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Business - 3 min read

Dealing With Underperforming Subcontractors

Jason Hook

Head of Sales and Marketing

Aug 12, 2016 9:42:00 AM

Dealing with underperforming subcontractors can be a real nightmare. It disrupts workflow, creates delays for other scheduled subcontractors and can send your work costs sky high. Not to mention missing the project’s contractual agreements.

In short, unless this bump in the road is ironed out immediately, it can cause some real havoc to your overall project. 

Before looking at how to manage a situation like this, it’s imperative to keep in mind that no subcontractor purposely underperforms. A subcontractor bears a lot of upfront costs before commencing the project, so to intentionally shirk their responsibilities doesn’t work in their favour either.

Difficulties with subcontractors may be as simple as overestimating their capabilities. But how can project managers approach subcontractors who let the team down?


Prequalify Your Subcontractors

Before bringing on board any subcontractor, determine if they qualify for the job. Ask yourself, are they financially, physically and mentally capable of carrying out the project? Those who don’t meet your requirements can easily be set aside, so you can focus on those who can. If you’ve got a handful of suitable subs, call for each of them to bid on the project. 

Be sure to keep communication streams open and be honest during this process. If you have subcontractors asking why they weren’t included in the bidding, be sure to explain your rationale in a professional manner. Educating them and maintaining a good relationship allows them to see how they can improve for next time. Doing so also sets the standard for those who work with you. 


Watch Out for Warning Signs

Poor performance doesn’t come about without warning signs. You can attempt to nip underperformance in the bud long before it becomes a real threat to the project at large.

For example, you may notice poor time management, delayed deliveries or even that your subcontractor's team seems to be changing daily. Other red flags may include behavioural changes or failure to pay their suppliers. 

All these signs are an indication that something isn’t going to plan. Speak up and address the issue with your subcontractor directly, and quickly. They won't always be forthcoming with concerns, so it’s up to you to take charge.

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Set Plans 

However, there will be times where your sub comes to you with a problem. They may be having issues with their own subcontractors or suppliers - or cash flow setbacks. If cash flow is a problem, determine whether you’ve inadvertently caused the issue. If you’re lagging with your payments, or doing so inaccurately, these issues can be quickly rectified.

Sit down with your subcontractor and create a plan of action. Subs can often fail because they’re not entirely sure what is required of them. Create a step-by-step checklist and strategy for them to work against.

Remember, terminating your subcontractor can be expensive. Explore alternative options like hiring another subcontractor to carry out the works, renegotiation of the sub’s contract, procure materials and equipment yourself or assist with payroll and supplemental staffing.


Make the Call

If you have addressed your sub’s under-par performance and there has been no attempt on their behalf to change, you may need to consider their termination.

At times this can be a difficult decision to make. However, you must consider how the overall project timelines will be affected by keeping them on board. More importantly, what will be the financial implications for you? 

Refer to the Fair Work Building and Construction website to ensure that any necessary termination follows procedure.

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