By: Conley Smith on November 16th, 2018
How to Build Strong Subcontractor-General Contractor Relationship
General contractors and subcontractors are facing a mixed bag these days. On the one hand, they’re experiencing strong, even record demand with backlogs averaging over nine months. But the volatile nature of rising material prices, fueled by tariffs and trade tensions, has dampened some of this enthusiasm.
Add in a nagging labor shortage and you’ve got a recipe for a stretched thin construction industry. Sure, working lean can reduce expenses, but it can also cause unexpected delays when trade subcontractors run low on experienced workers and projects come to a screeching halt.
Building Strong GC-Sub Relationships
In this highly competitive market, strong GC-subcontractor relationships have never been more critical. As subcontractors are facing mounting pressure to deliver more for less, they must walk a tightrope with their profits being squeezed between the margins.
All of this begs the question: how can a subcontractor of any trade—walls and ceilings or concrete—position themselves when it comes down to not just being the lowest bidder, but the best bidder? Beyond the win, what needs to happen so they can win repeat business from a general contractor (GC). No subcontractor wants to be viewed as a GC’s worst nightmare because they failed to deliver the work or information was miscommunicated. All of these answers are critical when the price isn’t the only determining factor in a winning bid.
Making the Shortlist With Financial Stability
Responsiveness, a positive attitude, and a sense of teamwork are all traits a GC appreciates when they turn to subcontractors for their trade expertise. GCs will also look at past performance, financials, equipment, safety, comparable projects, and project cost and payment terms.
Subcontractors should keep in mind that GCs are seeking stability since subcontractors must incur much of the cost as they will be reimbursed later. When it comes to fronting millions of dollars in expenses and labor costs, cash flow issues can have a life-or-death impact for subcontractors and negatively impact a project completion.
As part of their qualifying indicators, subcontractors should be able to show they are stable and qualified to do the work with the required licenses and insurance. Showing the GC they can incur these costs are a big part of this process. For example, if the subcontractor fails to estimate costs correctly, a project could fall behind schedule.
Understanding Project Scope
Building a long-term relationship with a GC is an ongoing process. One way to accomplish this is by submitting a final bid that reflects a thorough knowledge of project scope. Describing a project in detail and explaining their approach can help a subcontractor showcase their knowledge and trade specialty. It’s crucial their final estimate provides a level of detail that is not often communicated to a GC. For example, a subcontractor could build trust by providing a color-coded digital quantity takeoff.
When a subcontractor can itemize scope and quickly present varying price scenarios, it will further demonstrate their understanding of the project. The most efficient way to handle ad hoc requests on a project is by leveraging automation that separates the bid into areas and/or phases. By using dynamic reporting, a subcontractor can show bid detail and summary by selected area so they can respond quickly and accurately to the GC.
Standing Out from the Pack
As noted, general contractors review a whole range of issues when qualifying subcontractors—from their safety plans to their available equipment, including their ability to maintain and fuel that equipment. It may seem difficult for a subcontractor to stand out from the pack if they’re busy checking all the boxes.
Of course, the goal for any subcontractor is to build strong relationships with GCs so they can reap the rewards of repeat business. One way to get on this path is by using past projects and references to their maximum impact in the qualifying process.
Typically, subcontractors will be required to reference similar projects, in size and scope. Subcontractors should list similar projects completed with scope, schedule, budget, man-hours worked, and any special considerations that were part of the project.
When it comes to references, subcontractors should include references they know will be willing to speak in-depth about their performance. They should also be sure to include the contact’s role and pertinent project details.
Going Above and Beyond for Future Business
One of the best ways for a subcontractor to expand their GC client base is by making sure they go above and beyond the bare minimum required once they win a project. Showing the GC they care about winning future business is important. The best way to grow the subcontractor’s clientele is to improve customer relations.
One way to win over GCs is by avoiding conflicts through strong communication. Identifying and raising issues to the GC should be done as swiftly as possible. No doubt, changes on a project are to be expected, but ensuring timely and effective communication is key.
Let’s face it, no subcontractor wants to miss a critical project update email, or a change order that was incorrectly routed, or have the latest versions of plans and specs lost or ignored. This can lead to delays, significant cost increases, conflicts, rework, and even legal issues.
Winning Repeat Business
What general contractors are looking for in subcontractors isn't rocket science. Subcontractors should be experts in their trade, have a great reputation, and perform quality work. Even with a solid safety track record and strong financials, GCs often prefer subcontractors who don’t leave behind a mess or create more noise than necessary on the jobsite. Keeping on top of suppliers and handling all delivery issues is also optimal so a project schedule isn’t adversely impacted.
Remember, once they win the bid, subcontractors who know they are auditioning for their next job will likely find more success. For most subcontractors, the goal is to position themselves as an asset to the general contractor to ensure a healthy project backlog. By establishing their value post-bid, they can elevate themselves in the eyes of any general contractor.
Need help finding, prioritizing, and winning the right work for your construction business? ConstructConnect can help. Learn more and connect with more than 1,500 GCs now.
Conley Smith is a senior business writer with ConstructConnect. She has been writing about technology and its impact on business for more than 15 years.