When city or state ordinances don’t allow a remodeler to do skilled trade work, like plumbing or electrical unless they are a licensed electrician or plumber, it becomes necessary to get a trade contractor. Whether they’re on staff or the work is subcontracted out, it’s important to know the keys to managing these assets to the company.

1. Hiring vs. Subcontracting
There are advantages on both sides of the issue of whether to hire a tradesman to operate in-house or subcontract out the work. Sometimes for a larger company, it’s cheaper to put a tradesman on the payroll and pay them a salary. Having a dedicated plumber on staff means having someone ready to work, but in order to do that, there has to be work for them to do, or they’re just being paid to sit around.

For a smaller remodeler, subbing the work out eliminates some wages and taxes. They’re paying a subcontractor to do a certain job at a certain price instead of having the payroll expense bogging down the company when there’s no work for the tradesman.

“I have a smaller company and I tend to have a couple of each of the trade contractors on hand that I’ve done business with in the past,” explains Michael Hydeck, MCR, CKBR, president of Hydeck Design Build Inc., Teldor, Pa., and president-elect of NARI national. “Henceforth, when I’ve got a job coming up if Sub A can’t handle it, then I go to Sub B. Since I’ve worked with both of them over the years, it’s not a matter of who can do the job better, it’s about who can come to the job when I need them.”

If a subcontractor is hired, it’s important to make sure to have a contract. The contract should include things like the scope of work to be done, payment procedures and establish change order procedures. It is also a good idea to require all subcontractors to have insurance, comply with all regulations and indemnify the builder and homeowners.

2. Shop around
Remember, first and foremost a remodeler is running a business and it’s important to strike a balance between quality and price. If a remodeler sticks to one trade contractor for years, they may not know the actualities of what a particular job costs in that field anymore. For example, if a remodeler keeps a roofer for 10 years and every year he’s been raising his rates, the remodeler may be paying a higher rate than average, never questioning it because of the high quality of the work.