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Construction Jobs: Subcontracts or Direct Hire

Construction Jobs: Choosing between Subcontracting or Direct Hire

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Workers working with metal on site
Jetta Productions/Blend Images/Getty Images
Subcontracts vs Direct Hire? Tough question and harder to answer. Sometimes you will ask if it is better to have the job subcontracted or to hire someone directly to do the construction job. Subcontracting can offer you some warranties and hiring someone directly will require additional efforts from you. But what is the best decision? Well, we cannot answer that simple question without analyzing further in details the description and kind of job that you are trying to complete.

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.

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