It’s tempting to hold onto subpar trade partners when money is tight and their prices are good. You might also feel that you’re too busy to find replacements. But sticking with poor subcontractors can perpetuate problems with schedules and quality, and can damage your reputation and relationships.

My recommendations:

  • Pay more for performance. I prefer to pay a bit more to deliver the quality my clients expect than to suffer the consequences of subs who are stretched dangerously thin.

  • Have at least two subs for every trade. I like to have at least one electrician, plumber, etc., who is skilled at projects of $200,000-plus, and at least one who is very efficient at the smaller jobs. Explain that you have two of each — not to play them off each other but because you can’t afford to be in a pinch if one is unavailable.

  • Create, and have both parties sign, a subcontractor agreement for every project. Spell out your terms.

  • Enforce a “three-strikes” policy. At the first sign of a performance problem, notify the contractor and give him the opportunity to correct it. If the problem persists, help him develop a detailed corrective plan. If that doesn’t work, let him go.

  • After the first strike, start evaluating a backup. Make sure your replacement will be able to step in if needed.

Given the slow economy, it’s also a good time to review your trade partners’ prices for “subcontractor creep.” If needed, suggest that they realign their prices so that both of your companies can remain competitive.
—Andy Hannan is production manager of Mark IV Builders, in Bethesda, Md.