Factors to Consider When Hiring Subcontractors

By Cotney Construction Law.

Our construction attorneys understand that finding skilled workers can be tough, but it’s not impossible.

This is one of the reasons why many in the construction industry hire subcontractors. We’ll discuss how a general contractor (general contractors) and subcontractor team works together and identify characteristics that qualify a subcontractor.

How Contractors and Subcontractors Work Together

Contractors will link with subcontractors to complete work on projects it has bid on. The subcontractor is in direct privity with the general contractor while the general contractor is in direct privity with the owner of the project. The contractor acts as the manager while the subcontractor is the worker that provides specialized labor and materials for the project.

How Subcontractors Help

Hiring subcontractors is beneficial to contractors because they reduce risk, costs, and increase work performance. Subcontractors can be an asset to contractors for a number of reasons. For one, they help reduce a contractor’s costs and legal liabilities. Other benefits include:

  • They bring more knowledge and experience to the project
  • It’s more cost-effective to hire a subcontractor than a full-time employee
  • Subcontractors can provide their own equipment and material
  • Reduced payroll and benefit expenses for the general contractor

What Qualifies a Subcontractor?

The best and most qualified subcontractor should be the goal of any contractor. The following are things to look for when hiring a subcontracting candidate:

  • Experiences and references are readily available
  • Meets project requirements
  • Completing work within predetermined deadlines
  • A solid history with other professionals such as contractors, bankers, material supply companies

Drafting Subcontracts

One of the most important aspects of forming a business relationship is drafting contracts. It can determine the success and failure of a construction project. A contract between both parties should address the legalities labor, materials, pricing, and warranties. The contract must benefit both parties, this will eliminate misunderstandings and disputes. When in doubt, let a construction attorney in Orlando review or draft your contract to ensure the interests and investments of both parties are secure. Following are some of the key elements that should be addressed, especially on the behalf of the subcontractor:

  • Avoid vague contract language
  • Specify the work a subcontractor is and isn’t responsible for
  • Address losses and recovery will be handled in case of an unexpected termination
  • How will payments be handled to avoid a mechanic’s lien
  • Know what constitutes a default and be sure there’s opportunity to correct the default
  • Address how potential disputes will be handled

Pay Attention to Compliance

One of the best ways to ensure compliance is to set up a system for continuous monitoring. It’s a good idea to prequalify your subcontractors to verify whether they are licensed, bonded, and insured. This includes workers’ compensation and liability insurance. In addition to that, signing lien waivers and performing periodic audits is vital. On another note, the client (the owner) should always know that subcontractors are working on a project. Finally, accurately recording and reporting labor time and completing safety training programs are crucial.

To schedule a consultation with one of our experienced construction lawyers, please submit our consultation request form.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Editor’s note: This article first published on Cotney Construction Law’s blog and can be viewed here.

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