Hiring Subcontractors: 7 Steps to Forming Partnerships

Hiring subcontractors to perform specific tasks can prove an effective strategy for overstretched prime contractors to expand their capabilities, take on larger projects, and complete hiring client projects more efficiently. 

However, there are several factors to consider when hiring subcontractors, such as quality, reliability, and holding the necessary credentials. General contractors looking to expand their workforce through this strategy should understand and prioritize these factors throughout the selection process. 

This article outlines seven steps all prime contractors should consider when hiring subcontractors.

7 Strategies for Hiring Subcontractors

Seven strategies general contractors should consider to protect themselves and the hiring client are as follows:

1. Research and Contact Candidates

The first step in hiring subcontractors is conducting independent research on potential candidates in the immediate regions, including reviewing testimonials from previous customers. General contractors should also consider posting job listings on social networking platforms with a detailed project description (as discussed below).

2. Define Project Requirements

After identifying qualified subcontractors, the general contractor should define the project requirements.  It is essential to be clear and detailed to ensure that all potential subcontractors understand the project’s scope.  As such, the general contractor should consider creating a project scope document detailing the description of the project, including the following:

• Objectives
• Quality standards
• Communication protocols
• Deliverables
• Timelines
• Budget

The general contractor should then address any questions or concerns from the subcontractor. An open dialogue may ensure the subcontractor can produce high-quality work and completely comprehend the project requirements.   

3. Verify Their Licensing

Checking a subcontractor’s credentials and licensure is the next step after researching and identifying an experienced subcontractor. If businesses and contractors don’t follow labor laws, several states have rules for independent contracting and can impose fines and other penalties. The hired subcontractor might work in an industry that mandates specific certifications, including the following:

• Licenses
• Training
• Experience

Before drafting a contract, the general contractor should request the subcontractor’s qualifications.

4. Verify Their Insurance

General contractors must check their subcontractor’s insurance policy because, if they do not confirm it is sufficient, their insurance may skyrocket, potentially causing a severe financial burden. Any potential incidents involving subcontractors should fall under general liability insurance. 

Those accidents might include, but are not limited to, the following:

• Property Damage: A subcontractor might damage a client’s property while working on a project. If this happens, their general liability insurance policy should cover the cost of repairs or replacement.

• Bodily Injury: If anyone on the site suffers a physical injury because of a subcontractor’s actions, a general liability insurance policy should cover medical expenses, legal fees, and other costs associated with the injury.

• Product Liability: Many projects involve creating or installing a product that may cause injury or damage. This policy should cover any resulting claims.

• Completed Operations: If a subcontractor’s work causes injury or damage after completing the project, their general liability insurance policy should cover any resulting claims.

5. Negotiate the Contract

Next, general contractors should draft a labor contract that spells out the terms and circumstances of the assignment and their temporary employment after you’ve ensured the subcontractor is qualified to work on your project.  

Contracts often include the following elements:

• Work hours
• Daily tasks and responsibilities
• Liability agreements
• Tax information
• Payment

Having these items in writing with the subcontractor’s signature is crucial to ensure they meet all legal requirements and safeguard the general contractor in case of a legal issue.

6. Implement Accountability Measures

Establishing accountability measures is typically the last step in hiring a subcontractor. These procedures help ensure that subcontractors adhere to the contract’s requirements for the project’s duration. 

General contractors should consider scheduling a weekly meeting with a representative from your subcontractor, sending out questionnaires, or choosing someone to compile daily reports. Regardless of the approach, however, it is critical that the subcontractor fully understands the requirements for accountability and always has a clear line of communication with the general contractor.

7. Establish a Positive Working Relationship

While hiring the right subcontractor and executing the right contract are critical to a successful engagement, so is establishing a good working relationship. The specific advantages of positive interactions include the following:

• Encouraging collaboration. A positive working relationship can promote collaboration, encouraging team members to address issues and concerns promptly and support a smoothly run project.

• Building trust. Trust is an essential factor in any working relationship. A positive working relationship with the subcontractor can help build trust and establish a sense of mutual respect, leading to a more productive and successful project outcome. 

• Improving communication. Communication is critical to any successful project. Having a positive working relationship with your subcontractor can improve communication and ensure that everyone is on the same page.

Finding the Best Subcontractors Requires the Best Solutions

Hiring subcontractors can be a fantastic way to support your hiring client and take on new projects without hiring more employees. However, it is essential to approach the hiring process strategically to find the right subcontractor for the hiring client’s project. 

This process should include following the abovementioned steps to increase the likelihood of a successful project outcome. With careful planning and attention to detail, hiring subcontractors can help your business grow and thrive.

The general contractor’s vetting and verification software significantly impacts their decision-making when hiring subcontractors. And while choosing the best possible team may appear challenging, we can partner with you to tailor a solution that best fits your hiring needs.