Chapter 11 Subcontractor Work

1. Chapter 11Subcontractor Work

2. Introduction • Subcontractors perform 80% or more of the on-site work in residential construction. • Often, the homebuilder merely coordinates the activities of the subtrades. • There are a number of possible problems that may occur with subtrade work: • Unreliability of some subcontractors • Errors in subtrade quotes • Overlap or gaps in the work subcontracted • Conditional quotes from subcontractors • Congestion at time of bid closings

3. Unreliable Subtrades and Bid Errors (1 of 2) • Subtrades may be delinquent in a number of ways: • Subtrades fail to submit the quotes they had promised. • A subtrade withdraws their quote after the estimator has used it in the price of the work. • A subtrade (whose price is accepted) does not do the work, or the work done does not meet requirements. • One possible reason for these problems is that the subtrade makes an error when preparing their quote. • If an obviously low price is received from a subtrade, they should be notified and given the opportunity to revise their price.

4. Unreliable Subtrades and Bid Errors (2 of 2) • When each subtrade’s work is not clearly defined, some items may be missed from the estimate or some items may be covered by more than one subtrade. • Conditional bids from subtrades make it difficult to decide who is low bidder and whether the bids cover all the required work. • In a bid competition, subtrades tend to submit their bid prices at the last minute. • This results in a large number of prices arriving in the contractor’s office just before the contractor’s bid is due to be submitted.

5. Managing Subtrade Pricing Process • When subtrades are submitting prices in a competitive bid, the contractor needs to be organized. • As soon as drawings and specifications are obtained, prepare a list of required subcontractors. • Inform subs that prices are required. • Obtain commitment from subs that they will bid on the project. • If a low price is received from an unknown subtrade, check them out thoroughly before awarding the work to them.

6. Evaluating Subtrades • When evaluating subtrades, consider the following: • The general reputation of the company • The quality of previous work performed by the company • The quality of the company's management • The company's disposition in terms of their general cooperativeness and the ease of dealing with company site and office personnel • The financial status of the company

7. Analyzing Competitive Subtrade Bids • Subtrades may have different interpretations about the scope of work of their trade. • Subtrades may offer discounts if a group of their prices are accepted. • To deal with these complications, tabulate the subtrade prices, and then find the combination that covers all the work for the best price. • See next slide for a windows example.