Subcontracts
Subcontracts in the construction industry are the preferred method of doing business used when affronting complex situations. Although it will require some additional legal steps and precautions, when completing or servicing specialized areas it is the best way to manage a job without adding personnel and overhead costs. The benefits of using subcontractors are:
Useful if the project scope is too broad for the contractor.
Can free up time and resources so you can concentrate on growing your construction business
Usually less expensive than hiring a full-time employee
A construction contract must be written to ensure warranties of the service being provided
Subcontractor must provide its own equipment
Reduce the payroll taxes and benefits being paid
Payment can be used as a tool to negotiate for completed and accepted jobs
Construction contracts can be ended easily
Can provide you with additional knowledge and resources
Legal responsibility could be transferred to the one executing the job
Your organization can vary in size from one day to the other
Cons
Loss of control over the quality and timeliness of work, however, this can be controlled
Misrepresentation of a contract can lead to severe fines by IRS.
Some employees can turn mad thinking that they could be replaced
Normally follows its own rules, if not stated differently
Performance criteria can be an issue
Will prevent you to develop your own staff
Time must be spent analyzing and reviewing other company's work
Direct Hire
There are some cases when you need to hire someone directly for a construction job and create your own staff to handle projects. Usually routine 'simple' construction jobs are the ones assigned to directly hired employees. Direct hire method for construction jobs will give you assets, the most important ones; your workforce. If you decide to hire someone permanently you must consider for how long does the employee will be needed and the benefits that you will get when hiring someone. Direct hire can also have some benefits:
The construction company will have immediate results
The employee will provide continuity to your ideas
The rules are set by the employer
The employee can provide multitask services and serve in different construction trades
The employee can provide great input knowing the specific needs of your construction company
Employee can be trained to do specialized construction jobs
Quality control can be closely tracked
Work hours can be better defined
A company with employees is better looked than construction companies performing only with sub-contractors
Employees are always available
The construction cost can be 'controlled'
The construction worker is expected to have greater loyalty to your company
Cons
Will add overhead cost for your construction company
Equipment must be provided
Employees have broader rights when compared with sub-contractors.(This can also be a benefit.)
Taxes and benefits will be added to the employees' pay check and to your operational costs
Controlling their productivity is harder
Requires training and additional resources
It is up to you the decision on how to get your workforce. Remember to check with the IRS and with your local or state agency's to assure that you are doing things correctly.
