Is It Time to Start Subbing all your Work?

Is It Time to Start Subbing all your Work?

It wasn’t that long ago that many construction companies did all of their work in-house. If they had a foundation to dig and pour, their heavy machinery or backhoe operator did the digging and their concrete crews got busy. In many instances these companies even had their own plumbers, electricians, and HVAC mechanics that were kept busy with service work when not working on new construction. While this type of organization has died out in most urban areas, in many rural settings it’s still possible to find one company does all the work on a residential or commercial project from start to finish.

What are the advantages of this type of company that may go back several generations? For one thing, it’s often like having one big family work on a job – there isn’t too much finger pointing as to a particular task being someone else’s responsibility or problem as everyone works for the same organization and the work being done is a reflection of that company. You’re also fairly familiar with the quality your crews are turning out and if someone isn’t making the grade, they can be taken under a wing for further instruction or let go if that doesn’t work.

However, in this challenging economy there are also many drawbacks to this sort of organization. First and foremost, a large crew means a large payroll every week and regardless of whether you have work lined up, your employees expect a paycheck. Along with that weekly payroll come state and federal taxes, worker’s compensation costs, and possibly even your share of health insurance premiums. When you have more work than you know what to do with, these costs often take care of themselves, but when you’re constantly scrounging for the next project, those weekly expenses can seem like an anchor around your neck.

The alternative is to make the transition over to becoming a management company with several supervisors and everything else being subbed out to other contractors. When you’re ready to put in that foundation, a call is made to excavating and concrete contractors and you send a superintendent to the job. You’re giving up a little control of the project and possibly a little of your in-house quality standards, but you’re only paying people when they are actually performing work and what they do when times are slow is someone else’s problem.

Which is the best setup for your company? Only you can decide.

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