The terms, contractor, and subcontractor are often used interchangeably, but it is important for all parties involved to understand the differences between the two roles and how they work together to complete projects effectively.
The majority of construction work is carried out through contracting processes where a construction or project management firm wins a contract to complete work and then completes that work in exchange for money. This party is seen as the prime contractor. The prime contractor then brings on subcontractors to aid them in completing the work.
Let’s learn a little bit more about both contractors and subcontractors:
A contractor is a person or a company that seeks to do business by obtaining contracts and carrying them out. Being a contractor is similar to being a business owner – they negotiate deals, work for themselves, and retain clientele.
Subcontractors also work on a contractual basis, and they also offer a particular set of skills that they perform for customers. The key point about subcontractors is that they form agreements with the contractor, not with the customer. Subcontractors often specialize in one specific area of construction and try to network with contractors who negotiate for larger jobs that include this area of specialty. In this way, a successful subcontractor will always have work, thanks to their network of contractors.
With both roles comes different skill sets and areas of focus in regards to completing the job. For instance, subcontractors tend to specialize in one specific area. This makes subcontractors especially good at product and service delivery for their area of expertise. Contractors however are focusing on the big picture of a project. This means understanding things like financials, profit/loss, cost of doing business, time invested in a project, managing expectations whether the customer is happy, and a great deal of other potential concerns.
The key takeaways are that it is very important to hire subcontractors that you trust, and that has a reputation for both doing quality work and acting in good faith. For prime contractors, the scope of projects they take on grows with the number of quality, professional subcontractors they have access to. Therefore, it makes sense to build their network of professional contacts as much as possible. Working with subcontractors presents a unique set of challenges but is a great way to increase profits and create customer satisfaction as a prime contractor.