Employees Or Sub-Contractors?

 
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Old 03-08-2011, 06:50 PM   #1
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Employees Or Sub-Contractors?


Im a General Contractor whom has two employees (journeyman carpenters) who are good with concrete and framing. Currently, we sub out everything else. I will always sub out the mechanical work, but am curious to know what everyones take is on having an employee or sub-contractor take care of all the finishing work (drywall, taping, painting, flooring etc)?

I find I have great effieceincy with my two employees, but not as much with the sub contractors!

Id like to know what everyone else does, and why or why it doesnt work?

Thanks!

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Old 03-08-2011, 07:04 PM   #2
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Re: Employees Or Sub-Contractors?


It all depends how big you want to get.

When I did remodel, we did most in house. Get a framer/finisher, electrician, plumber, and a mix of the others. The trades do their own thing and help the others out as laborers. Some guys are competent at more than one trade, others aren't. Generally the Framing, trim, drywall, roofing, and concrete have some crossover between them. The guys won't be as fast as guys who do one thing every day but you offset that with much easier scheduling and better control.

When you get to large projects (complete houses) go with subs. At that point the efficiency of dedicated trades outweighs the other factors.

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Old 03-08-2011, 07:08 PM   #3
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Re: Employees Or Sub-Contractors?


Thanks Thom, just curious why you dont do that with spec building?
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Old 03-08-2011, 07:15 PM   #4
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Re: Employees Or Sub-Contractors?


I can see keeping trim and flooring in-house, but I can't imagine it'd be cost-effective to have your carpenters doing drywall and paint. Unless you're only doing one job at a time and don't have anything pushing your schedule (like financing), it's hard to beat being able to bring in a crew of 5 guys who do nothing but drywall all day every day.
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Old 03-08-2011, 07:32 PM   #5
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Re: Employees Or Sub-Contractors?


I have 8 men, and we complete all carpentry and concrete work in house. Our focus is commercial TI's and industrial and retail maintenance & renovation.

We know how to do many, many things, but are only fast at a few things. I do not go in and production frame developments, and our customers know that.

They also know that they can call on us to weld, frame, rock, demo, pour concrete, set speed rails or bollards, install trim & general millwork, lay tile, repair/replace AC/ACT, caulk, set and repair cash wraps, set and repair doors/frames/hardware and come up with one of a kind solutions to one of a kind problems. Among a whole bunch of other things.

Over 30 years in business we have done such a wide array projects that we've encountered just about every problem you can imagine. Were NOT speed demons, never have been, never will be. Were the guys you call when you've gotta PITA project that the other guys that DO rely on production won't touch. We spent 8 years doing massive demo and concrete, 10 years doing restaurant renovation & maintenance, 12 years doing industrial construction & maintenance, 6 years working in hospitals and assisted living facilities, 20 years doing commercial TI's. Having said that, it's been over 10 years since our last large pour, so I wouldn't attempt to complete that anymore. I'm tearing it out and forming it, than I'm calling my concrete guy. We haven't renovated a restaurant in 11 years, so no I'm not tiling those floors anymore. I'm calling my tile guy. You get the point.

Were not the guys you call to 1500 sheets of 4x12 5/8" rock in a week. Before I merged my organization, I was the guy to call for that. I was a division 09 contractor, and I did what the GC's couldn't do due to the size of the project.

Thom is absolutely 100% correct in all of his words. I make my decision on a project by project basis, depending on schedule, size and complexity. We almost always do the demo-finish, and leave the MEP's and flooring to the men that do it best. If I'm slow however, or a special circumstance, we'll do it. Example would be a corporate office reno before Christmas. The tile floor had to be laid while they were still in operation, and walking everywhere. My tile guy wouldn't wanna touch that, as theirs no money to be made because of the lack of production that could be completed. Enter: us. However, just because we CAN do something, doesn't mean we do.

I am a proponent of having an in house carpentry crew. I like having the extra quality control, scheduling benefits, CO's completed quickly and confidence that if I got deathly ill tomorrow I won't have to worry about anything going wrong, as my guys can continue on. In my personal business, it's also needed when KOHL's or UPS call @ 3am to say a truck just ran into the building and they need us there to shore it up and make it safe.

I'm rambling, but what it comes down to is what YOU want YOUR business to be. Do you want to be a construction manager, or a general contractor? Do you want to be able to call someone @ 12:30 and say "I need you here" or do you want to say "Let me set up a crew to complete this another time".

The other, and major issue is, do you have the work to sustain a crew? IMO, when you take on an employee, you take on a responsibility to see that they have work, just like they have a responsibility to show up and give you 8 quality hours, and more when needed. It's not fair to the employee, and really the employer, to take on someone you can't keep busy damn near 40 hours a week, every single week. Do you want to have to spend payroll to have them work at your house if you don't have work?

These are the questions that have to be asked when considering this. Never mind the WC, unemployment, payroll taxes, extra vehicle and phone payments if you so choose to provide them, etc.

In smaller work, an in house crew is more beneficial than the guy doing 2-4 builds at a time.
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Old 03-08-2011, 08:32 PM   #6
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Re: Employees Or Sub-Contractors?


The problem we have with subs who are used to production is that they aren't creative. Subs are fast, but not well rounded enough to fix simple solutions, or their solutions aren't the best given the situation.

We have to have a couple full time carps on site just to keep a project running efficiently. After a while everyone is pointing fingers.....If we left everything up to subs the project wouldn't be right....not even close.........

We sub mechanicals, insulation, DW and Painting.........Everything else is in house. We pull our hair out keeping a project on track and under budget.

If the sub isn't doing the work him/herself after a walk through we end up babysitting because the scope of work is lost in translation....."well my boss didn't tell me I had to do this...."...."well, I can't do this because...."

If it's not right, we make it right and hold the subs to it. If it's our mistake we fix then and there........If you have a crew you trust and know your standards it's worth the xtra cost to have a full time crew and not being hamstringed by poor scheduling and working backwards. JMOP.....
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Old 03-08-2011, 08:43 PM   #7
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Re: Employees Or Sub-Contractors?


We've got a crew of carpenters in house. We'll do small framing (not a whole house), decks, screen porches, window replacements, door installs, trim, drywall repairs and new drywall (up to 5 sheets), minor electrical, hvac and plumbing.

I will usually keep this crew booked out from 1-4 months and then use other subcontract carpenters for any new work that I land that needs to be done prior to when my guys are available. We're not good at production tasks such as hanging and finishing drywall in a basement or residing an entire house. We use subs for electrical, plumbing, hvac, painting, tile, and other specialty items.

The downside is that you have to keep the crew busy for 40 hours a week. It's not always easy. And it's stressful. There's always that overlying burden that's in the back of your mind because someone else is dependent on you.

Don't forget the workman's comp. To run a crew of 2 guys, my W/C costs around $12k a year.
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Old 03-09-2011, 12:39 AM   #8
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Re: Employees Or Sub-Contractors?


I always seem to end up making more money using subs vs have a large crew.
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Old 03-09-2011, 05:38 AM   #9
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Re: Employees Or Sub-Contractors?


I feel like it's easier to sell a job or at least build client confidence when you tell them the guys working in your home are my employees, and W-2 employees at that. That they've been with me XX number of years. I find a lot of resistance to the use of "subs". Even though subs are more efficient, licensed in their particular trade, and actually better at their trade than we can be in house, it seems that clients have heard a horror story about their friend's friend who had work done and the contractor was great but his subs never showed up and when they did show up they drank on the job, etc...which is actually the fault of the "contractor".

I explain that we use subs and why we use subs and how it will benefit the client in the end. Then I'll build the client trust by letting them know that I've worked with each sub for XX of years and we've only ever had raving reviews from our clients about them.

I find that it's easier to make money using subs. Do I make more with subs - sometimes. But it's easier because your costs are fixed and their production rates better than my crew's production which makes the job go faster. If the sub crew takes an extra day to finish the project, that's on them. If it's your crew, you have to eat it. But there is a level of control (both in quality control and scheduling control) and problem solving that my guys can handle that many subs can't. To me that's worth the trade off.
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Old 03-09-2011, 02:52 PM   #10
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Re: Employees Or Sub-Contractors?


I typically do carpentry work myself, and use subs for all other trades. Most of my reasoning has already been mentioned. I have found that I put more attention to detail in my framing and trim carpentry than pretty much any sub would (any sub that wouldn't price me out of the jobs anyway). I like using the subs though, because of the insurance cost savings, the fact that my cost is (usually) fixed, and the previously mentioned lack of the burden of keeping employees busy 40 hours a week. Since I don't have other mouths to feed, I don't have to take a job that would result in me not making money to "keep my guys busy".
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Old 03-18-2011, 10:18 PM   #11
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Re: Employees Or Sub-Contractors?


There are advantages to both

You have more control with employees with respect to schedule and quality ect. You also can have an advantage over those contractors that sub everything since if run properly your cost should be the same or less than a subs plus they are charging a profit above their cost. The downside you have payroll, risk and you need to keep employees busy to retain the good ones

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