A Good Trade-Off

The word “subcontractor” has gradually gone out of vogue. Break it into its two natural parts and you'll see why: The prefix “sub-“ means “under,” “below,” or “beneath.”

The movement away from “subcontractor” toward “trade contractor” isn't just a product of increased sensitivity and political correctness. Rather, it reflects a shift in the prevailing attitude that trade contractors are inferior to general contractors. The new philosophy is that trades are most effective working with remodelers and builders, not for them. “We look at [trades] as an extension of our business,” says Bill Fannin, co-owner of Post & Beam Design Build, in Forest Hill, Md. “We're just as concerned about their bottom line as we are about ours.” Those sentiments were echoed by nearly everyone — remodelers and trade contractors — interviewed for this story. That a strong working relationship between the two is mutually beneficial and profitable seems indisputable.

Working efficiently with trade partners means identifying companies that have values and goals that mirror your own. To find the right trade contractor, remodelers must first “figure out what kind of remodeler they are,” according to Dick Cissel, president of Apple Electrical Services, in College Park, Md. For example, “If they are trying to be a budget-conscious remodeler, they need to use electricians and plumbers who are also budget-conscious.”

The closer you align your business with your trade contractors', the closer you'll be to being a team. Remodelers and trade contractors who have accomplished this goal note that they are more effective overcoming the unforeseen obstacles that are inevitable in any remodeling project. “Very few problems are one person's fault,” Cissel says. He adds that the best way to approach them is not for the remodeler to ask the trade “What are you going to do about it?” Instead, both parties should ask themselves and each other “What are we going to do about it?”

Jim Strite, president of Strite Design + Remodeling, in Boise, Idaho, strongly believes that good trade contractors are essential to his company's success. “We're looking for raving fans,” he says, “and that applies to trades as well as clients.” Strite has paid for personality profiling for some trades, so that his project managers can learn to communicate better with them. He's also given them the kind of training he might give an employee (such as “The Seven Habits of Highly Effective People” seminars), and says he consults with them on business practices, even helping with a succession plan, in one instance.

There is no consensus among remodelers as to when to bring trades into a project. Even the trades themselves differ greatly in their preferences. Some don't like to be involved much until they're needed in the field — “I put in the pipes; I know how to do it and I'm good at it,” says Boise plumbing contractor Jim Romano — while others like to give as much input as they can. “I'd rather help establish the budget than have the remodeler make a wild guess,” Cissel says.

Strite likes to gather his trades for what he calls a “trades party” for medium-size and larger jobs. Together, they all go through the proposed design, discussing budget and potential trouble spots. “It gives them an opportunity to buy into the project so that once we start, they aren't coming back to us with stuff,” Strite says. “We impress upon them that they'll need to eat some of that if it occurs, but we give them the opportunity up front.”

Keep in mind that trade contractors aren't much different from remodelers. Both are small businesses for which time is money. Just as you may not want to be asked to come up with a design before receiving financial commitment from a homeowner, trades don't want to be asked to submit bids without a reasonable guarantee that they'll get the work. “The contractors who drive me crazy are the ones who aren't respectful of my time,” says Shane O'Harra, owner of Boise cabinetmaker and installer Timbercraft.

Before his “trades party,” Strite secures a design agreement from the client. “Trades know that if they are invited, they have a 75% chance of getting that project,” Strite says. “We're not inviting five electricians to bid on it. So only if they are way out of the ballpark on price, or if the client doesn't do the project [would they not get the job].”

But not all remodelers work with trades in this way. Those who don't, tend to think further in advance by getting general pricing information and keeping it handy. Geoff Horen, CEO of The Lifestyle Group, in Indianapolis, says that he typically does his estimating based on unit pricing. “If I have their pricing, I don't need to go through the process of getting a bid from them,” Horen says. He adds that he revisits pricing with individual trades every year or so — more often in the rare case where rising material prices necessitate an immediate change. If a trade initiates a price change, “anything already in the hopper remains under the old pricing,” Horen says.

This practice isn't without risk. It puts the entire burden of accurate estimating on the remodeler. “If we miss something, we'll eat it,” Horen says, noting that he doesn't try to pass such costs on to clients or trades. “We don't make our problems their problems.”

On the positive side, it saves Horen the trouble and time of having to arrange for the trades to walk through the project. The Lifestyle Group's relationship with its trades is also good enough that if a hidden or unforeseen condition does arise, Horen will know before he gets the bill — in time for him to negotiate any change orders allowed by his agreement with the homeowners.

Getting trades' input on the job falls under “communication” and “preparation,” and there's a lot more to both as they apply to the remodeler-trade contractor relationship. Once you have the contract and have chosen the trades, you need to be in regular touch with them regarding the schedule.

“The more notice, the better,” says Wes Carver, president of Wes Carver Electrical Contracting, in Telford, Pa. “A job I heard about a month ago gets priority over one I heard about three days ago,” he adds.

Setting the schedule as soon as possible, then, becomes important. Fannin says that as soon as a client signs a contract, the company alerts the trades to the tentative timeline for the project. That early notification not only gets Post & Beam Design Build on the trades' schedules, but “gives [trades] the opportunity to be efficient,” Fannin says, by, for example, applying for several permits at once rather than making multiple trips. Moffitt calls to remind trades two weeks before they are scheduled to be on a job. He follows up with a call the next week, and places a third call the day before.

Greg Henry, owner of Stephen Davis Construction, a framing contractor in Falls Church, Va., says that one thing remodelers could do better is have all materials ready for him. “They are used to their people working at a certain pace,” he says, so they think they understand the pace of the job. But Henry and his crews can work faster, since it's their specialty. “My end of the job is all labor,” he says. “If I have guys standing around [waiting for materials], it's very costly.” Scheduling the trade in phases — so that they have to be on site multiple times — is similarly bothersome.

Of course, every remodeler knows that an unchanging schedule is a fantasy. And for the most part, trades do, too, and respect the need for flexibility when working on a remodeling project. “We understand that certain things are beyond even the best remodeler's ability to control,” says Nigel Costolloe, president of Brookline, Mass., painting contractor Catchlight. Carver says his company writes its two-week schedule on a whiteboard, because “we're always erasing it.”

However, the more notice you give, the less likely it is that the trades will stand you up — a constant source of grumbling for remodelers. “When we find out about stuff at the last minute, that throws me into a tailspin for that day,” Carver says.

Once on the job, trades would much rather talk to someone familiar with the site, rather than the company owner. “It's important that a quality supervisor is there to help work through problems,” Henry says.

Carver also says he'd rather be in communication with a lead carpenter. “He's more realistic, having been out on the job every day,” Carver says. “A company owner is more likely to have us in there on top of people,” pushing to get the job done on schedule.

While sticking as close to the schedule as possible should be a goal, you don't want to take it too far. Squeezing as many trades as can fit on the site in order to stay on schedule is likely to make them even less happy than a last-second delay. Costolloe says that he can price a job fairly precisely under the assumption that his crew will be working without interference from other trades (as a painting contractor, he's usually on site toward the end of the project). However, if the schedule is squeezed, his efficiency will suffer. And, he says, “it's hard to estimate what that interference does to production rates.”

A good number of these schedule crunches come when homeowners request changes or take more than the allotted time to make selections. The best remodelers, says Costolloe, are the ones who are “confident enough to push back” and explain that change orders and selection delays will alter the project completion date. “But a lot of remodeling companies are fearful of saying that,” he says.

The end result of the “crunch” scenario is that someone loses money — and it's usually the trade. “Rarely does the remodeler want to take on an additional charge for the inconvenience,” Costolloe says. Put trade contractors in this situation too often, and you're likely to end up with business owners who aren't willing to go the extra mile for you when you need it — or to work with you at all. “A lot of painters just swear off remodelers forever,” Costolloe says.

Money is another area where you should apply the Golden Rule. Fannin's goal is to pay his trades ahead of schedule, when they bill him (rather than having a standard invoicing period). Horen says that The Lifestyle Group pays its trades every Friday for work completed through Wednesday — with Thursday reserved to verify the work being billed.

These examples describe an ideal, but the main thing, Costolloe says, is that “we want to always be working on someone else's nickel, instead of our own.” Sound familiar? If you're not willing to work without payment from the client, why should the trade work without payment from you?

Whatever payment schedule you and your trade agree upon, stick to it. “I don't have to get paid a certain way,” Cissel says, “but I do need to know what the plan is.” If a problem arises, be up front about it. “If it's going to deviate, I'd much rather that [remodelers] call me than me call them [looking for a check].”

It is also up to your company to set standards for your projects. For instance, telling the trades that you expect a clean jobsite isn't sufficient. It's the responsibility of your lead carpenter (or project manager or supervisor) to enforce those rules.

Why? Continuing with the cleanliness example, “If I show up at a site and it's not clean, I'm not going to leave it any cleaner when I'm done,” O'Harra says. Part of that is practical: O'Harra schedules and estimates based on having to clean up after he's finished. If he spends that time cleaning before he starts, he doesn't have it to spare when he's done.

But there's a more subtle, psychological aspect: “If I have to clean the area before I install cabinets, it reduces my respect for the job,” O'Harra says. That's not to say that he intentionally does inferior work on those projects — what good contractor would? — but there are bound to be ramifications of this perception bouncing around his subconscious. And the negative influence of this attitude will be even more pronounced in someone who, unlike O'Harra, isn't attuned to it. That probably describes most people, and work done under those conditions is likely to be sloppier.

If you achieve positive and mutually respectful relationship with your trades, chances are you'll be rewarded with more than just a profitable job that runs smoothly. Good trade contractors rarely lack work, and quite often will have two or more general contractors vying for their services. They do their best to accommodate everyone, but there are times when they have to give preference, and their decision to choose you over someone else hinges on your history with them. Cissel says he'll give preference to a remodeler who exclusively uses Apple Electrical Services. O'Harra says he may push back another project or work his guys overtime to accommodate the schedules of his best contractor customers. Henry says he's willing to help his preferred contractors solve problems, but adds that “it may not be worthwhile” to peel personnel off one job as a favor to certain others who he works for.

Fannin says that he has found his trades to be great business consultants. “They work for other general contractors,” he says, so they are exposed to a variety of methods for handling things like change orders or site preparation. “We've had great feedback [from trades] about how we can be more profitable.”

But most trades aren't going to volunteer those opinions without being prompted. Fannin is sure he's not the only remodeler to ask for that feedback, but the practice is “not so typical that they are expecting [remodelers] to welcome suggestions and criticisms with open arms.” Asking your trades or anyone else what they'd do differently in your shoes isn't going to hurt anything, and it could be a big boost.

Other benefits you'll see directly on your bottom line. Costolloe says he'll take a reduction in his anticipated profit for the right contractor, “out of loyalty.” That might mean eating a change order, or working overtime without billing the remodeler for it.

On rare occasions, Costolloe has even put his crews on a night schedule to keep a job on track while avoiding conflicts with other trades. “Good remodelers are a source of constant business for us,” he says. “We are prepared to bend over backward to accommodate them.”