Sub Contracting means you are the second in line. You will be getting your projects from the Main Contractor. Not everyone can qualify to be a Main Contractor. Main Contracting is big business. There are few types of Main Contractors. One is the International Contractor and they have the license and ability to bid for projects worldwide. Another is the Local Contractor that doesn’t have that ability and can only bid for projects locally. Among this local contractors, the government has also classified them into Class A right up to Class F. However, this classification is good for Government owned projects. Since I am not very familiar with all those rules and regulations, I will stick to writing about sub contracting in general practice.
Lets talk about sub contracting in the home renovation line that I am more familiar with. If you have been in the construction business for sometime and people knows the quality of your work there will come a day when people will want your expertise when they want to renovate of extend their houses. When that happens, you actually becomes a main Contractor. You can actually offer to do the whole project from the ground work right up to the finishing touches like the tiling, plumbing and electrical installations. In that case, you are the main contractor.
Since you are only a Construction man, familiar only with the masonry and carpentry side of the job, you will have to contract out the portions that you don’t know to the proper contractors. In that case, those contractors will become your sub contractors. In normal circumstances, the sub contractors will only answer to you and you are responsible for them to the house owners. If they screws up, you will have to be the one answering the questions.
The benefit of being a Main Contractor is you get to make something without doing anything. A Main Contractor always charge about 20 to 30% more from what their sub contractor’s quoted them. If the plumbing works for that project cost $1000, he will normally charge the house-owner $1200 or $1300. It’s a little something for his effort and furthermore, he has to be responsible for the works done.
The sub contractor on the other hand, will always make sure that he gives a price lower than what he would normally quote to his Main Contractor to offset the price difference. If his normal charges is $1000 for the project if he deals direct with the house-owner, he will charge his Main Contractor about $800. So even if the Main Contractor tops that up, the price will still be a competitive one. The Sub Contractor will get regular job offers from his Main Contractor so he is willing to cut down his profit a little bit. An added advantage for this small sacrifices is that he don’t need to deal with the house-owners who can sometimes be very difficult and fussy.