Once you have found yourself a few good crews, then it is time to focus on managing your crews effectively. Organization and communication are both crucial to successfully running a subcontractor production model. Throughout the process of working with subs there are four key aspects you will need to focus on:

1. Negotiating the pricing with a subcontractor
2. Communicating expectations and holding accountability to those expectations
3. Organizing your production schedule
4. Building a strong working relationship with your subcontractors

Negotiations on price

One of the first things you will need to do when setting your crew up is negotiate the price at which they will complete the work. Most subcontractors will only provide labor, while others may provide labor and materials (paint and masking materials). The general rule of thumb with subcontractor pricing is you want the subcontractor cost for labor to be at or below 40% of the total job cost and the cost for materials to be at or below 10% of the total job cost. This keeps your Cost of Goods Sold (Labor and Materials) at or below a collective 50% of the total job cost. Therefore if you have a job that you sold for $10,000 you would want to keep your payment to the sub at $4,000 or less for labor, and $1,000 or less for materials.

When it comes to negotiating with the sub, you want to make sure you are in control of the conversation. Do not start the negotiations by asking the sub how much he or she will charge for the job. They will highball you every time unless you have built a strong relationship with them. Also, ensure you are not paying a sub by the hour, as that can lead to much higher cost as you do not have control over their urgency of completing the job. Instead, you should pay a flat rate for the completion of the job, that way if they take longer on the job than expected, it does not impact your margins. Start the conversation with an offer. In the example above where a job total was $10,000, I would start by offering the sub $3,200. Knowing that I have a budget of $4,000 for labor this gives me $800 in flexibility if they push back on price.

From time to time, you will have a sub that starts a project and requests more money after working a couple of days. Normally, I would hold firm to the agreement, but it is important to hear why the sub feels they need more money. Use your own discretion, but if the sub has valid points on why he needs more money, or if there is more work than anticipated, you should consider working with them to come to a fair agreement.

Holding accountability

One of the biggest challenges with using subcontractor crews is that they are technically not employees. Because of this, you do not have full control of how things operate on the jobsite. However, just like working with employees, you can still set proper expectations and hold crews to those expectations. The first step to setting strong expectations is to get all of your expectations in writing using the subcontractor agreement form. This is where you will detail the following:

• Quality expectations
• Communication expectations
• Scheduling and promptness expectations
• Insurance expectations
• Warranty expectations
• Customer service expectations

Once you have a written agreement, it is up to you as the business owner to hold them accountable to those expectations. If you have a subcontractor that does not follow the expectations, you need to ensure you do not let them get away with it. If you allow them to get away with not doing their job properly once, they will think they can get away with it everytime. Here are a few tips to holding strong accountability to your crews.

• If a crew makes a mistake, always ensure they are the one fixing the mistake.
• The first job is the most important job to hold to your expectations. Do not be afraid to go over the top to ensure the first job is done perfectly.
• Do daily visits during the work day if you can, so you can catch a mistake before it is too late.
• Do not pay the crew's final payment until both you and the customer approve of the work.
• Hold up your end of the bargain. Make sure you follow through on everything you promised as well. Strong accountability needs to come from both sides.

Production and Crew Scheduling

Organization and communication is crucial to ensuring crews are being used as efficiently as possible. Subcontracting crews have schedules of their own, so you should create a production schedule that you can use to track your project’s start and end dates. Another key component of smooth production is ensuring that you have materials ready for job start. A project can’t start without the required materials of the job. When scheduling a crew for the job, use the following list of “To-Do” items to make sure it is set up for success:

• 2+ Weeks Prior to job start
• Confirm crew is available for the scheduled start date.
• Send project scope and details to subcontractors.
• Schedule a project walkthrough with subcontractors.
• Confirm material colors with the customer.
• 1 Week Prior to job start
• Conduct project walkthrough with subcontractors.
• Negotiate and finalize sub pricing.
• Fill out required paperwork - per job agreements.
• Ensure all materials are ordered for the project and will be ready for project start.
• Confirm project start date with customers.
• Day before project start
• Ensure all needed equipment and materials are on site.
• Send a reminder text to the subcontractor with address and start time.
• Send reminder text to customer with expected start time.
• First day of project
• Be present at the start of the project to ensure crews have a full understanding of the project and to set expectations.
• Double check to make sure all materials and equipment is onsite.
• Introduce the crew to the homeowner.
• Schedule a check in call or visit with the crew for the afternoon.

Keeping Crews Happy

Keeping your crews happy is crucial to having a smooth production operation. It is a possibility for a subcontractor to no-show, find other work, or walk off the jobsite if they are not treated properly. This can leave you, as the business owner, in tough situations. Treating your crews well will often lead to faster production time, more communication, and even additional subcontractor contacts once the word gets around that you treat subcontractors fairly. Here are a few tips to help ensure your crews are satisfied with working with you:

1. Always pay your crews on time. Once you have a set payment schedule with your crews, do not deviate from that schedule. Once a crew is consistently working for you on a weekly basis, I recommend having a weekly pay day.
2. Schedule jobs in advance. Oftentimes sub crews will be just as busy as you, so scheduling jobs in advance will help the crews stay organized themselves.
3. Make sure all materials are on site for the crew to complete the job. Crews do not like to make runs back and forth to the supply store as it eats up their working hours. If the crew is picking up materials, make sure everything is ordered and ready for them at the supply store so they can just make one trip.
4. Have a detailed job description and do a walkthrough with crews before the job starts to ensure they know all of the details of the project. Crews will grow increasingly frustrated if they need to redo work that they already did.
5. Try to earn the crew tips from the customer. It is not uncommon for customers to leave a small tip for the crew and the work they performed. This will help encourage your crews to work with better customer service and give them the opportunity to earn extra money each job.
6. Don’t be afraid to give out a bonus or buy them lunch. If a crew has been doing good work and generating a positive experience for your customers, make sure you reward them. Something as small as bringing them a gatorade on a hot day goes a long way with crew morale.
7. Treat them like humans. This one is self explanatory, but many subcontractors are treated poorly, because many other companies view them as expendable. Be polite and honest with your crews and they will reciprocate.

‍