Almost all businesses that hire subcontractors agree that the productivity of their contractors affect their bottom line. Yet only half of those businesses have a strategy for improving the productivity of their subcontracting relationships.
In simple terms, the efficiency, productivity, and ultimately the profitability of a job is largely determined by the subcontractors performing the job itself. With so much riding on the workmanship of subcontractors there is much to be gained from improving their performance.
Here we look at the top 5 keys to improve the productivity of a subcontracting relationship. These are not meant to be overly technical, but rather simple strategies that any business hiring subcontractors can implement in a short space of time.
Trust and relationships with principal contractors
The relationship between the hirer and the subcontractor is cited as the most important to the outcome of productivity on a jobsite. While this may seem touchy-feely to some, it’s a reality that people work best with other people they know, like and trust. Building up trust and positive relationships with subcontractors often happens in a short space of time due to the nature of contracting relationships, but can be broken equally as quickly.
The biggest factor in building trust with a subbie is open, often, and transparent communication both ways. Subcontractors understand that this is a commercial arrangement and business decisions need to be made. Telling them what you are doing, why you are doing it and when you are doing it during the planning and development phases will go a long way to building trust, whether they are the contractor that gets the job or not.
Quotes and tender practices
The general practice and process for receiving or reviewing quotes and tenders is often described by subcontractors as confusing, unclear and misleading. While the Hirer is shopping for the best contractor based on price, quality or services, they can easily offend subbies in the process.
Be clear with contractors from the outset with what the process is going to look like and what stage you are up to. Practices that involve shopping around, under cutting or sharing subcontractors proposals create mistrust and distaste towards your business.
Project documentation and document control
Admin, admin, admin. It is the bane of existence for both Hirers and Contractors, but like eating your veggies, it is essential to have a happy and healthy business. From a Hirers perspective there are a growing spread of documents and paperwork that need to be finalised before, during and after a job for them to maintain compliance requirements. For the subcontractor, it is an admin requirement that serves no purpose to their own objective and has a big impact on their time. This mismatch of perceptions leads to an endless back and forth relationship that can become frustrating or bitter when it doesn’t go smoothly.
While technology is often touted as the big solution, most platforms quickly become overly confusing, time or labour intensive and end up becoming outdated, unused or irrelevant. When it comes to technology simplicity is essential. The more information going into a system and the more users accessing and interpreting the information, the more chance of errors.
For project documentation and document control processes to improve productivity, they need to be targeted and laser focused on collecting the absolute minimum required to meet compliance requirements.
Planning, scheduling, and coordination
It’s no secret that scheduling mishaps and uncoordinated calendars result in frustrating delays and wasted time spent sitting on the fence. Depending on the size of the job or project and the number of contractors involved, this can become a real headache.
While principal contractors tend to keep a tight hold on the schedule and use themselves as a single point of contact for coordination, a move to a more open approach may inject some flexibility that improves productivity. It’s a common protest from subcontractors that they are not included in the timing and scheduling plan until too far down the line. The buck has to stop with the project manager, however, giving subcontractors a say in the plan design from early on will significantly lessen unexpected delays. If the subcontractor is involved in the design, they have buy-in from the start and can anticipate realistic objectives without being pressured to fit into an un-realistic deadline.
Once again, open, often and transparent communication with all the subcontractors involved in a job will help to ensure things run smoothly and you keep your finger on the pulse.
Payment and incentive structures
Money makes the world go round, and overwhelmingly peoples first response to a productivity issue is to throw money at it. While the size of the pay check does matter, the way you structure it matters more. Similarly, money alone isn’t going to solve all your problems, and yes, I left this to last for a reason. If you can tackle the first 4 tips mentioned above first, the money part is going to become a lot easier.
Incentives for subcontractors is all about structuring them to be in alignment with the outcome you are trying to achieve. Don’t skip ahead though, an outcome doesn’t have to be the end result, in fact the best outcomes are small bite size pieces that anyone can digest. If you can work out a way to break your job/project down into small incremental stages and align your incentives with reaching those milestones, you’re 90% of the way there.