When a new build or construction project is underway, it's important to have a contractor or a team of subcontractors on-site to execute the work. These professionals bring expertise to the job to make sure it’s completed efficiently and follow compliance rules to confirm everything is completed to regulation. Let’s learn the difference between contractor and subcontractor work and also how they work together.
What is a contractor? What does a contractor do?
A contractor, whether an individual or a company, is hired by business owners to oversee and manage an entire project. They are often brought on because of their specialised skill set, either in the specific labour required or for the operation of equipment needed to complete the project.
For project managers, contractors are vital to a project because their expertise makes sure the project runs smoothly and meets the necessary standards. At the same time, contractors are also liable for the entire project and responsible for fulfilling the contract provided by the business owner, so they have quite big shoes to fill.
Contractor roles tend to work on a freelance and contractual basis, not as a full-time employee.
How to be a contractor?
To become a contractor, you'll need the relevant education, proper licensing, and sufficient experience. These qualifications ensure that you have the knowledge, skills, and legal approval to manage projects safely.
As a main contractor, you must have a bit of a ‘sales’ mindset and understand how to gain new projects for yourself. To do this, you’ll want to network in your community and establish a positive reputation through repeated work or marketing tactics. By making the right connections, you’ll be more than good to secure job contracts.
Once a contract has been approved, contractors will manage and oversee the project that needs to be delivered. They will track the inventory, confirm product deliveries are on time, and delegate various tasks to workers. Contractors don’t usually carry out the entire project themselves. Instead, this is where subcontractors come in.
What is a subcontractor? How does subcontracting work?
Contractors bring on subcontractors with high levels of expertise in a specific industry to do most of the actual hands-on work. Subcontractors are responsible for doing the nitty gritty tasks, while contractors oversee the tasks and manage them.
For example, if electrical wiring issues need to be resolved, contractors would subcontract electricians to fulfil that specific task and then if a toilet needed to be redone, plumbers would be subcontracted for that. Think of them as the small helpers who make the bigger picture come together.
Essentially the main difference between subcontractor and contractor roles is who you report to. In the hierarchy of the project, subcontractors report to the contractor, who is then responsible for reporting to the client for their work. It’s important to note that subcontractors are liable to the contractor, but not to the client.
Becoming a subcontractor
Subcontracting requires professional education, training, and experience in a specific type of construction such as steelwork or floor installation. Becoming a subcontractor in Australia involves proper trade schooling and licensing along with apprenticeship experience. With that under your belt, you’ll be ready to fulfil jobs for various projects.
If you perform well on subcontract work, a contractor may reach out again to come for more and more projects. However, it’s important to note that if a client hires you as a subcontractor directly, you then become a trade or independent contractor and are no longer under the rules of a subcontractor.
Can you be both a contractor and subcontractor?
Tradies can find themselves on either side of the spectrum depending on the project's needs. You can be a contractor on one project and then be a subcontractor, who subcontracts smaller parts of your project to another subcontractor. Keep in mind that neither position involves full employment with the client — you're simply fulfilling a contract.
Implementing legally enforceable contracts
As an employer, when hiring a contractor or subcontractor, it’s important to clearly outline roles and responsibilities in a legal contract. You can use an Independent Contractor Agreement for an individual or a Company Contractor Agreement if you're hiring a company.
Making sure you have insurance policies
Both a contractor and subcontractor need insurance policies to protect themselves. General liability insurance is the most important policy that protects you from lawsuits over property damage, bodily injuries, and advertising injuries. This insurance can cover lawyer and court fees, medical bills, and property repair and replacement costs
As a contractor, you can also consider errors and omissions insurance which protects you and your business from lawsuits claiming your work was inaccurate, late or incomplete. If you have employees under you, having workers compensation insurance is important because it covers anything dangerous that could happen to your workers. At the end of the day, being protected is crucial because it creates trust and helps you win bigger contracts.
How to find the right contractor or subcontractor for your project
If you’re a business looking for the right help, you’ll want to screen incoming contractors and subcontractors to make sure they have relevant certifications, licences, and insurance coverage to legally work. If you haven’t worked with them before, take a look at online reviews to confirm they are reliable and responsible workers.
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