The Value of Subcontractors

05/18/2021

Successful commercial construction projects are not just a function of good general contractors, they also hinge on the many subcontractors that team with us to get the work done.  The value of our subcontracting partners is immense. Today, we discuss more about the role they play, and why we cannot do our work without them.

Experts in Their Trades

While we, as the general contractor, manage the entire project and must know the overall scope of each trade, the individual subcontractors are masters at their craft. They know how to accomplish their piece of the work more completely than anyone else on the site.

Each subcontracting trade helps inform many factors of the work on a construction project, including:

  • Time to complete their work
  • Exact cost of their work
  • Scope that must be coordinated with other trades
  • Trade permit requirements
  • Inspections required
  • Safety requirements
  • Ongoing maintenance requirements
  • Warranty options

The role of the general contractor includes maintaining oversight and quality control of the work; we must know that the subcontractor’s work was completed correctly, and accurately. The trades work alongside our site superintendents and project managers as a team to complete each project.  

Assistance with Preconstruction

Subcontractors are also relied on during the preconstruction process. We utilize their expertise to provide feedback on many items, such as:

  • Design considerations and/or full designs, particularly for mechanical, electrical, low voltage, fire protection and plumbing scopes
  • Identification of appropriate materials and associated lead times
  • Optimal scheduling timelines and manpower loading
  • Current pricing and anticipated escalation trends
  • Value engineering or target-value design options
  • Constructability reviews for individual components
  • Contributions to BIM modeling and clash detection
  • Early determination of Requests for Information submissions to get clarification from the architect

While we keep tabs on the market trends, our subcontracting partners assist in gathering detailed information with the most current pricing and lead times to contribute to our budgets and schedules.

Below are some real examples from past projects of items that subcontractors have helped to define:  

An owner needs 10 outlets and one television in their office with appropriate office lighting.
An electrician determines energy loads, electrical panel sizes, light fixture options, etc., to properly price and complete the work in a manner that meets or exceeds commercial building code.

An owner knows that they need a desk for their receptionist, but does not know what kind of material to use for the countertop. 
A casework contractor evaluates pricing options, lead times, and durability between plastic laminate, Corian, quartz, or other countertop materials.

An owner plans to install two restrooms in their office space. 
A plumber suggests how to properly upsize the sanitary line diameter so that the building has added capacity for more restrooms in the event that the building use changes, another tenant is added, etc. 

An owner is designing a new office space and wants to determine options to upgrade the interior.
A drywall contractor suggests using wrapped openings at the door frames for a more sophisticated finish. This leads to a discussion about door frames and types, including evaluations from the door supplier and a storefront contractor to define the most economical options to upgrade.

An owner knows that they want three private offices but hasn’t considered how the ceilings should tie into the walls. 
A framing and drywall contractor can help evaluate whether the ceilings should sit on top of the walls or pass through the ceiling grid to help with sound transfer, and determine the cost of each option. 

Contributions to Construction

Perlo self-performs several scopes of work, including concrete and miscellaneous carpentry items, and we rely on our subcontracting partners to complete most other trade items on our jobs. 

Perlo_Construction_Collaboration

Great subcontractors have the following characteristics:

  • They provide honest, accurate pricing for the work
  • They order materials in a timely manner and track them for delivery to the site
  • They follow the schedule of work and complete their items quickly, efficiently and accurately
  • They offer ways to improve the workflow, safety or quality of installations
  • They bill for their work in a timely manner and pay their suppliers and subcontractors on time
  • They take corrective action quickly, if necessary
  • They work to resolve conflicts in a manner that best needs the owner’s needs
  • They communicate clearly and often with the project teams

Whether a subcontractor can perform to these standards or not makes a big difference in how effective the general contractor can be in delivering the work on time and on budget. It is worth noting that these same standards apply to the general contractor and that by working as a team, both parties can deliver their work and complete projects as promised to the owner. 

How Subcontractors are Procured

In previous posts, we have discussed procurement strategies for general contractors and, for the most part, the same things apply to procurement of subcontractors.  However, while general contractors are quite often procured on a negotiated or prequalified basis, subcontractors are almost always subject to a hard bid before being awarded a project. How many subcontracting competitors are invited to bid on a project depends in part on how the general contractor was procured by the owner.

Subcontractors may be secured based via a multitude of procurement strategies:

  •  Lowest bid with a complete scope
  •  Billing rates for labor and fee above cost
  •  Target budget that subcontractor must meet
  •  Negotiated contract based on qualifications of subcontractor

If the general contractor is hard-bidding the work, the pool of subcontractors invited to bid may be quite large. Additionally, if the work is for a public project, rules require that the work be advertised publicly, so the pool of competitors is often even greater.

Alternatively, if the contractor was negotiated with the owner, the pool of subcontractors may be as few as three per trade. In these instances, the general contractor has more ability to pre-qualify the pool of subcontractors and focus on their abilities to complete the work, and evaluate their responsiveness, timeliness, and expertise before inviting them to bid. This can help ensure a high-value product is delivered.    

Recruitment and Mentorship of Subcontractors

With subcontractors holding such an important role in the work that we do, we work hard to both recruit and maintain a large pool of qualified subcontracting partners. In addition to the standard procurement strategies, Perlo employs both a full time Subcontractor Coordinator and Subcontractor Relations Manager that work to recruit and retain subcontractors for our sites. These individuals send out bid notices, help connect subcontractors to internal project managers and estimators, and mentor them on the projects that might best fit their skillset.

In addition to our standard procedures, we may employ several other strategies to ensure subcontractors all have an equal opportunity to bid our work. Some examples include:

  • Hosting subcontractor ‘open house’ opportunities to review the projects with Perlo team members.
  • Holding onsite walk-throughs to see existing spaces and review project requirements.
  • Announcing bid opportunities and attending minority group meetings such as:
    • OAME – Oregon Association of Minority Entrepreneurs
    • NAMC – National Association of Minority Contractors
    • PBDG – Professional Business Development Group
  • Mentoring subcontractors in the appropriate paperwork to submit billings, insurance or other forms to ensure timely payment when work is completed. 

Most importantly, we strive to work together with our subcontractors to create a team environment, where their success is our success, and our success is the owner’s success.

Subcontractor Appreciation & Final Thoughts

Great subcontractors contribute to smoothly running projects.  When each team member on our sites is contributing optimally to the work, surprises or changes to the scope can be dealt with quickly, efficiently and without conflict. Here at Perlo, we try to make sure our subcontractors know how much we appreciate their work.  They are an integral part of our team and help us deliver projects that owners and the community around them value. 

If you’re interested in working with us as a subcontracting partner, you can check out our open bid opportunities or fill out our subcontractor pre-qualification form by visiting our Plan Room.

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