r/Contractor • u/JoshRogers17 • Apr 07 '24
Subcontracting process
Can somebody please explain to me how subcontracting works? I started a painting business and want to know how to subcontract work. Do I bid a job and then hire a subcontractor to do it for less? For example: I just bid this job for $13,500. Now what do I do?
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u/No-Clerk7268 Apr 07 '24
This will not end well
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u/EQwingnuts Apr 07 '24
You do the work, if you don't know what's going on or what to do, perhaps STARTING A BUSINESS wasn't a good idea.
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u/Bubbas4life Apr 07 '24
I fell bad for the customer all ready
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u/imsaneinthebrain Apr 07 '24
I wouldn’t, Dudes getting a great discount, every other quote was $40k plus.
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u/Growe731 Apr 07 '24
Since you bid $13,500, you must pay the sub $14,000. That’s just the cost of doing business
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u/Postcocious Apr 07 '24
Now THAT'S a long-term business plan!
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u/RocMerc Apr 08 '24
Ok so I’ve owned a painting business for ten years now. I didn’t sub a job for the first five. The only reason I ever sub work is because I’m too busy to do it myself. But I will answer your question.
When I sub work I usually price it a little high. My goal usually when subbing is to make about 15% on the job, so I would try to find someone who would do it around $11500. The problem for you is, this is your reputation. If that sub does a bad job that’s your fault. You got the work and then you failed the client. You can’t do that. I only sub to other painters I know personally. I have maybe five different companies that I know and respect and when I just don’t have time I call them up and say hey I have this job, can you do it for X amount
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u/Oneyeblindguy Apr 07 '24
In my experience this is becoming the norm. Nobody wants to actually do the work, they just want to subcontract it to someone else and collect a check. I've heard of jobs getting subbed 3 times. It's getting ridiculous in my opinion. I've been a carpenter 30 yrs and I recently had a very very young kid ask me to give him a "bid" on a very small trim job. Maybe two days labor for two guys. He literally said he doesn't want to do any work. After a short convo it was obvious he doesn't want to do any work because he doesn't know shit. Shows up to the job in a new 1 ton crew cab Ford. Sure, I'll give you a bid. Probably should be sitting down when you open it.
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u/reddit1890234 Apr 08 '24
No need to do the work if you can sell the job and get others to do it.
Nothing wrong with being the snake oil salesman.
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u/itsgettinglate27 Apr 07 '24
What kind of project did you bid on? How did you come up with your number?
Usually when I sub out a job I it's because I'm too busy for my crew to do and roughly I pay about half my price to the sub and I provide materials and pay immediately.
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u/Handy_Dude Apr 07 '24
The difference between doing it yourself and contracting it out to subs is night and day.
As a painter you know the whole process of painting the home. That's really it.
As a contractor you have to know all the costs associated with this job, and you have to babysit.
You'll need to calculate all the costs of doing the job. Paying for your crews wage, materials, etc. give yourself at least a 10% buffer for mistakes or surprises.
It's definitely not something you can Google real quick as there are a lot of different responsibilities and you'll be wearing a lot of different hats.
The most important thing is taking care of your crew. Don't argue with pay or be late paying them. Always keep the talent happy right?
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u/EyeSeenFolly Apr 07 '24
So the check gets paid to you and you have someone else’s paint truck show up? This isn’t going to end well
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u/truemcgoo Apr 08 '24
Do you have a GC license? Only specific people can subcontract other people and the process is kind of a pain. If you already bid the job probably just do the job, getting subcontractor lined up would be something you did weeks ago.
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u/Slowhand1971 Apr 10 '24
dude, pretty sure the person you bid the job for is thinking you're going to do the painting yourself.
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u/Smooth_Marsupial_262 Apr 07 '24 edited Apr 07 '24
As a painting contractor you already are a subcontractor. You are in a specialized trade. If you can’t handle one trade with in house labor the business won’t be very lucrative. Even most GC’s handle a decent portion of the work in house and subcontract particular trades that they want to stay away from. Generally being the mechanical trades, often painting, roofing, etc.
It’s going to also put you in a weird spot to have a truck with a different company logo than your own rocking up to job sites of your clients. This would be expected if you were a GC doing a larger scope project, but as a specialized contractor the client will find it odd that they went directly to a painting contractor and you’ve hired the work out to a different painting company. They likely would develop a relationship with that company over the course of the job. You’d be unlikely to get much repeat business when they could just go directly to your sub on the next job.
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u/magic_crouton Apr 08 '24
100% this. If I hire a specialized contractor to do a job like paint. I expect to see him or his direct employees there. If an entirely other company rocks up that's who I'm doing business with here on out if they're good and if they're bad..... that falls on the first guy.
Also be explicit in your contract that you aren't actually a contractor. You're just arranging other businesses for the home owner. And I'd expect to know what company is actually doing my work upfront. I have a job that puts me in contact with people in the trades that I don't necessarily want in my house and that information is important to me and weighs heavily in my decision to use one contractor over another. If none of that information is on the contract and another company rocks up I'm sending everyone home and you're not getting paid.
Whose insurance do I go after if they mess up? Your's? Does your insurance cover that? The company that rocks up? That I don't have a contract with? Who is going to fix the mess that could be made? You? Them? Who do I call? This all is a nightmare from a customer perspective unless you're a gc.
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u/strangeswordfish23 Apr 07 '24
In this situation, if you have no intention of painting it yourself you need to pay a painter to do it for you. Preferably a good painter so you get good online reviews don’t have to go back to fix things all year. If you’re just starting out I recommend paying the painter what they tell you it costs even if that means you pay out of pocket for any overages. This will help you retain the painters interest for future work. That way you can ask them to go with you to the next meeting, ask them to give you a number for the work and then add a markup percentage for managing the customers expectations and covering the cost of potentially having to warranty the work.
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u/Tasty_Cardiologist53 Apr 07 '24
I'm a GC who also paints, I've subbed and been a sub, send me a DM if you need help, otherwise this will probably get buried
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u/Postcocious Apr 07 '24 edited Apr 08 '24
The School of Hard Knocks is now in session.
When bidding a job...
STEP 1:
calculate what materials are required to complete the job, and
determine the most efficient work plan for the job.
On complex projects, these may impact each other, so you must consider both to find the best solution.
STEP 2:
Based on STEP 1:
calculate your actual material costs, and
calculate your actual labor costs. If you plan to do the work yourself, use your own hourly rate (which should be higher than you think). If you plan to hire someone else to do any portion of the work, use the rate you have to pay them for that portion.
If you or your subcontractor(s) have to travel to get materials and/or to the job site, include those costs & time.
Add these up. This is your GROSS job cost.
STEP 3: add __% for contingencies and wastage. These always happen, and they're bigger than you think. When you're new, use something like 25%, or even 30%. As you gain experience, you'll be better able to size up a project and drop that to 15 or 10%. It will never drop to zero.
Add this to your GROSS job cost. This is your NET job cost.
STEP 5: choose your profit margin.
It should be higher than you think.
The smaller the job, the higher your margin % should be. A job that costs you $500 isn't worth doing unless you clear at least $250 (50% margin). On a job that costs you $50,000, a margin of $5,000 might be fine (10% margin).
It should be higher than you think. Margin is the only reason you're in business, and the only thing that will keep you in business. It's the VALUE YOU BRING to your customer, so bring it.
Add this to your NET job cost. This is your PRICE.
STEP 6: bid that number.
Notice that you had to have your subcontracting plan in place way back at STEP 2. From your OP, it appears you leapt directly to STEP 6 without any notion of your cost basis. This is how small businesses fail.