Longtime construction coach and consultant Michael Stone is troubled when he hears about remodelers planning to save money by bringing in-house what they once farmed out to specialized subcontractors.
“A company will not cut costs by bringing the work in-house,” says Stone, of construction industry business management training company MarkupandProfit.com. “I hate to see these guys dig themselves into a hole without even realizing it.”
More Than Just Cost
Specialized trade contractors are almost always more cost-effective on fixed-price projects, Stone says. He recommends that remodelers look beyond their need to keep their guys busy and not get hung up on trades’ high hourly rates. (Although this could apply to cost-plus and time-and-material jobs as well, Stone says that cost savings aren’t as important to contractors on those jobs because costs are passed on to the client.)
Faster job completion. “Specialists will almost always do a job faster than someone who does not do the work every day,” Stone says. Their experience means fewer delays due to unforeseen problems and less time spent searching for the parts and materials that skilled plumbers, electricians, and insulation contractors almost always have on hand.
Higher quality. Specify your standards before you get your quote, and a specialized trade contractor will deliver a well-done job at the price you expected. “You don’t have to pay them until it’s done the way they agreed,” Stone says. If your employees do the work poorly, by comparison, you’ll still have to pay them — possibly twice. You’ll also eat the cost of materials that were wasted in the process.
Think about warranty too, Stone says. If something goes wrong post-completion, wouldn’t you rather have your trade contractors take responsibility, at their expense, than you at yours?
Lower price — usually. Skilled subs require less overhead than employees, and their time efficiencies (and possibly material-purchasing efficiencies) should produce lower costs. They already own the tools, equipment, and vehicles required for specialty work. And, again, their experience minimizes surprises and delays.
All true, says Gerard Heid, a client of Stone’s. His Colorado company, Heid Remodeling, works on a lot of expensive vacation homes, and he takes the time to do exploratory work that enables his trade contractors to produce a confident flat-fee price.
There’s also the long-term relationship advantage, Heid points out. If something goes wrong down the road — say, with that Sub-Zero fridge or home-automation system — he appreciates being able to return to his specialty trade contractors to make things right.
Which brings Stone to another caveat: “You want subs that are experienced and paid well enough to stay in business.”
—Leah Thayer, senior editor, REMODELING.