Building Stronger GC-Sub Relationships
Posted: April 2, 2021 | Project Management
The impact of COVID-19 on construction is far-reaching and will likely continue well into 2021. With many construction projects that were in the design phase during the start of the pandemic being delayed or put on hold, the full impact of the pandemic on the construction industry is still unknown.
Even as building picks up again, there could be a rocky road ahead for subcontractors who are less financially stable. Many of the smaller firms will likely continue to struggle to stay afloat as the number of projects on which to bid grows smaller and the competition becomes more intense.
For general contractors, this means having to self-perform work they would normally sub out. The worry for many is the potential of subcontractor default due to aggressive bidding, overextending their ability to deliver, and a lack of qualified labor.
Back to Basics for Subcontractors
In this highly-competitive market, strong GC-subcontractor relationships are critical. In boom or bust times, it’s important to be reminded of the basics for building stronger GC-sub relationships.
When jobs are scarce, no sub wants to be viewed as a GC’s worst nightmare because they failed to deliver the work or miscommunicated information. When the price isn’t the only determining factor in a winning bid, subcontractors will need to lean into how they can build stronger ties to GCs.
Financial Stability Still Key
As always, responsiveness, a positive attitude, and a sense of teamwork are all traits a GC appreciates when they turn to subcontractors for their trade expertise. GCs will also look at past performance, financials, equipment, safety, comparable projects, and project cost and payment terms.
Subcontractors should keep in mind that GCs are seeking stability, since subcontractors must incur substantial upfront costs. When it comes to fronting millions of dollars in expenses and labor costs, cash flow issues can have a life-or-death impact for subcontractors. How they handle cash flow can quickly impact a project’s completion.
As part of their qualifying indicators, subcontractors should be able to show GC’s that they are financially stable as well as qualified to do the work with the required licenses and insurance. Showing the GC they can incur the upfront costs is a big part of this process.
For example, Michael Bordes, president of New York City general contractor AA Jedson Company, said his firm was limiting his risk from subs by handling more work in house. Noting that affording insurance is one issue with which subs are struggling, he said, “The people we’re dealing with may not be transparent about saying we’re having trouble with assurances or we’re short on labor. If you keep it on your payroll, you, at least, have 95% control.”
Using Tech Tools to Show Project Scope
As the economy begins to pick up again, subcontractors may want to add more tech tools to set themselves apart. One way to accomplish this is by submitting a final bid that reflects a thorough knowledge of project scope.
Describing a project in detail and explaining their approach can help a subcontractor showcase their knowledge and trade specialty. It’s crucial that their final estimate provides a level of detail not often communicated to a GC. For example, a subcontractor could help build trust by using estimating software that delivered a color-coded quantity takeoff.
When a subcontractor can itemize scope and quickly present varying price scenarios, it will further demonstrate their understanding of the project. The most efficient way to handle ad hoc requests on a project is by separating the bid into areas and/or phases. By using dynamic digital reporting, a subcontractor can show bid detail and summary by selected area, so they can respond quickly and accurately to the GC.
Using Past Projects to Win New Jobs
Of course, the goal for any subcontractor is to build strong relationships with GCs so they can reap the rewards of repeat business. One way to achieve this is by using past projects and references to their maximum impact in the qualifying process.
General contractors review a whole range of issues when qualifying subcontractors — from their safety plans to their available equipment, including their ability to maintain and fuel that equipment. It may seem difficult for a subcontractor to stand out from the pack if they’re busy checking all the boxes.
Typically, subcontractors will be required to reference projects similar in size and scope from the past. Subcontractors should list similar projects completed with scope, schedule, budget, man-hours worked, and any special considerations that were part of the project.
Staying On Top of Communication
With many employees working from home, fine-tuning bid proposals over Zoom may be a stretch for some subcontractors. If needed, mask up and meet with potential clients in person in a well-ventilated office or conference room, or even outside.
As always, strong communication skills are essential to avoid project conflicts. Identifying and raising issues to the GC should be done as swiftly as possible. No doubt, changes on a project are to be expected, but ensuring timely and effective communication is key.
With many more people planning, designing, and bidding projects from remote locations, it is essential to make sure you have the right tech tools so you never miss a critical project update, email, or change order. Not having the latest versions of plans and specs could lead to delays, significant cost increases, conflicts, rework, and even legal issues.
Weathering the Storm
Even with a solid safety track record and strong financials, GCs often prefer subcontractors who don’t leave behind a mess or create more noise than necessary on the jobsite. Keeping on top of suppliers and handling all delivery issues is also optimal to ensure a project’s schedule isn’t adversely impacted.
With fluctuating backlogs, it is more important than ever for subcontractors to keep in mind that they are always auditioning for their next job. By establishing their value post-bid, they can elevate themselves in the eyes of any GC to better weather the ups and downs of the industry.
If you’re ready to take the next step, be sure to check out ConstructConnect’s integrated estimating tools now.
Conley Smith is a senior business writer with ConstructConnect. She has been writing about technology and its impact on business for more than 20 years.