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Dealing With Subcontractors

Dealing-With-Subcontractors Landscape QS  - Dealing With Subcontractors

Dealing With Subcontractors

Over the last ten years or so, the approach of landscape contractors in the way they operate and manage their businesses has changed dramatically. Much of this change came about out of economic necessity: the recession demanded leaner businesses practices. For many, it was simply a matter of keeping spades in the ground.

During the boom times, businesses expanded at a rapid rate and operators found themselves having to make significant machinery and infrastructure purchases just to keep up with demand. These investments were - as time would tell - were often ill-considered, poorly planned and recklessly financed. As we have seen, a great many were caught with their pants down and exposed to unsympathetic banks.
With life now back within the industry, a lot of contractors are finding themselves rebuilding and restructuring their businesses and while things are most certainly improving, growth has been somewhat slow paced. The slow pace is giving contractors the opportunity to consider how best to manage and run their operations. Instead of hastily leaping on the next project like they did before the crash, contractors are looking back on the lessons learned. New leaner and more efficient systems are being implemented to ensure profitable business re-established.

A key component of this is proper use and management of sub-contractors.

The engagement of subcontracts provides specialised skills when required and provide a flexible solution to labour and additional machinery without being exposed to debt. It may not be cost effective to increase the size of full time staff because the workload in the industry is inconsistent due its very nature. While has been a common practice in the construction industry since the beginning of time due to the complexity of construction projects, it is only now starting to creep into the landscape industry.

PROCUREMENT

In order to have a symbiotic working relationship with subcontractors it’s important to have a management all aspects of their involvement correctly. Like your own operation, a business is only as good as its employees. Your subcontractors will be the face of your business whenever they are on a project for one of your clients, so you need to hire the best available. Word of mouth has always been the primary method of getting business because it means satisfied customers think well enough of a company to commend it to others. The landscape industry is no different. Since the industry is relatively small, it shouldn’t be difficult to find subcontractors by asking about. It’s always good business never to have to rely on just one subcontractor. You should endeavour to build up a list of contractors that you could approach depending on the type, location etc. of the project you may need them to assist you with.

AGREE THE NUMBER

The next area to manage is the price for the works. The best way to avoid conflict in this area is for a subcontractor to give you an estimate to you before you give the overall price to your Client. You will have to add on your own attendances and profit before you revert to the Client. To get an accurate cost and reduce the risk of a dispute down the line, give each contractor under consideration exactly what the project will entail by giving them as much information that is available to you. Bring them to the site and show them the situation on the ground. Items like access, parking, storage of materials etc. are never fully explained on a drawing but can have a bearing on cost and timeframes. As a main contractor you should be prepared to pay a fair rate for doing the job. Of course you can negotiate a deal but if you end up getting one over on the subcontractor, friction and disputes will more than likely occur over the course of the project. You will also narrowing your pool of subcontractors the next time you require one. You can also run the risk of the subcontractor just cutting his losses and not turning up to finish off the job. This can have a long lasting effect on your business as it may harm your reputation.

CONTRACTS

Once you have been successfully appointed to a project, and in turn engaged a subcontractor,  it is important you get them to sign up to a subcontract agreement. Unfortunately the day of the handshake is gone. Unfortunately, far too often dealings with subcontractors are handled informally and, as a result, may even end up exposing the contractor to significant liabilities, be it financially or otherwise. An effective contract with a subcontractor can save contractors a tremendous amount of time, money and frustration. These agreements can be as simple or as complicated as you want to make them but the three key issues that I always recommend to include are insurances and the indemnification of the main contractor, project timeframes and deadlines and lastly payments. There are a whole host of additional items which can be incorporated but I believe these to be the three most critical to undertaking a successful project with subcontractors.

COMMUNICATION

Once you have everyone signed on you need to make sure all parties involved in the project know how you want the site run and the standard of quality you require. This doesn’t just apply to subcontractors but also to your own employees. Everybody on the site should be clear what their role is and what is expected of them. Don’t just assume subcontractors know exactly what to do the first day they turn up. You need to set the early standard in term of quality and also indeed general rules on the site. Setting simple rules can keep the project running smoothly. Simple things like instructing your subcontractor not starting a consaw at seven o’ clock in the morning with the intention of annoying the neighbours or parking in only permitted areas.

WHAT TO EXPECT

It is also important to set a high standard of workmanship from your subcontractors. If you don’t have any previous experience with the contractor the first project together may take up more resources until you get used to their approach to undertaking the work and build up some trust. You might have to literally hold their hand for the early part of the job until everybody is on the same page. On a recent project I was involved in a sample area of paving was laid down to the approval of the main contractor and Client. This one square meter became the benchmark for the remaining four hundred square meters of the project. It took the subcontractor a number of attempts to get the jointing approved on the paving but it was time well spent for all parties.

Regular communication leads to better project outcomes too. It can be important when you have subcontractors employed as they need to be aware of your activities too. You might need to have one area of the site cleared for the storage of plants and trees but your subcontractor wasn’t told that and has stored the paving here. Often main contractors will organise all the required materials with the subcontractor providing the labour. If the materials runout on site, it is a meaningless waste of valuable resources if the job is stalled on site and you have a few lads sitting around the site staring into their phones while waiting for the next delivery to arrive. Sit down with your subcontractor and create a plan of action.

PAYMENTS

The old saying treat others as you would like to be treated diffidently applies to subcontractors. Treat your subcontractor as you would like to be treated, and by this I mean pay subcontractor on time. I think the most important thing about paying your subcontractors on time is that it creates trusting relationships. Subcontractors who are treated fairly, paid on time are usually more responsive and more obliging and willing to help you out on the next project.

As part of this, an agreed payment schedule should be written down and agreed upon. This may require the subcontractor to give you a cash flow forecast to tie into your own. Once everyone has a good idea of what they will be paid and when it can benefit both parties. This in turn focuses your own mind on getting paid from the Client on time too. 

THE WAY FORWARD

The current shortage of skilled labour is another reason why contractors should look to working with other contractors. I work with a number of contractors who specialise in paving. They inevitably have projects which require soft landscaping. Many of these contractors are quite willing to bring in another contractor, who has little interest in paving, to carry out the soft landscaping on their behalf. It benefits both contractors as both are working in their areas of expertise. While this approach may not suit all contractors I am of the opinion that all contractors would benefit in some way from the use of subcontractors.