What Leaders Should Know About Subcontracting

I will let you in on a little secret; most construction companies do not do it all independently. Often when a construction company is hired for a large project, they will bring in subcontractors. Subcontracting is when the leading company, i.e., the contractor, hires an outside firm to do a specialized task that cannot be performed or is not worth performing by the primary company. A subcontractor does not mean hired labor but an individual or company with a specialized skill set. Subcontracting often occurs in large projects that require a multitude of services.

Mutual benefit

A proper contractor-subcontractor relationship benefits both sides and the hirer of the contractor. The contractor can complete the project due to the subcontractor's work. The contractor can also focus on their specialties rather than taking on another type of service in which they are currently not specialized. Generally, it is cheaper for a contractor to hire a subcontractor than an employee since the contractor does not need to pay workers' compensation or the like for the subcontractor. The subcontractor gets a job due to the contractor. At the same time, the person hiring the contractor benefits. They only need to worry about working with one company while at the same time having all aspects of their project completed. Overall, subcontracting can be an excellent option for all parties involved in many circumstances.

Understanding the agreement

A strong understanding of subcontracting can give a better idea of whether it suits a specific project. The first important thing to understand is that the subcontractor does not have an agreement with the property owner but only with the contractor. The subcontractor and contractor may sign a written subcontractor agreement. This helps to solidify the subcontracting details and ensures the protection of both parties involved. Additionally, even though the subcontractor does not have a direct deal with the property owner, the subcontractor may still be subject to provisions in the agreement between the contractor and the property owner.

Examples of Subcontractors?

There are many examples of specialized tasks that a contractor may hire a subcontractor to complete. Two of the most well-known examples of a task often subcontracted are electrical work and plumbing. Construction companies usually hire outside companies that specifically do one of these two tasks since they require a particular skill set. Some other examples include concrete, plastering, carpentry, and roof work.?

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