If you are a result-driven contractor that has a goal to scale up the construction business, the necessity of subcontracting is only a question of time. Hiring subcontractors is a must if you undertake several orders at once. Only imagine how you can increase your profit margins with individual specialists attracted on a project-to-project basis.
That is why one of the win-win approaches most present-day contractors count on together with other strategies like implementing communication apps, automation tools, and project bidding software is subcontracting. This tendency becomes more and more widespread among construction market players of any size. For example, both large-scale building companies and medium-size contractors in the local markets can hire subs for their orders.
Is It Reasonable to Practice Subcontracting?
It is worth noting that subcontracting obtains numerous benefits for contractors. But you should remember that this practice is not lacking in weak spots as well. That is why we recommend taking a closer look at all the pros and cons of subcontracting at once. This way you will understand if it is reasonable to hire individual specialists and attract narrow-direction experts.
Most contractors adore subcontracting for zero taxes and compensations to be paid. You do not hire a new team member with sick leaves and paid days offs when state holidays take place. It is convenient for most businessmen in the construction sector to practice subcontracting for this reason. Additionally, there are other benefits to take into account:
- Fewer legal obligations. You have fewer responsibilities when it comes to law liabilities and any other legal background.
- Zero taxes to withhold. The same story as other payments do. If you hire a self-employed person, you save some money on various paychecks.
- Improved quality of the undertaken tasks. As you attract a competent specialist, it goes without saying that the qualified expert brings new-level expertise to the site.
- Exceptional skills to focus on. You can save some time and money for onboarding if you hire an experienced specialist. This person can teach your on-site workers new hacks, tactics, etc.
- Increased productivity and no failed deadlines. Subcontracting is about sped-up on-site processes and the decreased risks to have challenges with scheduling.
Every contractor will find more and more advantages personally for his/her business. As can be seen, subcontracting brings many positive aspects at once. But there are still general contractors who dislike the practice of “subbing out”. For this category of GCs, subs are only about extra spending, time-wasting, and headache.
As you do not pay taxes and compensations to hired workers on a project-to-project basis, be ready for higher per-hour rates. It is well-understandable practice when subs get more than workers in the team. It can be explained with the higher competence of this specialist you attract for some projects. Additionally, you have saved some amount on sick leaves and other bonuses your staff obtains.
Speaking about other pitfalls and weak spots related to subcontracting, they are:
- You can face workers who demonstrate less commitment to your projects and construction business at all.
- Your team members in comparison with subs are more motivated and are ready for long runs.
- Some onboarding challenges can take place. For example, your team members can know well about some rules and corporate policies.
- Your self-employed narrow-direction specialists can lack training, and some organizational, and management insights.
Additionally, you can face some misunderstandings when your plumbers realize that some hired workers in the same position get higher per-hour rates. You need to think of all these arrangements and explanations beforehand.
What Are Benefits for Subcontractors to Practice This Type of Cooperation
We took a closer look at the benefits of subcontracting from the side of contractors. It is reasonable to analyze all the pros of this type of cooperation for subs. If you are interested in subcontracting, you need to take into consideration that such a format of contracting will turn into a rather beneficial professional experience.
First, you are able to get higher per-hour payments. Additionally, you can decide on the schedule yourself. The only requirement is to meet the deadlines of the project. One more benefit is your increased experience with more and more recommendations from the general contractors.