Hiring the Proper Subcontractors
The hiring of the proper subcontractors is essential to the success of a project. Years ago, the fundamental reason for hiring a subcontractor was past association and reputation. Unfortunately in today’s construction industry, these values are definitely, much further down the level of importance for selection. The illusion of cost savings, as well as the fundamental attitude of the “cheaper “the better, has overridden any association with ability and reputation. This current attitude continually causes issues on the project, such as delays and a constant barrage of additional work claims. I have witnessed the deterioration of the selection process for subcontractors and suppliers first hand, and have been involved in countless lawsuits that were instigated by the selection of subcontractors and suppliers that were not qualified to perform the work.
I remain a proponent of establishing a methodology for selection of the proper subcontractor and supplier, that includes the following;
- Reputation. Although an old fashion credential, a subcontractor’s reputation remains an important element of subcontractor selection. Understanding the current attitude that the price governs, I have challenged this concept with several contractors, as I attempt to instill some degree of professionalism with those I consult with. Unfortunately the price remains the principle factor in the selection of any subcontractor, much to my amazement. Reputation normally will indicate how the subcontractor will perform on the project. This is the reason that I remain confident that, overall, the reputation of the subcontractor is much more important than any monetary gain that a, mediocre of even bottom feeder sub may provide.
- Financial stability. Once again, years ago, we performed an investigative process to establish the financial stability of a subcontractor. By calling vendors, suppliers and other general contractors, we would attempt to determine the actual financial stability of a subcontractor. Understanding the basics of construction, no one wants to part with their money; we all understood that the owner would probably not honor the financial commitment portion of the contract and were reluctant to process subcontractor invoices on a timelier basis, than we were getting financed. Based upon this realistic interpretation of the business, the financial stability of the subcontractors that we had selected was an important element to the proper selection of that subcontractor. It is important that a subcontractor is capable of financing the project as it advances. If this is not the case, the project will lack the manpower as well as the material required to accommodate the project schedule.
- Manpower capabilities. The ability of a subcontractor to provide the number of capable men to perform the work was extremely important. Can the subcontractor find or employ the required men to perform the work, even if it was accelerated? These questions were extremely important to the selection of a subcontractor for the work. The subcontractor should prove to you that they have the resources to provide all of the manpower that will ever be required to perform the work. If they cannot provide the references and the past history of exceptional manpower numbers to accommodate a schedule, the subcontractor should be reconsidered.
- Equipment status. We used to actually visit the yard of a prospective subcontractor to see what “iron “was in the yard. I laugh at the naivety of this position and concern, when considering the current attitude regarding subcontractors. In today’s environment, there is no concern over the equipment capabilities of the subcontractor. Why is that such a non-concern? Because the overall attitude and subcontractor response will be, no matter, we can always lease whatever we need. There is no pride in ownership anymore, and the identity of a subcontractor’s competence is no longer the “iron” that is parked in the yard. However, even with the attitude of “ we can always lease “ there is nothing more accommodating to generating momentum on a construction project than the ability to mobilize countless pieces of equipment to stimulate the project. When three loaders show up and start working, the concrete subcontractor has a tendency to take notice.
- Management capabilities. The management capabilities of the subcontractor were known by the industry. The majority of the construction industry would indicate that one subcontractor had a specific superintendent that everyone wanted. This is no longer the case and the individuals involved with the success of the subcontractor are merely names on the payroll. It is important that the subcontractor has reliable and permanent staff that has a reputation for getting the job done. This should be a very important consideration and should influence the hiring of the subcontractor.
- Professionalism. The professionalism of a subcontractor should be a major influence on selecting this subcontractor for the project. I have just attended a meeting that was focused on the lack of response regarding submittals, guarantees, as-builts, etc. that are required from subcontractors. I honestly sat there in amazement that this organization could not manage this issue. They were constantly awarding work to the same subcontractors that, repeatedly failed to conduct themselves in a professional manner. My answer to them was, do NOT continue to use the same subcontractors. Establish a reliable number of subcontractors and attempt to create the proper roster to win the game. A successful team incorporates the best players. This must be considered when selecting a subcontractor.
The hiring of subcontractors has become an analytical game, which selects the lowest of the low. This decision to base the selection of a subcontractor on nothing but a financial incentive hurts the overall construction industry. However, I have seen this tendency in my current consulting career and need to identify the negative issues and problems that this type of selection process will incur.
- As I have indicated in several webpages of this site, the financial aspects of the construction industry has overtaken the honest and professional evaluation of the selection of subcontractors for a project. Unfortunately all that matters is money. The cheaper the better.
This attitude will create an extremely contentious environment and will only stimulate lawsuits and change orders on the project.
- If there is any financial stress, such as the owner lack of payment, the subcontractor will fold their tent and abandon the project. This is of no value to anyone. The hiring of the improper subcontractor will never support the requirements of the project, and will only cause difficulties.
- There is NO possible way that the hiring of the improper subcontractor will support the inherently difficult and important schedules demanded by the current set of developers and owners. It is mandatory that the proper professional subcontractors be hired to perform the work. Unfortunately, with the owners and developers demanding the lowest value and the shortest project schedule, only difficulties will incur.
- In most cases the lowest priced subcontractor that does not have the reputation or the substance to perform the work, will normally run away with the first or second payment. This subcontractor is essentially, looking for the first or second check to bank and leave the project. They will come up with all the reasons why you led them astray and they will attempt to blame others for their limitations.
Unfortunately the hiring of the proper subcontractors has been reduced to the need for the lowest price and the promise of misguided schedules. Again, as I have indicated throughout this website, you do not get something for nothing, and the attempt to reduce the legitimate cost of a project by hiring the wrong subcontractors will only cause difficulties in the future.
It is important that the subcontractor is as dedicated to the project as you are, and this requirement should never be compromised!