Weighing the Pros and Cons of Subcontracting
The construction and contracting industry is one of serious ups and downs. Business surges, then falls off sharply. Many businesses can’t afford to maintain a large enough staff for those busy times through the lean months. Rather than deal with constant hiring and layoffs, many contracting companies choose to maintain a solid basic staff while employing the services of subcontractors when they need to boost their efforts. As with any business decision, there are benefits and drawbacks to this approach. In this article, learn a bit about the pros and cons of subcontracting in the construction industry.
Using subcontractors can increase your productivity vastly. It allows you to have more hands on deck right when you need them, and usually a subcontractor is a specialist in their area of work, meaning they’ll add an extra expert point of view.
Broad Access to Skills
Subcontracting allows you to diversify the skills you have on your crew. You can call upon exactly the people you need for the specific job at hand. This is especially useful for contractors who handle a wide range of jobs. You may only handle welding on occasion, for example, so when a job with this need comes up, you bring in an outside welder to help out.
Efficiency and Flexibility
Using an outside worker to handle occasional or specialized tasks allows you to maintain flexibility and efficiency in your operations. You’ve always got just the right person on board for the task at hand, and that person will be able to handle the task quickly and with precision. This makes you supremely adaptable, while still being able to provide quality service.
With a subcontractor, you’re hiring someone as a consultant or self-employed worker. This means you don’t have to pay employment taxes, which can save you a lot of money every year when the tax man comes knocking!
On the down side, you will have to spend a lot more time and effort communicating with a subcontractor than with one of your in-house workers. There will be more questions, more follow-up on progress, more time being spent on educating them on policies and safety procedures.
More Advance Planning
You will have to spend more time planning for your job. When you are using outside workers, you’ll have to take stock of who and what you’ll need for the job and put out a call for the temporary worker. You can’t just assign your guys to the job and go.
Most subcontractors provide expert work at a high level of efficiency, but there is always a risk, particularly when working with someone you’ve never dealt with before. Eventually you will build a pool of reliable and trustworthy consultants, but you may have to go through some rough relationships first. Your favored contractor may also not always be available for the job when you need them, forcing you to find someone else.
Despite the potential pitfalls, many construction companies work with subcontractors every day. You need to understand all of the pros and cons of subcontracting, make sure you have all the proper liability coverage for your business and decide if doing so is right for you.