Don't Screw the Subby!

Your take away from reading this blog post, as an up and coming construction industry professional is simple – you don’t need to screw someone else down to make a profit on delivery. 

There is an affliction in the industry for builders to simply screw down the subcontractors to make a profit. Huge generalization, I’m aware, but it’s so common.The fragmented nature of the industry means competition is rife, and clients have options. So to win a project in a very competitive market, some builder’s go in on a negative margin, at cost, or with a really small margin to win the project. In order to win this back, or even maximise the percentage of profit on a project, builder’s seek to get this back from subcontractors – by either negotiating heavily at tender time, or being unfair and “stitching up” subcontractors by not paying them, or withholding money in some form. Now head contractors and subcontractors are bound by a contract, and the contract is in place to protect both parties, so I think it’s fair play that both parties are to maintain and fulfill their contractual obligations. And when there is a breach, well the contract has certain mechanisms to protect both parties, and agreeably at times, they need to be used.

I'm all for fair and reasonable. 

But so many subcontractors go under because of bad business with builders. This is just one negative consequence of being such a cost driven industry. Of course, we all want to pay fair market value for goods and services, no problem with that. I once had someone quote me $28K for supply and install of 13 LVL’s, that actually cost $4K to complete! So I won’t be overpaying, that’s for sure.

So many projects as an entity of their own suffer because people are conditioned along the way to work against subcontractors rather than with them. Why? That the only way to deliver a project on time is to screw the little guy. To play the adversarial game, to be impossible to deal with. Who told you to do that?

Guys, stop. Subcontractors, are people too, with businesses to run and families to support. They’re not greater than or lesser than a head contractor, we’re all damn equal. Have perspective – if this was your business and you’ve done the work, it’s all good, and you don’t get paid; how would you feel? Or how would you feel if someone set intensely impossible timeframes for delivery that you had to agree to in order to get the job to stay afloat, and then get “yelled” at for being, two days behind?! Do you feel better about yourself a person by having screwed someone down which set their business trajectory to going into bankruptcy?

Subcontractors on the whole have also become more contractually savvy in response to builders, but the cost of lawyers, or having in-house contractual expertise is still not commonplace because generally their businesses are smaller, so there are times when they’ve signed up to a contract and are left exposed to financial loss. Considering how many jobs they have to tender, it’s not feasible to have a lawyer review each and every contract!

And hats off to the subbies. Seriously. Especially the owner-operators, who do the physical, delivery work during the day, then go home to do admin, and emails, and quote work. That is freakin’ commendable.I’m pleased that I have successfully delivered projects at a profit and have subcontractors who will happily price works for me, and want to work on projects that I am delivering because how great I am to deal with. I’m firm, but fair and reasonable, and that should be the expectation. 

Remember, construction is about building long term relationships, and one day, you’ll need a favour from a contractor. Do you think they’ll jump for you if you’ve been horrible? No. No they won’t. It helps a lot when a contractor will ramp up their labour for you because they know you’ll pay.

I could go on and on.
So when you’re entering industry, and before you get conditioned to start screwing everyone down, think about this:

A collaborative framework to project delivery will maximize your success. Everyone can make money -the client, the builder, the subcontractor, the supplier. News flash.

What we fail to realize is that in the process of contracting is that we have created another entity and that is the project. The project suffers when everyone is literally playing games and looking to screw down anyone. Contractual claims can burden efficient collaboration in construction. I perceive that a collaborative framework for project delivery is essential; let’s have teams that are working towards a common goal and can all walk away with success stories rather than war stories. Let’s rescind the adversary. It’s certainly a project environment that I perceive as conducive to success and one that I hope to see across all tiers of project delivery – wouldn’t that be a great future?

The industry has huge, deeply rooted systemic issues which need to change for this to become a norm, but for as long as I’m on project delivery, that’s exactly what you can expect to see. 

Want to read more on my approach to collaborative frameworks? Check out my industry commentary in the Australian National Construction Review, Page 10!