Know more about subcontractors, how subcontracting works, and its benefits.
Published 5 Dec 2022
| By Kevin Gausch, Roselin Manawis
A subcontractor is a person, team, or business that is slated to do a certain part of all of another’s project or contract. Often, a subcontractor has a certain field of expertise or task that they specialize in and which is what they are hired for.
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.
However, in most cases, between a contractor and a subcontractor, only the contractor will have contact with the client. The contractor will then have two contracts: one with the client, and one with the subcontractor. Meanwhile, the subcontractor will only have one contract, and that is with the contractor. The subcontractor will then only report directly to the contractor, and thus, the contractor will be solely responsible for them. Contractors are responsible for fulfilling the contract with the client, not the subcontractor, who is only there to help them do so.
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.
Some of the most common job examples for a subcontractor are related to:
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.
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.
Some of a subcontractor’s responsibilities should always include:
Contractors only employ subcontractors if the project is too hard to complete alone, or if they deem that having one will improve the turnaround time. Some contractors can finish their projects without hiring one.
Ideally, all subcontractors should have a contract in place before agreeing to work. Subcontractors generally only need a contract with their contractors. They often do not have a direct contract or agreement with the project manager.
Outsourcing and subcontracting are similar in how they are about employers looking for workers outside of their own teams or businesses. However, there is a difference in their purpose.
Outsourcing refers to the business strategy wherein specific tasks in a company that are usually done in-house are instead being completed by an external or third-party entity. There is often a budget already allocated for outsourcing.
Meanwhile, subcontracting refers to the process of an outsourced contractor hiring another party to help them accomplish their tasks. Subcontractors only work with the contractor that hired them, but not directly with the entity who hired the contractor.
Contractors can keep a subcontractor for any duration, as long as they agree upon it. Subcontractors can be hired for both long-term and short-term projects. They can also be hired by the same contractors multiple times.
Subcontractors have a lot to do and keep track of, so having a digital tool can be a great help for managing their daily tasks and maintaining the safety of the worksite. Using a digital checklist, in particular, can help in organizing documents and tasks, as it can properly outline the tasks that need to be done and in what manner, all while being stored in the cloud.
A digital tool that subcontractors, contractors, and their clients can use is SafetyCulture (formerly iAuditor). iAuditor is an online checklist solution that can be used for managing multiple tasks in different fields such as construction, mining, electrical, and more. iAuditor offers smart checklists that can be programmed to work on a scoring basis, show flagged items based on set criteria, prompt the need for corrective actions, and require photos, videos, and notes for certain responses. There are also the options to convert existing subcontractor Powerpoint, Excel, and PDF checklists into an iAuditor checklist and to use an existing subcontractor-related checklist from the Public Library to get started. In particular, there are already existing checklists for some of the common subcontractor jobs out there, making it easy to get started.
Many subcontractors and their respective contractors and clients use iAuditor to also improve their communication with one another. iAuditor offers a way to report problems by empowering its users to raise Issues, assign Actions to specific staff to address them, and to create a Heads Up to inform others of changes and announcements while on the field. All iAuditor checklists and templates are also stored in the cloud, allowing for easy access anywhere. They are also shareable to whoever the user would like, ensuring privacy and seamless understanding between staff members when on the field.
Other things iAuditor can help with are:
Kevin has a Lean and Six Sigma Black Belt from Villanova University and Certified Manager of Quality and Organizational Excellence through ASQ with a focus on the construction industry. Kevin has 13 years of Quality and Project Management experience in the utility contractor space, including; electric transmission, distribution and substation, gas distribution and pipeline, and telecommunications, both inside and outside plant. 16 years of construction experience overall.
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