emphasize the consequences if goals are not met. Once everything is communicated, solicit agreement and a signature from the subcontractor in question.

Finally, meet at the end of each job to provide constructive feedback and adjust processes as necessary.

SHOW THE MONEY
Always make sure your subs are paid on time, even if your customer is late paying you. There is no better way to instill the loyalty of good subcontractors. Include enough so they can both complete work and manage their job.

A typical contract will specify partial payment at 30 and 60 days into the project, depending on its length. Review the hours the subcontractor reports and be available to answer questions and help with problems.

Pay is another area where a good software application can help immensely. Not only will it help you with tax withholding and reporting, you can use it as a record of payment and link it to procurement accounts and other databases to get a complete view of cash flow.

Qualify, set expectations, plan, communicate early and often, and pay on time.


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