What Is a Contractor?
First off, let's talk about what a contractor is. A contractor, or general contractor, oversees a construction site. Contractors manage vendors and trades, and they also serve as the central communication point for all involved parties. They are responsible for coordinating the project, which involves assessing project documents or determining the site for renovation projects. Contractors submit fixed price bids or propose cost plus price contracts. When creating their proposals, they consider the cost of the materials, equipment, office, and labor.
Contractors are responsible for supplying the necessary equipment, material, labor, and services to complete your project. They hire specialized subcontractors to perform either a portion or all of the work. Contractors use Subcontractor Agreements to protect themselves and the subcontractors they hire. These agreements outline what materials and services will be provided by the subcontractor as well as the price of the job and any warranties that might be included.
They may apply for permits, provide temporary on-site utilities, ensure that the property is secure, and manage any personnel working on site. Contractors may also be responsible for maintaining accurate records and monitoring cash flows.
What Is a Subcontractor?
If a contractor manages the construction site, what is a subcontractor? A subcontractor works under a contractor. Here's how it works:
- You give the contractor a contract to build a house.
- The contractor gives a contract to Company A to install the roof and Company B to build the walls.
- Company A and Company B are subcontractors.
In this example, Company A and Company B work for the contractor. The contractor works for you, the client. Company A will be in charge of installing the roof, while Company B will be responsible for building the walls. Essentially, a subcontractor will perform all or part of the obligations of the contractor's contract.
Subcontractors may be an individual or a business. In most cases, they are not considered an employee of the contractor, but rather an independent contractor. Depending on the Subcontractor Agreement, they may be responsible for providing their own materials and equipment for the task they are hired for.
If contractors are the managers, subcontractors are the workers. They tend to specialize in one area of the field, which allows them to complete your job quickly and properly. Hiring subcontractors offers numerous benefits to contractors, including the mitigation of project risks and reduction in the overall cost of the project.
Contractors and subcontractors work hand-in-hand to complete a construction project. The contractor acts as the manager of the project, serving as the central point of communication and organizer. The subcontractors complete the job.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.