Have you ever talked to someone involved in construction? If so, you know they can share endless stories about mishaps. That’s because the construction process - from pre-design to closeout – is fraught with risk. There are seemingly an infinite number of things that can go wrong.
One area of potential risk is subcontractors, or subs. General contractors often have a list of ‘go-to’ subs. They deliberately limit subs to those they have worked with previously. Bringing on new subs means having to vet them to ensure they meet the necessary qualifications.
Yet, expanding your certified subcontractor pool in your community also has advantages. Let’s consider them.
Loss of Certification
You completed the RFP, submitted the bid, and won the project. Great. As part of the bid, you had to meet specific federal, state, and local mandated utilization goals related to one or more of the following: MBE, WBE, DBE, SBE, UBE, and VBE.
No problem. You choose from the list of subs you’ve previously worked with who have the proper certifications.
However, companies can lose their certifications for a variety of reasons. As the general contractor, you may not realize your go-to subcontractor has lost their validation until after the bid is submitted, you’re in the middle of the job, or even until you’re awaiting final payment.
Then, you’re up the creek. Failure to comply can result in fines, penalties, loss of future opportunities, and a dent in your professional reputation.
Staying on top of your subs to ensure they maintain certification is a hassle. You can minimize the challenge by having a list of multiple contractors certified in whatever realm you may need. Future bids won’t be delayed. You can quickly reach out to other certified contractors you deem a good fit for your business.
Availability
Another area where expanding your existing lists of certified subs would be helpful is related to completing RFPs.
Completing RFPs is a necessary hassle that involves mounds of paperwork. The allotted time to complete the RFP is almost always insufficient. So, those responsible for completing the paperwork are in a rush.
You may figure your ‘go-to’ certified sub has the workforce available to handle the project. But what if they don’t? Or what if they can’t handle the project when the job begins?
While the sub surely values being viewed as the ‘go to,’ they can’t be expected to be constantly available. The sub needs to take on projects as they arise to ensure their own viability.
Understandable, but what is your workaround?
As the general contractor, you need to get that bid in (and begin the job) with a team that meets all the certification requirements. If you can’t meet the requirements, submitting the bid is pointless, even if you believe you’re the perfect candidate.
Having an up-to-date list of certified subs that you’re comfortable working with means you can easily pivot when you’re ‘go to’ isn’t available. You can confidently submit the bid and know and have a team you believe in who can complete the job. At that point, you will likely not have to spend hours looking for new subs, combing through outdated databases and calling companies that may no longer be in business.
Cost Control
Competition is one of capitalism’s bedrocks. It leads to improvements in efficiency and innovation and drives prices down.
Considering the average profit margin is approximately 6% for general contractors, though it can be as little as 2-3%, watching every dollar is urgent. The cost of having just one ‘go-to’ certified subcontractor can take a meaningful chunk out of project profitability.
Even if you’re getting the best price from your preferred subcontractor, you wouldn’t know if you don’t have multiple options to consider. Having multiple certified contractors on your CRM tool lets you consider options easily.
The ‘go to’ subcontractor may not give you the best price on every project. Perhaps they’re down in staff, swamped, or the job requires a specialty they don’t have. Also, why would the sub bother offering the lowest price they are guaranteed to win the bid?
Opening up the bidding to new contenders can give you peace of mind, knowing you’ve done what you could to protect profits.
Expand Your Comfort Zone
Remember Linus, the Peanuts character who always carries his blanket? The lovable character appreciates the stability and comfort that his blanket brings him.
But in the workplace, avoiding your "comfort zone" can increase creativity. If you always work with the same team, you’ll likely rely on the same solutions.
Working with a variety of certified subcontractors gives you a window into how each one approaches challenges/situations. Different collaborations can spark new alternative approaches. The new approach may be more efficient, cost-effective, or safer. The success can enhance employee retention, save money, and improve productivity.
Now that you’re familiar with the many benefits of growing your list of certified subcontractors, and how it can lead to growth opportunities, you still might be wondering how to manage the time-consuming task of finding new subs.
Let Tough Leaf help you find certified subcontractors and win more bids. Reach out and get a demo.