One of the most troublesome of problems in a tight market is a difficulty in securing and keeping enough qualified sub-contractors to keep projects moving on schedule.
While there's no magic solution to this problem, the best solution is establishing and maintaining strong relationships with your sub-contractors. This is a long-term process, and you can employ a number of different strategies to achieve your goal.
Pay on Time
Few things get the attention of a sub-contractor like timely payments. If a sub has to choose between a builder who pays like clockwork and one who is a little slower, the fast payer will win every time.
You may even want to consider offering an accelerated payment schedule. For example, if your cash flow allows, you may agree to make a payment each Friday for work done during the week -- if the contractor shows up every day as scheduled. But be careful that your payments don't get ahead of the actual work in place.
You also need to make clear that these are special arrangements, not a new norm. Advise the sub-contractor that your current cash flow allows this type of payment schedule, but only if the project can be completed on time.
Discuss the Schedule
Sub-contractors need to schedule the jobs they take just as you do, so let them know what you need as early as possible. Also let them know what you have coming up in the next few months to help them gauge their own workflow.
If you fall behind schedule, be sure to notify the sub as soon as possible of any necessary scheduling changes. With early notice, he may be able to reorganize his own timetable to accommodate your revised needs without losing any work days.
It's also a good idea to confirm with a contractor a few days before a project is set to start, and again the night before. This not only serves as a reminder and confirmation, but it's also a signal that you are alert and ready. If the sub needs to delay someone, it will probably be whomever he thinks he can put off with the least difficulty. Make sure that's not you.
Pay a Bonus
You always want to keep a close eye on costs, but in especially tight markets it may make sense to pay a bit more to get the project completed. Interest, postponed closings, and dissatisfied clients can all cost more if your project gets delayed.
Try to offer any extra payment in the form of a special bonus rather than a straight increase in price. This helps keep your "regular" base of pricing steady. It also allows you to easily attach specific conditions -- for example, a 10% bonus if the job is begun and completed on time.
Be a Valuable Client
Few sub-contractors will want to alienate builders they consider to be valuable customers. Obviously, timely payment practices and effective communication are the major factors in establishing a position as a valued customer. But there are a few other things you can do, as well.
For example, think about recommending the contractor to other builders, though not when things are so busy that your project is falling behind. Also make it clear that he can use you as a reference for new clients.
It also helps if the contractor expects that you're here for the long haul -- that he is in line to see significant future work from you. Mention any pending projects, even tentative ones, so the contractor has a mental note of this future workflow.
Be a Pain
Like most business owners, sub-contractors are sorely tempted to take too much work when it is available. When this happens, someone's project will get delayed. Make sure it's not yours. You've scheduled early and reminded the contractor of the start date. If the crews still don't show, it's time to become the squeaky wheel.
Call the sub right away. If you can't reach him, get into your car and go find him. Ask why no one showed up at your jobsite. Insist that your work be done in a timely manner (meaning: start tomorrow).
Don't get angry or yell; just be firm and professional. You also want to be reasonable: if the sub is a couple days behind because of weather, for example, it's probably best to accept a brief delay without too much complaint. Just ask for the contractor's assurance that your work is next and establish a new start date.
Know When to Pull the Plug
The last thing you want is to be looking for a sub-contractor on short notice in a booming market. Nevertheless, you'll probably eventually find yourself in just that position.
Sometimes, despite your best efforts at communication and fair dealing, a contractor will repeatedly fail to live up to obligations. If a history of problems develops, you have no reason to expect the behavior will improve. That's the time to start looking for someone else. Just be sure you don't fire the original contractor until you've secured a new one.
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