Subs Vs Employees

wackman

Are there any GC's on here that use subs for everything, even remodels? No employees?

Right now my subs prices are just kicking the crap out of how much my employees are costing me.

I watch them work and they're doing a good, steady job. Really not a lot to complain about, but there's no motivation for speed. These are good, established, highly skilled guys who know their stuff. I could talk to them about it but I suspect it'll just hurt morale because they really feel that's the way it should be done.

I think it's kinda like a woman you're in a relationship with, once a guy is a bit older, knows what he's doing and is fairly set in his ways you aren't gonna change them, either accept it or send them down the road.

In my head it seems like using all subs would be a logistical nightmare. Making sure the whole thing comes together without some serious supervision (which I am way to busy to do) seems unlikely. That's where these guys come in. They know their way around almost everything on the site and catch stuff the subs don't even realize they're doing all the time.

But then there's times where they take waaaayyyyyyyy longer than it should and I have little control over the costs. Then I lose money and I think how easy it is with the subs.

Has anyone tried the all subs system out? Anyone got an opinion one way or the other? Pros? Cons?

Wack

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rbsremodeling

Wack

I have two contractor friends that sub all their work out. They have two carpenters that run 6-8 jobs at a time. The carpenters are like formen in his book they frame out and do trim if necessary but everything else drywall, flooring, electric, plumbing, hvac, roofing, heavy equipment, masonary, painting is subbed out. One contractor is thinking about hiring a driver/clean up/wait for inspections guy. He swears by it. He says he saves about 100k a year versus having employees when he looks at his cost.

He also claims the projects finish faster because the subs are more motivated to do the work. I use some of the same subs he uses and they are good guys licensed and very dependable which makes a big difference when going that route. Quality of his work is as good as mine with employees. I have been looking at the idea of going the same route my self

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Double-A

What are you doing to motivate these guys?

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thom

I switched years ago. I went from all employees (we are licensed as GC, EC, MC) to all subs. I just quit the remodel stuff.

The stress level dropped dramatically
The job performance increased
I make more money

If you stay in remodel, you need a couple lead-men who can oversee a variety of jobs and work themselves. Make their pay performance based (just like subs are).

To make their pay performance based, you will need to cut their hourly significantly and add bonus money. Bonus money should be a percentage of gross profit.

Stone Mountain

I use exclusively subs. I supply all the material, including nails, they supply the labour.
I have been doing it this way for 25 years, and let the last of my employee crews go 18 years ago.
I don't think I would be in business if I paid by the hour.

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wackman

I build homes and do some remodeling. I'm a pretty small builder and with the market I just shifted gears and went after more of the remodeling.

I use subs for everything on my new homes with the exception of maybe finish carpentry and tile. I use lot's of those subs for the remodels too. The place where I use my employees a lot is the remodel framing, demo, small stuff, finish, tile, etc...

I like to limit how many subs are going in and out of the owners home without me having strict control of the access and scheduling. Nothing seems to piss my customers off like subs not showing up when expected or showing up at the wrong time, leaving a mess, etc... Plus I've noticed lot's of the subs field workers don't understand the next trades job and will do something stupid because it's easy for them now, but it's gonna be hard for everyone after them.

My guys are sorta in that superintendent role a lot and it works well because one of them is sharp as a tack. I can say we've not had to go back and redo much of anything and not much has slipped past this guy. He's a bit of a perfectionist and that causes slow progress. I guess I just need to estimate more time for the work that they're doing and that'll probably fix this.

I love the idea of some sort of incentive pay and I've posted on here many times about it. The idea of profit sharing is good and I talked to him about it but he had some good objections. He said he's up for that but he'd like a say on the estimate of time, he thinks I'm optimistic, which I probably am, and wouldn't want to get penalized on his pay because of this. Well that makes it necessary for him to be involved in aspects of the estimating, he'd need to visit the site, work out hours, etc... I don't want him doing that because he might want to inflate hours (he is a perfectionist) to the point where we price ourselves out of work and because I want him in the field.

That's where I come back to subs.

I don't know.

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Brock

Myself one slilled helper and several subs on speed dial. Hint: Always give the sub something extra even if it's just a 12 pack. He will be be less likely to raise up on you in the future. Hint #2 This doesn't always work.

BreyerConstruct

Wack,

I've got an incentive plan we just rolled out this week.
When I have a spare minuet, I'll post the details.
It's easy & it has (so far) gotten a very positive response.

~Matt

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silvertree

Since starting over last year minus my partner I have used subs more often.
Ideally myself and another carpenter acting as PM's with subs would work well.
I tried to motivate my guys in the past and tried bonuses and that didn't work well. More pay didn't work much better. For me developing reliable subs will be the way I produce my jobs in the future. Employees are great in that you know what they are capable of, but it's a lot of headaches too, not to mention if work slows I always felt responsible for their welfare and would keep them on even when I was wasting money.

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KillerToiletSpider

A few of the GC's we work for have no employee's, they sub out everything, and visit all their jobs on a daily basis, most of them have their own carpenters that act as project managers, and one GC we work for is an electrical contractor that subs out everything but electric and low voltage. In a strange twist, the elctric GC usually subs the carpentry out to another GC we work with, and is the electric sub on that GC's jobs.

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rbsremodeling

I will admit because I have done both it is easier for a house/ home GC vs A remodeling contractor to sub work.

There is a lot more involed as a remodeling contractor. If people live in the house, trash removal, possibly daily clean up interacting with the ho, selection process. So a remodeling contractor may find it a bit harder to go the all or partial sub route depending on the jobs, ho, and his subs

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wackman

Yes, please do, because I've been thinking about it for awhile and everything I've heard of either doesn't sound very good or requires too much work to oversee and moderate. So definitely, I'm very interested.

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Floordude

Theoretically, it should cost more to subcontract out the services, then to have your employees doing it, even with all the associated overhead with employees.

I mean the guy your subbing to, is going to have the same identical cost of employees as you would have occured, yet he has to make a profit on top of that, for his business.

Is it like that... NO because most subs are really mislabelled employees, and have no clue what it is to run a profitable business. They live week to week on what is dictated to them, and controlled by the employer.

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macmikeman

I'm not an accountant, nor a labor attorney, not an enrolled tax agent, but what I have read about often in my career is that your so called subs are not subs when you supply the materials. That makes em your employees, regardless of who's name is on their paychecks. Take that tip for whatever it is worth. I would not want to go into an audit while in your shoes thinking that they qualified as "subs". By the way, I approve of your method in general, but you would be better off if they provided their own materials, and they need to work frequently for other outfits beside yours in order to qualify as subs for the taxman.

tnt specialty

exactly!Floordude

chris klee

yep. the only employees we have are the 3 of us that started the company, and a superintendent we just hired a couple months ago. we have a few key subs we almost always use.

The main owner is the salesman and 2 of us are the project manager. you have to go to each job everyday and check up on the subs. if you keep them inline and things in order it works out very well and every one makes money.

chris klee

actually it doesnt matter where the materials come from. as long as they have the proper licence and insurance they are a separate company. ever hear of a temp labor company?

Double-A

According to IRS publication 15-A, the criteria used to determine a common-law employee vs. an independent contractor are:
Please note that materials are never mentioned. Read through the publication, especially section 2. Who supplies materials is not important. What is important is control.

All of the above seeks to answer one question;

Is this worker (either lawfully or unlawfully employed) in the service of another where the employer has the power or right to control and direct the worker in the means and methods by which the work is done.

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Railman

[quote=Floordude;374260]Theoretically, it should cost more to subcontract out the services, then to have your employees doing it, even with all the associated overhead with employees.

In my opinion this just isn't true.
The reason subs are more efficient is because of their proficiency at doing one thing well, versus workers who do something different each day. Efficiency come from having good techniques, & getting the repetitions to get fast at them. You just can't get there doing something different each day...I know because I've tried! Subs are typically 20-50% faster, which offsets the added markup for another company middleman.

Having said all that, it really depends on the size of the job. If I were building a dog house , it just wouldn't be worth subbing out all the phases, for obvious reasons. I have used this "DOG HOUSE" analogy many, many times over the years, in negotiating pricing with builders, as a sub.

The trick is to realize when it's worth it to a sub, to sub out the various phases. There is a break even point.

Joe
edit: Posted just after DBL A!

rbsremodeling

[quote=Railman;374717]
I agree with Joe I sub out work based on the amount of work my guys are good but with larger qtys subs are usually more efficient and pricing goes down versus my payroll guys doing it. and the priced on subs is fixed so it makes it easier to figure out actual cost and stick to them

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