This is another in the continuing series spotlighting the games that general contractors and subs play. This one is called, “Sub Sub,” and it is found in a broad range of project types from residential to commercial and institutional. It happens in both the private and public sector. In other words, it is a widespread practice by subs who want to maximize their profit, minimize their risk and overhead, and who do not much care for the well-being of the workers on the job.
What is it? The Dictionary of Construction defines it as: “One under contract to a subcontractor for completion of a portion of the work for which the subcontractor is responsible.” Sounds reasonable enough, but like the other games we will talk about, this one is regularly gamed in a variety of ways.
For example, take a hard bid or low bid job where a company with little or no field labor force wins a bid and then hires another sub contractor to do the work under the original contract and then that sub contractor hires 1099s or independent contractors from a “labor broker” to do the work that the original sub is responsible for.
Why is it a game? Like any game, there are winners and losers. More losers than winners. The owner and GC lose since they might not know that the winning contract number they got from the winning sub was based on that sub hiring another sub to do the work. The original sub might not have the workforce with the skills to even do the original job and goes to other means to “get the work done.”
The owner loses when the quality of the construction is not up to standard, the work is not completed on time, and there are numerous rework issues, change orders and delays. These delays are costly for the developer, owner and GC and can create the need for additional construction financing. This game also creates additional risk, stresses insurability and bonding and creates other issues that generally ripple across the entire project.
The craft workers or 1099s lose in that they may be paid in cash daily or weekly, by the piece they put in place, receive no overtime, no healthcare benefits or worker’s comp if they are hurt on the job. They receive little or no safety or craft training and they are shuffled from jobsite to jobsite or return to the parking lot.
It is a problem for the owner and the tenants who will live or work in the finished project, especially when poor craftsmanship causes cracks, structural failures and re-works on projects well before normal wear and tear would require it.
The industry suffers when responsible subs hire craft workers as employees, pay them by the hour, pay them overtime, provide benefits and worker’s comp and they try to compete in the marketplace with folks who allow sub subbing and they fail in that competition because the sub subs are gaming the system.
How do you spot it? These are a few of the clues. You see that sub picking up laborers at the local Home Depot or on the corner. You never see the same workers on the project from week to week. The original sub doesn’t know who is on their crew. You see the sub paying the workers in cash.
How do you stop it? One of the easiest is to credential everyone on the project, take bids from only responsible contractors and subs, call out the sub subs for what they are, and improve the industry.
We are interested in hearing your thoughts on this and the other Games that Contractors and Subs Play. Give us your comments or stories of projects where you have seen Sub Sub being played in your market.
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