According to an industry report from Autodesk and the Associated General Contractors of America (AGC), 80% of construction companies are struggling to fill hourly craft positions that make up a majority of the construction workforce.
The labor shortage is a threat to the industry—and even if you already have a strong network of subcontractor relationships, it’s critical to stay prepared. According to the National Center for Construction Education & Research, 41% of the current construction workforce is going to retire by 2031.
Why you can’t afford to hire the wrong subcontractors
While GCs risk violating contract clauses if they can’t find labor, it doesn’t mean you should blindly hire any available sub, either. Working with overstretched or underqualified subs opens projects up to risk projects cannot afford to take on, including poor quality, mistakes, rework, schedule overruns, and more. In fact, that same report from Autodesk found that almost half (44%) of the responding firms indicated labor shortages caused them to lengthen completion time for projects already underway.
Given the realities of today’s industry, savvy GCs have developed strategic ways to find subs in this tight labor market. Construction is a handshake industry built on relationships, so addressing the labor shortage means investing more effort into building trust with the right trade partners.
Not sure where to start? Here are some of the best ways to find and hire the right subcontractors for your projects.
1: Be more targeted with your invitations to bid
Every GC has favorite subs they like to work with, but it’s important to cast a wide net and build relationships with new trade contractors to maintain coverage on every project. After all, every project isn’t right for every sub.
Data from BuildingConnected’s network shows that acceptance rates rise throughout the first 400 bid invitations a GC sends to a sub. But, the correlation only goes so far.
After a single sub has received more than 400 bid invitations from a GC, acceptance rates start to decline—and by 1000, acceptance rates crater.
This suggests that it pays to be selective when inviting subs to bid.
It’s also wise to be selective when adding bidders to a bid package. Data from the BuildingConnected network also indicates that when more than 10 subcontractors are invited to bid on a single bid package, accept rates start to fall off. You should keep that in mind next time you’re tempted to invite 50+ subs to bid on a single bid package.
Creating a strong, wide network of trade contractors is imperative for success, but the data suggests that it pays to be strategic when choosing which subs to invite to your project. Avoid wasting partners’ time by mass-blasting every invitation to bid (ITB) to every sub in your database. This will keep the ITBs relevant, more likely to be accepted, and help mitigate risk by ensuring unexperienced subs don’t slip through the cracks.
2: Build long-lasting subcontractor relationships close to home
It pays to have a strong network close to where the majority of your projects take place. More data from BuildingConnected’s network shows that subcontractors are much more likely to accept a bid if they’re in close proximity to the jobsite. If a sub lives within 10 miles of the project, they’re nearly twice as likely to accept the bid than if the job is over 50 miles away.
GCs can nurture local relationships by hosting subcontractor appreciation events, from happy hours to treats delivered directly to the jobsite. For instance, every HITT office hosts an annual “Sub Day” event to recognize its subs’ continuous dedication and performance, even presenting a “Subcontractor of the Year” award to showcase excellence in workmanship. HITT also has an open-door policy with subs, encouraging them to stop by any time to meet the team or learn about new projects.
These efforts don’t require a ton of resources, but they do show subcontractors that they’re valued and appreciated. GCs who treat their subs as valued project partners are much more likely to reap the rewards of trust and loyalty over time.
3: Find and connect with subcontractors in new markets
Let’s say you already have a loyal base of qualified subcontractors in your local area—but what happens when you get awarded a project outside of your normal geographic radius? Coming into potential economic headwinds, it’s important to be able to find and maintain relationships with subs in new locations, too.
When a GC is relatively new to a market, it takes time to find the right trade partners. In a recent article in Construction Dive, Mortenson’s VP of Operations Allen Troshinsky noted this challenge:
“It’s all about planning and exploring the local market, doing the homework and identifying the subs with which the company would most like to work. This strategy starts up to a year in advance of deploying the project team.”
After accepting a project in a new region, it’s crucial to get an understanding of the labor market in that area, plus a general familiarity with the experience and capacities of its subs. A little research can go a long way, and once you’ve identified subs you’d like to work with, you should begin nurturing those relationships as soon as possible.
4: Look into working with more diverse businesses
Some GCs, like Sellen Construction, have resources dedicated specifically to proactively engaging and supporting the diverse subcontractor community. For Sellen, a diverse business is owned by someone from an underrepresented minority—including women, veterans, people with disabilities, and members of the LGBTQ community—or operates in a Historically Underutilized Business Zone (HUBZone).
According to Angela Battle, Director of Subcontractor Diversity & Development at Sellen Construction, “The intent of having this program is to build a culture at Sellen Construction in which subcontractor diversity is a clear priority and is supported through training, policy, and inclusion plans. Not only is it simply a better hiring practice; studies show that adding diversity allows for more innovation and better ideas, leading to more sound business decisions.”
For those subs that are relatively small or disadvantaged-, woman- and minority-owned businesses, it’s not uncommon to break scopes of work into smaller packages in order to make the tasks more manageable. Being flexible helps GCs connect with historically underutilized subs and bridge the gap to entry into their larger projects.
“Utilizing new suppliers or subcontractors often feels risky to GCs, and because of the historical makeup of this field, businesses owned by underrepresented groups often don’t have the decades-old relationships with general contractors that other businesses do,” Battle said. “One of the biggest barriers to this line of work is getting people to open their minds. There are incredible businesses out there that can bring new ideas to the table and introduce innovative ways of doing things—you just have to give them a voice.”
Leverage construction’s largest real-time network of subcontractors
The ability to find and hire qualified subcontractors is crucial in today’s tight labor market. BuildingConnected’s real-time, crowdsourced network of nearly 1 million subs across North America makes it easy for GCs to find the right subcontractors for their projects. With BuildingConnected, GCs can flag diverse subcontractors for outreach, identify subs in new areas, see which trade contractors have already been qualified by their risk team, and more.
Ready to learn more about BuildingConnected? Request a demo.
The post How to Find Qualified Subcontractors for Your Construction Projects appeared first on Autodesk Construction Cloud Blog.