In a still uneasy economy, clients and even subcontractors are often tempted to bypass working with a general contractor and negotiate the project on their own. Let’s find out the actionable steps to prevent your construction business from bypassing.
What is Business Bypassing in Construction?
Business bypass in construction happens when clients or subcontractors directly engage with each other, excluding the construction business from the project transaction. Due to this, companies of general contractors may suffer –
- Lose out on commercial construction projects
- Decrease in company revenue and profitability
- Build tense client relationships
- Expensive legal disputes
- Damage to the general contractor’s credibility and reputation
Although construction business bypass is something that general contractors should be aware of, there are ways to ensure that clients and subcontractors do not bypass working with your general contracting business.
6 Tips to Manage Clients and Subcontractors
Below are some tips to help manage your clients and subcontractors, secure their construction business, and keep your projects running smoothly and efficiently.
1. Establish clear contractual agreements
A well-written contract is a fundamental solution for preventing clients and subcontractors from bypassing your construction business. By outlining details about the various roles and responsibilities in a legal document, you can clearly set expectations for all parties involved and lessen the risks of disputes or lawsuits.
Whether the commercial contractor is signing a construction contract with a client or a subcontractor, it should mention the following provisions:
- A statement of work (constraints on subcontractors for certain parts of the work)
- Clauses for the scope of work
- Project deadlines
- Rights and responsibilities of each party
- Payment schedules and methods
- Change order provision
- Provisions in case of breach of contract
As the owner of a general contracting business, ensure that all the parties review the contractual agreement together and make potential corrections. Seek the advice of a real estate lawyer on what provisions to include in the contracts.
2. Make sure everyone’s roles in the process are clear
Sometimes, clients may not see the point of working with a general contractor when they could just hire subcontractors directly instead. However, it is important that general contractors clearly convey to their clients why their role is critical to a commercial construction project’s success. By demonstrating to clients that general contractors manage the project’s details so that subcontractors can concentrate on the actual construction, clients will be less likely to bypass working with a general contractor.
3. Communicate and follow up regularly
It is much easier for clients and subcontractors to be reluctant to work with a general contractor if they never hear from any. But if you make an effort to talk to them and make them feel like a valuable part of the commercial construction project, it will be much easier to work with your clients and subcontractors throughout the process. It is also important to follow up after each phase of the construction project to ensure everything went smoothly and get feedback from your clients and subcontractors.
4. Ensure that you are the connection between the client and the subcontractor
Subcontractors sometimes try to bypass general contractors by talking too directly to the client. This is something that general contractors should keep an eye out for. As the general contractor, make sure that you remain the go-between through the project by ensuring that all communication goes through you. This will require you to be diligent about talking to the clients and the subcontractors throughout the commercial construction project, but it is an important way to ensure that subcontractors do not bypass your business.
5. Stay proactive in addressing unexpected changes.
The advantage of signing a well-written contract is that you have established terms and communication channels to keep subcontractors informed about change orders from the clients. Via communication channels like meetings with the general contractor, project management software, and applications, subcontractors can execute their job precisely and on schedule.
Keeping them in the loop not only saves your business reputation but also strengthens your relationship with the client. If you fail to remain proactive in coordinating unexpected changes to the subcontractors and clients, they may bypass your construction business.
6. Keep your marketing information up to date
One of the best ways to generate business is through marketing, and many clients and subcontractors will decide whether they want to work with you or not based on things like your website. By ensuring that all of the information on your website is up-to-date and thorough, your construction business will be much more likely to attract clients and subcontractors. This especially includes listing the commercial construction projects you have worked on and keeping an updated portfolio.
Conclusion
General contractors play a crucial role in commercial construction projects, so they must be aware of clients’ and subcontractors’ potential to bypass their business and take affirmative steps to prevent this.
Constructive Solutions, Inc. is an industry leader in the commercial general contracting business with several years of experience. Our team has accomplished a diverse range of commercial real estate projects in San Francisco, San Jose, and San Mateo.
Contact us today to discuss your next commercial construction project with us.
FAQs
How to select reliable subcontractors for my commercial construction project?
Reliable subcontractors are licensed, insured, have adequate equipment and resources, and are fairly experienced in construction work. Learn more about the selection of the subcontractors here.
What are the effective means of communication in a construction business?
To maintain regular communication between general contractors, clients, subcontractors, and other members, one can use the following methods:
- Face-to-face meetings
- Phone or video calls
- Email updates
- Project management software
- Mobile applications
- Site visits
- Daily logs
What should I do if a subcontractor or a client is trying to bypass my construction business?
First of all, review the contract terms thoroughly. Next, gather any documentation that proves their bypassing actions and confront the client or subcontractor over the matter. Still, if the situation worsens, seek legal advice for dispute resolution.
Relevant Resources:
- How To Become a Commercial General Contractor and Which 11 Books You Must Read
- 4 habits that can change your contracting business
Constructive Solutions, Inc. is a full-service commercial construction company serving San Francisco and Bay Area.
Whatever your vision, we have the resources, experience, and insight to make your concept a reality, and a space where your business can flourish.
Call Us Now for Estimate
Thanks Rami, good bullets. Are there any legal protections? What about during an RFP/RFQ process while trying to source a sub? What is the best course of action to mitigate obstacles like this during the estimating and bidding process.
Thx!