Many General Contractors (Main Contractors) probably aren’t concerned whether their subcontractors make or lose money on their construction project. Why should it impact them? It would after all seem to be an anomaly, because if a subcontractor is making money it’s probably at the project’s expense? But no!
In fact some GC’s make a habit of squeezing their subcontractors so they can be more profitable.
Why it’s helpful when your subcontractor is profitable
A subcontractor who is profitable is usually a happy subcontractor, and a happy subcontractor is:
So why do subcontractors lose money and how can you assist them?
Many smaller subcontractors aren’t astute as they should be, or don’t have the management skills and knowledge that they should. Some subcontractors are working on a number of projects at one time, trying to share their time and resources between their different projects and clients. They often don’t have the money for a large number of supervisors or project managers. Some General Contractors are happy to let their subcontractors bumble on, only taking action when there’s a major problem. I however, prefer managing my subcontractors and providing help and guidance when needed.
How you can help your subcontractors?
When your subcontractor is in trouble
However some subcontractors will never make money on a project, due to their incompetence, or a contract price that is too low. I certainly don’t advocate you pay them money which isn’t due to them. Still, it’s important the Project Manager is aware of problems a subcontractor may have, particularly if they are losing money on the project, and takes mitigating actions, for example:
Construction requires teamwork. Often subcontractors are vital to the success of a project. A delay or poor quality caused by a subcontractor usually impacts the project as a whole and negatively impacts the General Contractor’s reputation. Proper selection of subcontractors including correctly adjudicating their quotation will help minimise problems. Managing subcontractors properly is essential.
Other similar articles by the author
Understanding what impacts your company’s reputation
Did you make a difference on your project today?
Choosing a subcontractor
(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)
© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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