In-House Personnel or Subcontractors?

Some remodeling companies have in-house field staff who do a lot of their work, such as carpentry, electrical work, plumbing, drywall, and paint. Other companies use a mix of subcontractors and in-house personnel, such as a lead carpenter and helper. And some prefer to use all subcontractors and manage them with supervisors and project managers. 

There are advantages to each of these scenarios, and typically, whichever method is used, is declared to be the best for the client. There is no best way; there is only the way you choose to run your company, and what works for your market. 


Subcontractor Agreement HandshakeIf you use subcontractors…

Whether you use one subcontractor or twenty, you have to have regulations in place to protect your company and to instruct the subcontractor of your expectations when they work for you. I call this a Subcontractor Agreement. 

Each subcontractor that you work with should sign this agreement. I suggest that you have them sign a new one each year. This is due to changes in your Subcontractor Agreement; changes to legislation and insurance laws, and flaws/loopholes/improvements you would like to modify in your agreement. 

I also suggest a condensed version be included in all RFQ’s and WO’s. This reinforces the agreement and allows you to review it with whichever subcontractor employee that comes on the job site. Each WO is signed and further binds them to abide by your regulations. 


What to include in a Subcontractor Agreement

Here is a checklist of items you might consider including in your Subcontractor Agreement:

  • Check-in/Check-out – Hours you usually work, and the days you normally work. It’s no good when a sub shows up unexpectedly on Saturday or Sunday to do his work. 
  • Permits – Whose responsible for pulling permits. Is it included in the RFQ amount agreed upon?
  • Licenses – They must have the required license. Put a copy of the license in the  subcontractor’s folder.
  • Insurance – They must have the required insurance, such as General Liability and Worker’s Compensation. Note expiration and set an alert for expiration date.
  • Talking to clients – Swapping tales and gossiping with clients should be discouraged. Let them know that they should stick to business, and never discuss your company or their company business. 
  • Accepting food – What you expect – accept food or coffee?
  • Conflict of  interest/competition – This is basically a non-compete clause. Moonlighting should be prohibited. Moonlighting creates liabilities even though they aren’t working for you. The courts will have a different view. A botched moonlighting job, done without your sterling standards, will reflect on you, like it or not. Lay down the law – no working for a client without your permission (no time limit). This works well for various reasons. 
  • Smoking/chewing tobacco – You decide
  • Dress code – Define your expectations and name the type of dress, or lack of, that you will or won’t allow
  • Payment schedule – How soon can they be paid and what needs to be completed and submitted in order to be paid
  • Alcohol or illegal drugs – Be firm and clear
  • Client’s property – Respect for the client’s property clause
  • Radios and earphones – Will you allow them and under what conditions?
  • Fighting, Language and  Loitering – Make this very clear. Don’t be subtle. 
  • Materials and labor – What will they supply and what you will provide, e.g., you supply garbage cans, etc. They supply all materials required to perform their WO agreement. 
  • Change Orders – How they should be handled. Can they make a Change Order?  Who can? Define the Change Order process. 
  • Schedules – Very important. This should stand out. Without proper scheduling and work performed on time, the project and your clients will suffer. Tell them how you will update them, how much notice they will get, and the consequences of delaying the project.
  • Clean-up – State your clean-up standards. Don’t just say, “Clean-up each day”.
  • Safety Standards – Another very important point. Worker’s Compensation claims can drain the piggy bank and create a lot of financial stress. Tell them what you expect and don’t deviate. A safe job will keep everyone happy and out of court. 
  • Warranty – What you expect them to warrant and for how long.


A good Subcontractor Agreement means peace of mind

Go over your Subcontractor Agreement and see if there is anything from the list above that you need to add or if there is something you need to modify. A well written Subcontractor Agreement will serve you well year after year. 

Wishing you the best of fortune, Randall

Randall S Soules

Remodeling coach, adviser, and educator

My one-on-one coaching will take your remodeling business to new heights!

This article was written by Randall Soules, creator of the Scientific Remodeling System, showing you easier ways to advance your business, raise your profits, and improve your life, through the use of superior  remodeling processes. If you would like to learn more about this eCourse, click here.

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