Subcontractor vs. Contractor: the key differences and what you need to know for your next construction project
The list of things you need to get your construction project underway is dizzying! From gathering estimates and checking references to obtaining building permits, it’s easy to get caught up in the chaos. The best way to get your project started on the wrong foot is making a bad hire.
Don’t let your project get away from you before it even begins. Prior to considering hires for your construction project, you need to have a comprehensive understanding of the various roles performed by a subcontractor vs. contractor.
As you will see, there are numerous trade-offs to choosing one over the other. It’s essential to take all of your project needs into account before making a final decision.
Subcontractor vs. Contractor: Defining the Difference
Let’s start by defining a general contractor. When undertaking a sizable construction or renovation project, you may require someone who will take complete control over the project. A general contractor can be an individual or company hired for residential or commercial projects. If you can’t assume any of the tasks on your own, a general contractor can do it all from assessing initial project plans to overseeing physical labor.
On the other hand, a subcontractor is hired by a general contractor to undertake specific tasks of the operation. Just like general contractors, a subcontractor can be an individual or a company. Subcontractors are tasked with completing smaller projects that lead to the completion of the bigger picture. Many subcontractors specialize in a particular construction niche.
Subcontractor vs. Contractor: Responsibilities
Knowing who is responsible for what can help when making your hiring decision. Keep in mind general contractor responsibilities can vary from project to project. Some typical duties performed before, during, and after a job include:
– Providing all materials needed for the project
– Supplying all labor necessary for the project
– Furnishing equipment, vehicles, and tools
– Hiring subcontractors for specific parts of the project where more detail is needed
– Overseeing the quality and timeliness of all work performed
– Monitoring schedules, payments, and cash flow
– Keeping accurate records of all aspects of the projects
– Ensuring that safety measures are upheld at all times
In direct contrast to a general contractor, a subcontractor will be skilled in a specialized area to focus on individual aspects of the project. Subcontractors generally work on a contract-by-contract basis. Examples of projects they may be contracted for include:
– Electrical Work
– Appliance Installation
– Plumbing and Drainage
Subcontractor vs. General Contractor
– Subcontractors work under a general contractor and follow the instructions of whoever is overseeing the project.
– Subcontractors never work directly with clients as the general contractor hires them.
– Subcontractors specialize in one specific area of construction, such as carpentry or insulation.
– General contractors are responsible for the hiring of subcontractors and work directly with clients.
– General contractors oversee the entire project from start to finish as well as handle project planning.
– General contractors will take care of every aspect of a construction project and perform new construction, renovation, and repairs.
Subcontractor vs. Contractor: Pros and Cons
To help you better understand what kind of individual or company you will want to hire for your industrial project, let’s review the pros and cons of subcontractors vs. contractors.
Subcontractors Pros and Cons
Subcontractors can work fast and efficiently and excel in their particular area of expertise.
Subcontractors are generally available on short notice and can often take on extra work.
Subcontractor fees are much lower than those of general contractors.
Subcontractors offer more range of flexibility and can be hired as needed for particular project tasks, giving project owners more control.
Subcontractors don’t always have the same level of commitment to a project as a full-time employee will.
Working with a subcontractor requires different tax implications and can alter work standards.
Because subcontractors only work under contractors, and not directly with clients, you have no control over who is hired.
General Contractor Pros and Cons
Working with a general contractor gives clients peace of mind knowing every aspect of the project is being overseen.
In addition to experience, general contractors bring to the table proper insurance and licensing.
Project prices and details can be negotiated through a general contractor.
When specialized tasks are necessary, a general contractor can hire subcontractors that are right for the job.
General contractors can be costly, depending on the size of your project.
When working with a general contractor, you have no control over the project’s quality or performance.
Because general contractors must oversee all aspects of the project, they cannot physically perform every task themselves; therefore, they will need to hire subcontractors, which can add to the cost of your project.
Subcontractor vs. Contractor: How Pay Differs
One of the reasons the distinction between subcontractors and general contractors is so important is because they’re paid differently.
Everyone, regardless of title, is connected to a project by the work being done as well as the financial aspects of the job. Both general contractors and subcontractors are their own separate entities. This means both the subcontractor and general contractor must look out for their own interests when it comes to payment. In order for everyone to get paid and get their part of the job done, they must cooperate.
Each vocation faces different payment challenges. General contractors are responsible for the collection of lien waivers. Think of a lien waiver as the construction industry’s receipt for payment.
Everyone who does work on a project must sign this document waiving the signer’s right to file a lien for the amount specified in the waiver. The general contractor typically cannot receive payment from the property owner until all lien waivers have been collected from all of the subcontractors and suppliers who have done work on the project.
Retainage is another unique practice specific to the construction industry. Retainage refers to a portion of payment that is withheld from a contractor or subcontractor during the term of a construction project. This common practice leads contractors to run the risk of losing money on the job if a customer requests changes in exchange for releasing all or a portion of retainage.
Subcontractors are lower down the payment chain, which means they are at the mercy of clients paying contractors and contractors paying them. In other words, they only get paid when both the project owner and general contractor make good on their promise to pay. This increases the chances of something going wrong. Any number of reasons can delay payment to a subcontractor from misappropriation of project funds to missing or late paperwork.
What to do Next
While to outsiders, the differences between subcontractors vs. contractors may seem minimal, there are, in fact, many aspects distinguishing the two roles. The bottom line, who you hire for your industrial construction project, largely depends on the work that needs to be done, however, in all likelihood you’ll be looking for a general contractor.
Make sure to do your due diligence when researching prospective hires, so you get it right the first time. Anyone can boast of superior qualifications, but don’t just take their word. Ask for references and check with your local building department to find out about your area’s licensing requirements.
Before hiring a contractor or subcontractor, request written estimates from several firms. Avoid automatically going with the lowest bidder and make sure to compare estimates carefully. The low-ball offer may be missing some essential project elements.
Make sure to ask your potential hires a lot of questions. Ask about project permits and the type of insurance they carry. Inquire about other projects being worked on, as well as who will be needed as additional hires to complete your job.
Before any work begins, get in writing the who, what, where, when, and cost of your project. Finally, keep detailed records of change orders, any correspondence, and payments made throughout the project.
Contractors You Can Rely On
For a company you can rely on, turn to Loder Construction. Our beautiful office is centrally located on the border of Granite Bay and Roseville. Come by and view our variety of material finishes for your project or just to say hello to our furry friends. At Loder, we have a dog policy so our employees and their four-legged buddies can work together.
Our vast portfolio offers a full range of services and highlights our many industrial construction projects. From ADA improvements to custom ground up designs, we’re happy to help you with any project. We also offer janitorial cleaning services, electrostatic spray cleaning, HVAC sanitation services, and much more!
Need a general contractor for your commercial build project? Start here! Our highly skilled team is eager to hear from you.
He received his first hammer at 4 years old, not that he wanted one but, because he kept “borrowing” his father’s. Construction has been a part of his life and being raised as a six-generation carpenter, it came naturally. As a boy he visited his father and grandfather on their construction site, and he learned what was being built. High school and college summers were spent soaked in sweat, at the end of broom as his apprentice skills improved. After graduating from Fresno State with a Bachelor of Arts in Communication in 2008, he started running small Tenant Improvements for Loder Construction and excelled in keeping projects on-time and on budget.