Subcontractors: Get Complex Projects Moving Smoothly

What is a Subcontractor?

A subcontractor is a person, team, or business hired to complete specific work on behalf of the main contractor. They support the main contractor by keeping the project on track, compliant, and aligned with all parties. Subcontractors are usually brought on for their specific skills in a particular trade, or to handle labor-intensive work the main contractors can’t handle on their own.

Difference Between a Contractor and a Subcontractor

A contractor, such as a general contractor or independent contractor, is an external person, team, or business hired by a client for a certain project or task. Similar to a subcontractor, they often have certain fields or tasks they specialize in, which is what they are hired for. In some cases, when the task assigned to the contractor may be too heavy for them to handle, they hire a subcontractor.

Typically, only the main contractor deals directly with the client. This is because the contractor holds two contracts: one with the client and one with the subcontractor. Thus, the contractor is responsible for managing the subcontractors, and together, they work to meet the client’s requirements.  However, arrangements can vary depending on the type of subcontractor hired and the job to be done.

Types

There are three main types of subcontractors, especially in large or complex projects, such as those done in the construction industry. Each type has different roles and responsibilities, helping define who does what and who reports to the main contractor. The three types are:

• Domestic Subcontractors - These subcontractors are hired by and report directly to the main contractor, instead of the client. They handle and complete the tasks assigned by the main contractor.

• Nominated Subcontractors - These subcontractors are chosen directly by the client. They’re often brought in for highly technical or specialized work, giving the client more control over how it’s done.

• Named Contractors - These contractors sit between domestic and nominated subcontractors. They’re proposed by the client, but the main contractor can accept or reject them. Once approved, the main contractor manages their work while taking the client’s preferences into account.

In addition to the different types of subcontractors, each can be grouped into tiers: 1, 2, or 3. Tier 1 subcontractors handle the most critical work, while tier 3 subcontractors focus on specialized or labor-intensive tasks. These tiers are based on each subcontractor’s role, scope, and relationship to the main contractor.

Why Do Companies Hire Subcontractors?

Subcontracting is a common practice in industries where complex and time-consuming projects are often carried out. A subcontractor is usually hired by a project or company’s general contractor, who will assume responsibility for them for the whole duration of their hire. Some fields where it is the norm to hire a subcontractor are construction, manufacturing, and information technology, as they have very laborious and time-consuming tasks.

While it is not necessary to hire a subcontractor for long-term or intense projects, many prefer to do it as they find it more cost-effective in the long run. Rather than bringing in new employees for specific projects only, they choose to hire subcontractors instead, who they can employ on a per-project basis or as necessary, depending on their expertise or the situation. This arrangement also allows for more flexibility when planning for the project.

Example Jobs

Some of the most common job examples for a subcontractor are related to:

• Construction work such as excavation, concrete-setting, and stonework

• Plumbing for houses and buildings

• Tiling of establishments

• Roofing and sheet metal work

• Heating, Ventilation, and Air Conditioning (HVAC)

• Electrical wiring and other related work

Subcontractors are also common in the fields of Information Technology (IT) and advertising and marketing, where many employers turn to freelancers or agencies to lower costs. In recent times, it has become more common to outsource staff for these two fields as they are constantly evolving and often require lots of time and effort.

Responsibilities

A subcontractor does almost the same things a contractor does unless otherwise specified in their contract. That is, they are required to keep their own paperwork documenting their processes and problems, work with little to no supervision, and manage their expenses. While these tasks should be done with the knowledge and supervision of the contractor, they are generally left up to the subcontractor for the duration of their job.

Additionally, on-site safety management is also an important aspect of a subcontractor’s responsibilities. In some countries, such as the US, UK, and New Zealand, there are legal provisions in place to guide subcontractors in how to manage safety in their respective workplaces.

Subcontractor Responsibilities

Some of a subcontractor’s responsibilities include managing the following:

• Workplace Safety - Maintaining a safe and clean working environment

• Risk Assessment - Identifying hazards and possible risks before, during, and after work

• Equipment Inspection - Observing assets, structures, and other items to make sure they are in working condition

• Material Handling - Storing and handling materials properly and without harm to whoever is handling them and their environment

• Worker Welfare - Providing essential facilities for the benefit of the workers’ welfare such as drinking stations, rest areas, and toilets

• Incident Reporting - Keeping records of any incidents, identified risks, and possible issues for future reference