What do large construction companies look for when they look to subcontract?

Hiring a subcontractor is common practice for the Construction Industry and comes with a whole host of benefits – most of which I explored in my last article which you can check out here. Whether it be to lighten the workload, improve performance and productivity, or to bring a variety of skill-sets under one roof, hiring the RIGHT subcontractor is just as important as hiring an internal employee. After all, ‘subbys’ are an extension of your team so there’s a lot to consider. That’s why companies just like the ourselves at the RE:GEN Group look for specific attributes to ensure we are bringing the right businesses on board. So, what are they? 

Before we dive in, it’s important to note that every contractor is different so always be sure to read the small print when it comes to any kind of application process, as the requirements can be strict (from the number of years you’ve been trading to your turnover figures, the devil is quite often in the detail). However, I want to take a broader view and share some key criteria that we consider important which will put you in good stead for growing your network and building on your pipeline.

At the start of the process, large construction companies will be met with a client bid and scope of work. Within the scope of work, they’ll need to decide what type of subcontractor will be best suited to carry out the job – i.e., a labour-only subcontractor or a bona fide subcontractor. A labour-only subcontractor is similar to an employee, they work under the supervision of the employer, and are provided with materials, equipment and tools. Their hours are determined by the employer and how they should be working. Or is it a bona fide subcontractor? They are independent workers who set their own hours, get paid by invoices and provide their own tools, equipment and materials. They supervise themselves and usually work with staff of their own. Once a company knows what kind of subcontractor they want to work with, we can progress to the next step of the partnering process.

The main thing a company will want to ensure is that the subcontractor they are hiring is fully licensed and insured. General liability insurance protects the company in case something goes wrong and the client tries to hold them responsible. A company will want the subcontractor to have proof of insurance, whether it be through a business or independent, insurance is an absolute must.

Once those boxes are ticked, construction companies will tend to ask for a number of things when on the hunt for the right subcontractor. In most cases, contractors will request references and examples of previous work to make sure they have experience and strong credentials in the skillsets required. So having a portfolio of work, or a way to demonstrate your existing relationships and performance is key. There must be assurance that a subcontractor’s quality level matches the high standard of the contractor to ensure consistent delivery and seamless integration across the board.

That said, it isn’t just the output that must be aligned. Most importantly for us at RE:GEN is having our values aligned with all subcontractors and partners we work with. Everything we do is underpinned by our four core values (We’re Dynamic, We Care, We Challenge The Norm & We’re Trusted) and we expect every member of our team, be it internal or external to share in these values. We’re dedicated to working in the Social Housing and Retrofit sector so it’s crucial that our pool of subcontractors have experience or ambition to work in these areas.

It’s not just the contractors who should be calling all the shots. It’s just as beneficial for you as a subcontractor to run your own due diligence checks on the contractor you’re keen to work with. Do they align with YOUR values? And what is it like to work with them? A key recommendation here is to try and obtain feedback from existing sub-contractors within their network to see what it’s like to work for the company you are trying to engage with. Ask questions like: Do they pay on time? What do they require? What do they like and NOT like about working with them? It’s best to find this out sooner rather than later.

So far, we’ve considered different types of sub-contractors, the need for licenses and business alignment. What else is important?

A large construction firm will also want to ensure that there is good communication coming from their subcontractor. As cliche as it is, communication is king when it comes to building trust. And the power of strong interpersonal skills never goes unnoticed. Ensuring positive communication, honesty and openness across all parties in the supply chain (including the client) is vital for project success. Sometimes things go wrong, but the ability to flag problems at the earliest opportunity and work together to resolve them is where the real magic of partnership comes into play. As standard, contractors will request regular project status updates from their subcontractors, not to check up on them but to ensure everything is on time and in budget. If they have set a deadline, they will need to feel confident and reassured that the project will be complete in that time to meet client expectations and deliver on their promises. After all, it’s their reputation at stake!

Once a company has chosen the subcontractor they want to work with, they will ask them to sign a subcontractor agreement which will protect the company from taking liability if anything goes wrong during the projects. The contract will vary depending on the nature of the work in the construction industry but would typically cover areas such as project details, payment, communication protocols, costs that the company has covered, non-disclosure and non-compete clauses as well as terms of termination or modification.

If all areas are covered and confirmed by the subcontractor, and the construction company is satisfied with the quality of previous work, the subcontractor’s work ethic and all engagement contracts are signed, then the partnership can officially commence. Like any relationship it takes continual effort from both sides to make it work and building trust isn’t something which happens overnight. But when things go well, the synergy between a large construction company and their subcontractors can be incredible with rewards and benefits felt across the board.

With over £100m worth of work to deliver in the next four years, we’re on the lookout to increase our subcontractor network, specifically within the North of Tyne area. Could that be you? We’re inviting businesses from all around the region to join us for our first SUPER-SUB event on Thursday 21st July at St James Park, Newcastle.

Interested? Great, come join us! To sign up, just click below.