Construction Accounting Article -
When Scheduling Subs Keep in Mind the Bottom Line

Target Audience: General Contractors, Construction Industry Professionals, Subcontractors, Construction Business Owners, Schedulers

If there’s one thing guaranteed to erode the bottom line on a construction project, it’s subcontractors who throw things off schedule. Keeping in mind the bottom line when managing your subs can put you in a better position to roll with any other punches the project throws at you. Here are some tips.

Don’t just communicate, collaborate

As soon as you win a bid, call the subs you’ll need. They know their business better than you do, so review the plans with them and ask for help identifying any potential problems. Then work with them to develop a realistic project schedule. Remember to consider the tools, equipment and materials that each will require at each stage. It does no good to have the plumber show up on time if you don’t have the pipes on site when he or she arrives. Because neither you nor the subcontractors can predict every problem that will arise, build in a little leeway along the way, too. Some contractors schedule only four days of every five, leaving one day open for subs to catch up if necessary.

Put it in writing

When you have a schedule that looks good, put it in writing. A good ol’ Gantt chart still works, or an Excel® spreadsheet is fine. Assuming it’s legible, even a large piece of paper with a hand-drawn calendar will probably suffice. Whatever you use, just be sure everyone signs off on it. In doing so, they’re agreeing to the schedule’s terms. And having a document to prove this could help defuse any differences of opinion that develop later in the job. This is also a good time to check in with your subs about bonding. For projects that are bonded, getting subcontractors bonded is critical to protect yourself in the event a sub is unable to finish his or her work.

Be a bother

Once a sub is signed on and the schedule is set, some general contractors feel they’re being a bother if they follow up. Don’t worry about that — being a bother can pay off later on when the project goes smoothly. Remind your subcontractors of the schedule they signed off on and, specifically, of their individual timetables. As work progresses, keep subs informed. Let them know if you hit a snag that could cause a delay. Give them the chance to fill those days with other jobs, if possible. And even if there are no delays, update subs on how the job is progressing. When the time is drawing near for a particular subcontractor to begin work, call or send an e-mail — with a reply requested — to be sure everything is still going according to plan. Some contractors make that contact two weeks in advance; others may feel safer doing it up to a month ahead.

Involve other parties

Other things you can do to help your subcontractors don’t involve them directly. For instance, we mentioned the importance of having the right materials on hand at the right time. To that end, confirm prospective deliveries with suppliers a day or two ahead of the sub’s arrival. Also, be sure you have a superintendent on site every time a different subcontractor starts. He or she can answer questions, identify problems and generally get a new sub up to speed on how the project has progressed to date. Of course, you’ll want that superintendent to keep an eye on the sub’s work, making sure it’s on schedule and up to your quality standards. He or she can also start developing the punch list early so that the subcontractor can correct mistakes and minimize or prevent unfinished work before leaving the job site. In addition, look closely at monthly payment applications as compared with work completed. Don’t just count on the retainer to cover these amounts. Last, but perhaps most important, involve your banker. That is, pay your subs promptly. If they’ve done an exceptional job, consider giving them a bonus if the budget allows.

Provide, don’t provoke

Building a reputation as a general contractor who communicates early and often, provides assistance rather than provokes problems, and pays on time can quickly move you to the top of your subcontractors’ “A” list. And that may be the best scheduling tool of all.

Sidebar: Getting the most from your scheduling software

A good scheduling software package can help keep construction projects on track from bid through the last item on the last punch list. Yet if you’re using one of these applications as little more than an electronic calendar, you may be missing out on a lot of useful functionality. Here are some tips for getting the most from your system:

Use templates to save time. Most software allows you to take advantage of your experience by creating standard schedules based on tasks you know the job will include. Be sure to consider variables, though, because no two construction projects are ever exactly alike.

Integrate your scheduling and accounting software. As jobs proceed, you can track and update billing and expenses in concert with the schedule. By doing so, you’ll be able to keep close tabs on job costs and identify resources that you could reallocate to other projects.

For better results, drill down. Use your software to create not only large, overview schedules, but also smaller, more detailed ones for specific tasks. This way, you can prevent anything from slipping through the cracks and cut down on unpleasant last-minute surprises.

Find out how our expertise in construction accounting can add value to your business. Email us or call us at 1 (888) 875-9770.

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