Hiring Subcontractors / Meeting Notes June 2016

At our Hamilton meeting in June 2016, we talked about hiring subcontractors, including such questions as:

• Do you hire subcontractors?
• Where do you find them?
• How do you screen them?
• Is it for long-term or short-term work?
• Do they sign a contract?
• Do you tell your clients?
• What are the advantages and disadvantages?

Where to find them:

Approach other GHVA members or members of other associations you belong to – in other words, people you know, like and trust. If you don’t know anyone with the required skills, ask others for their recommendations.

If you need to post an RFP, be prepared to spend a lot of time screening proposals and interviewing potential subcontractors before making a decision. If it’s for a standalone project, you might be better off referring it out than spending a lot of time on this process.

Contracts:

Contracts should cover terms of payment (amount, by the hour or by the task, billing monthly or at the end of the project), confidentiality, and non-compete clauses.

Income:

What you pay your subcontractor(s) may or may not be directly related to what your clients pay you, and your subcontractors don’t need to know how much you’re making on the transaction.

Your profit (difference between what you collect and what you pay out) may vary depending on the type of work being performed and whether it’s a short-term project or an ongoing relationship.

Client Communication:

You can choose whether your subcontractors deal directly with your clients or whether everything goes through you. If you only have one or two subcontractors, you might want to be the main contact and project manager, but if you have a team, it’s probably more practical to let the clients and subcontractors communicate directly.

You should let your clients know that work may be subcontracted, even if they only communicate with you.

Advantages:

Keep work in house rather than referring it out, thereby increasing your income and ensuring client loyalty. This applies whether you’re experiencing a heavy workload and can’t do it all yourself, or whether you don’t have all the skills needed to complete a particular project.

Disadvantages:

You are responsible for all work performed by your business, whether you complete it personally or not. This might mean that you have to spend time checking your subcontractor’s work, so you need to weigh this against the time it will take you to do it yourself.

It might also mean that sometimes you have to take a loss, if for example errors arise because you didn’t give clear instructions to your subcontractor and corrections are needed. You can’t expect the client to pay for the extra work nor can you expect the subcontractor to fix your mistakes for free.

If you’ve hired subcontractors, or worked as a subcontractor, please feel free to add to these recommendations!

Photo © fizkes / depositphotos