5 Keys to Trade Contractor Management

by bkrigbaum@solagroup.com

When city or state ordinances don’t allow a remodeler to do skilled trade work, like plumbing or electrical unless they are a licensed electrician or plumber, it becomes necessary to get a trade contractor. Whether they’re on staff or the work is subcontracted out, it’s important to know the keys to managing these assets to the company.

1. Hiring vs. Subcontracting
There are advantages on both sides of the issue of whether to hire a tradesman to operate in-house or subcontract out the work. Sometimes for a larger company, it’s cheaper to put a tradesman on the payroll and pay them a salary. Having a dedicated plumber on staff means having someone ready to work, but in order to do that, there has to be work for them to do, or they’re just being paid to sit around.

For a smaller remodeler, subbing the work out eliminates some wages and taxes. They’re paying a subcontractor to do a certain job at a certain price instead of having the payroll expense bogging down the company when there’s no work for the tradesman.

“I have a smaller company and I tend to have a couple of each of the trade contractors on hand that I’ve done business with in the past,” explains Michael Hydeck, MCR, CKBR, president of Hydeck Design Build Inc., Teldor, Pa., and president-elect of NARI national. “Henceforth, when I’ve got a job coming up if Sub A can’t handle it, then I go to Sub B. Since I’ve worked with both of them over the years, it’s not a matter of who can do the job better, it’s about who can come to the job when I need them.”

If a subcontractor is hired, it’s important to make sure to have a contract. The contract should include things like the scope of work to be done, payment procedures and establish change order procedures. It is also a good idea to require all subcontractors to have insurance, comply with all regulations and indemnify the builder and homeowners.

2. Shop around
Remember, first and foremost a remodeler is running a business and it’s important to strike a balance between quality and price. If a remodeler sticks to one trade contractor for years, they may not know the actualities of what a particular job costs in that field anymore. For example, if a remodeler keeps a roofer for 10 years and every year he’s been raising his rates, the remodeler may be paying a higher rate than average, never questioning it because of the high quality of the work.

3. Good working relationship
It’s important for a remodeler to have a good working relationship with their trade contractors. The tradesmen need to know that the remodeler is going to be responsible enough to take care of them when it comes time for a paycheck or paying their bill.

“I’ve heard so many horror stories from different people of doing work for a company and come two months later they still haven’t gotten paid,” says Hydeck. “In my business, I carry around a checkbook and when a guy is done on the job, I pay him right then and there. That gives me credibility to the trade contractors working for me and I know that when I call they’re going to come.”

4. Watch the work they’re doing
If working with a new trade contractor, it’s important to watch their work. Make sure they are doing the type of work customers expect. Staying attuned to that will help in building a good working relationship and strong reputation in the area.

5. Find a professional
“I would recommend that a remodeler work with a sub that is involved with a professional organization,” advises Hydeck. “Because we know that they’ve been vetted, they’re competent, they’re licensed, and they’re insured vs. picking someone cheaper off the street. We strive to make our industry and its people professional and one way to make that happen is by insisting on using professionals.”

Knowing how to appropriately manage trade contractors can help remodelers grow their business as well. If there are key tradesmen that they often use, a remodeler can usually partner with the trade contractors for business. As much as the plumber is a go-to guy for plumbing, the remodeler should be the go-to guy for carpentry or walls.

“For the roofer that goes in to repair a roof, but the walls have to be done first, he’s going to call me,” says Hydeck. “So I’m relying on them to send me business, just as I send them business.”

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