Contractor vs Subcontractor: What's the Difference?

Both contractors and subcontractors are indispensable to the development and completion of a construction project. Despite their integral role, there are still many who don't really understand the main differences between them.

In an effort to dispel the confusion, we have prepared a helpful guide that describes in detail what unites and separates a contractor and subcontractor from each other. Hang in there and find out everything you need to know about the role of a contractor and subcontractor during the construction process below.

What is the role of a contractor?

A contractor can be a company or a person whose goal is to obtain and complete contracts. Contractors could be compared to business owners since they are in a position to work independently, create and maintain their own clientele, and freely handle any business that comes their way.

In construction, a contractor provides the client with a certain set of skills and services (e.g. labor and materials) once a contractual agreement has been reached between the two parties.

1. Independence and Accountability : Contractors have the autonomy to operate independently, seeking and executing contracts according to their own strategies and methods. They take responsibility for the successful completion of projects and customer satisfaction.
2. Skills and Services : A contractor offers the client a specific set of skills and services needed to complete the project. This may include providing labor, materials, equipment and managing subcontractors as stipulated in the contract.
3. Negotiation and Contracts : The contractor is responsible for negotiating the terms of the contract with the client, including scope of work, deadlines, costs and payment terms. They must ensure that all parties involved clearly understand their responsibilities and expectations.
4. Financial Management : As an integral part of the construction process, contractors handle financial aspects of the project, including budgeting, cost estimates, controlling expenses, and ensuring profitability.
5. Profits and Risks : Contractors have the opportunity to make significant profits from successful contracts, but they also assume financial and operational risks associated with performing the work. They must be able to effectively balance risks and rewards to ensure business viability.
6. Client Relationship : The ability to establish and maintain a positive client relationship is critical to a contractor's success. This involves effective communication, problem solving, meeting customer needs and ensuring the quality of work delivered.

This information highlights the importance and responsibilities involved in the role of a contractor in the construction industry.

A contractor's profits can obviously be greater than those of other parties to the project (e.g. workers), as he was the one who was able to speak to the client and reach a final agreement. As a result, the contractor retains any profits resulting from the work included in the contract.

The role of a subcontractor

A subcontractor can be described as a different type of contractor. More analytically, it is a person or company that performs work for a company on a contractual basis. A subcontractor is part of a larger project and typically provides more specialized services (e.g. plumbing) to the client than the general contractor.

Subcontractors are found by the contractor and conclude agreements with him and not the client. This is a key difference when comparing a subcontractor to a contractor. In other words, subcontractors are working for the contractor.

Their specialization allows them to participate in different construction projects at the same time. Once they have fulfilled their role, they can move on to the next project.

1. Specialization and Specific Services : Subcontractors are hired to provide specialized services on a construction project, such as plumbing, electrical installation, carpentry, among others. They have specific technical knowledge in their areas of expertise.
2. Contract with the Contractor : Unlike contractors who enter into agreements directly with the client, subcontractors are hired by the main contractor or general contractor. They have contractual responsibility to the contractor, not the end customer.
3. Participation in Larger Projects : Subcontractors are part of larger construction projects, contributing their specialized skills to the successful completion of the venture. They can be involved in various stages of the project, according to their areas of expertise.
4. Flexibility and Mobility : Due to their specialization, subcontractors have the ability to work on different projects simultaneously. After completing their responsibilities on one project, they can move to another project as needed, staying busy and active.
5. Professional Network and Job Opportunities : A solid network is crucial for subcontractors as it makes it easier to secure new projects and job opportunities. The more relationships they cultivate with contractors and contractors, the more likely they are to secure new contracts.
6. Dependence on Relationship with Contractors : The ability of subcontractors to stay busy and successful is directly linked to their relationship with contractors and contractors. A solid and reliable connection with these professionals is essential to ensure a continuous flow of work.

This information highlights the key role of subcontractors in the construction industry and highlights the importance of their expertise, professional network and relationships with contractors.

In general, a strong and active network is of substantial importance to subcontractors. The more contractors they know, the easier it will be to find new projects to work on. In this sense, a subcontractor can always stay busy as long as they have a solid connection with the contractors.

Contractor vs subcontractor: the main distinctions

Now that we have a better understanding of what the actual role of a contractor and a subcontractor is, it's time to dig a little deeper and delve into the key distinctions between the two sides. In short, we could categorize them as follows:

When comparing contractors and subcontractors in the construction industry, it is essential to understand their fundamental distinctions. Here are the main differences between these two roles:

1. Contractual Responsibility :
   • Contractor : A contractor assumes direct responsibility for the execution and completion of a construction project. They usually have a direct contract with the client and are responsible for the entire scope of work, from planning to final delivery.
   • Subcontractor : A subcontractor is hired by the main contractor to perform a specific portion of work within a larger project. They have a contract with the contractor and have no direct responsibility to the end customer.
2. Scope of Work :
   • Contractor : Contractors handle a variety of tasks and responsibilities on a project, including managing staff, procuring materials, coordinating subcontractors, and ensuring compliance with regulations.
   • Subcontractor : Subcontractors focus on a specific area of ​​expertise, such as electrical installation, plumbing, carpentry, among others. They are only responsible for performing the work they were hired to do.
3. Customer Relationship :
   • Contractor : Contractors have a direct relationship with the client and are responsible for meeting the client's expectations and requirements throughout the project.
   • Subcontractor : Subcontractors do not have direct contact with the end customer. They work under the supervision and direction of the main contractor, following the instructions provided by him.
4. Risk Management and Finance :
   • Contractor : Contractors assume the financial and operational risk of the project, including costs, deadlines and quality. They are responsible for managing and mitigating these risks.
   • Subcontractor : Subcontractors have less financial and risk management responsibility as they are only focused on their specific areas of work within the project.
5. Flexibility and Mobility :
   • Contractor : Contractors have more flexibility to work on a variety of projects and sectors in the construction industry.
   • Subcontractor : Subcontractors may have less flexibility as they are more restricted to their field of expertise and depend on the availability of projects requiring their services.
6. Professional Network and Job Opportunities :
   • Contractor : Contractors build a broad and diverse professional network, which can lead to more business opportunities and partnerships.
   • Subcontractor : Subcontractors rely on connecting with contractors and contractors to ensure a steady flow of work and project opportunities.

These distinctions highlight the different roles, responsibilities and work dynamics between contractors and subcontractors in the construction industry.

Different focus point

Continuing what we mentioned earlier about the importance of a good network for subcontractors, it doesn't take much effort to understand that the area of ​​focus of a contractor and a subcontractor is not the same.

On the one hand, we have contractors whose main focus is building a solid reputation that, in the long run, will allow them to attract new clients and work with them on mutually beneficial projects. To achieve this, they need to consider customers as their top priority. Only then can they get good references and keep their business growing.

On the other hand, subcontractors typically have a very different focus and mindset. It goes without saying that they also want to do a good job for the client, but they want even more to establish some beneficial connections with the contractor. This way, they can remain active in the market and receive new work continuously.

Contractors Care About the Big Picture

A contractor and a subcontractor may work on the same project, but they do so from a completely different perspective. As a contractor, you expect to focus on the big picture and be prepared to provide essential solutions to a multitude of issues, from finances to hiring subcontractors and client meetings.

In a sense, it is not an exaggeration to say that a contractor should be seen as a versatile manager. Depending on how efficient he is during the development of the construction process, a project can be a success or a costly failure.

Subcontractors specialize in a specific area

If contractors are viewed as multitasking managers of a construction project, then subcontractors should be viewed as specialists in specialization. As a general rule, subcontractors focus on a specific aspect of the construction process (e.g., plumbing, insulation, drywall).

Their responsibility is to successfully complete the project tasks assigned to them within the established deadlines. That being said, a subcontractor should prioritize delivering services and products according to their expertise.

The good news for subcontractors is that they can work independently and only need to focus on their tasks. The bad news is that they typically earn less than contractors and have less influence on the project.

Common Pitfalls for Contractors

Being a contractor means that sooner or later you will have to hire a subcontractor. Without a doubt, the client expects you to make a good decision and choose the right man for the job.

As you can imagine, this isn't always easy. For example, you may end up hiring an inexperienced subcontractor whose work may not be of the best quality. In these cases, design disputes are likely to arise between you and the subcontractor.

But the worst thing is that this conflict can also harm your relationship with the customer. In short, you will be the one to put this mess in order. This can be a challenge.

Furthermore, serious problems can also arise if agreed deadlines are not met successfully. In these cases, you will likely be held responsible by the customer for the delay.

To make matters worse, if you decide to part ways with your subcontractor, there is always the chance that this decision will be seen as a “breach of contract” and could even cost you the project.

For this reason, you should always be very careful in selecting your subcontractor(s), as they ultimately represent your company.

• With the help of collected project data, better understand your project mistakes and learn from them.
• Get access to full project audit trails and documentation on who did what and when.
• Minimize the risk of someone leaving the project.

These elements can contribute decisively to optimizing collaboration on projects between departments and strengthening the connection between the office and the location. This way, you can help your team be more consistent and optimize project delivery.

With a single place to collect and maintain all project data, you can share the right information with the right people in real time. Thanks to this, you can be sure that everyone is on the same page and that delays or costly mistakes will be avoided.

Additionally, you now have the opportunity to monitor the progress of different projects across the company and drill down to uncover the information you need.

Concluding

Whether you are a contractor or a subcontractor, there are a large number of tasks and responsibilities that you need to focus on. A top contractor must be able to manage many different aspects of a construction project at the same time, while ensuring the stability and ongoing development of the project.

When it comes to the role of subcontractor, quality of work and on-time project delivery appear to be two extremely valuable elements.

In both cases, the contribution of digital tools can be substantial. Reliable project management software can help you regain project control and streamline collaboration between the construction site and the office.