Subcontractor vs. contractor

contracto and subcontractors
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The world of construction revolves around contractors, from design to building, repairs to remodeling, interior to landscaping, and all things in between. On any given jobsite, most of the people either work for a contractor or are contractors themselves—sometimes both.

This guide will walk you through the differences between the roles played by contractors and subcontractors. We’ll also go over what you need to know as a business owner when it comes to getting your contracting platform off the ground.

Let’s get started.

Subcontractor vs. contractor: What’s the difference?

The biggest difference between a contractor and a subcontractor has to do with hierarchy and workflow. Subcontractors are contractors who are hired (contracted) by other contractors.

That’s a mouthful! But the underlying relationship is pretty simple:

  • Owners hire (contract) contractors
  • Contractors hire (subcontract) subcontractors

In construction projects—from kitchen renovations to high-rise developments—an agreement is reached between the owner of the property and one or more contractors. Those contactor(s) may then hire other workers, or other contractors, to help get the job done.

Who’s who on a jobsite?

Given the diversity of scope and scale of construction work, no two projects are the same. This means roles can be case-specific.

You can be a general contractor on one project and a subcontractor on another. You can begin working on one project as a subcontractor and then find yourself subcontracting out your own portion of the project to another subcontractor.

So, let’s get into some technical definitions of the major players on any given jobsite.

Contractor

A contractor is an individual or business that obtains construction contracts and sees them through, delivering what’s contractually required. Typically, a contractor is someone with experience in the construction field, often within a given trade (an electrician, plumber, etc.).

Contractors sometimes work independently on smaller-scale projects. On most projects, though, they delegate work to others. But at a base level, contractors are devoted to two primary functions:

  1. Securing contracts – Contractors negotiate contracts for work they’ll deliver. Before they can get work done, though, contractors must find the work. To obtain projects, contractors:
    • Establish a strong reputation so clients solicit work
    • Network and advertise their services to find work
  2. Delivering finished projects – Once a contract is secured, the contractor needs to deliver the work that’s been agreed upon. To do so, contractors use some combination of:
    • Their own handiwork or hired laborers
    • Subcontractors and their own work or laborers

Although a contractor typically has experience in at least one construction trade, they are often hired to be general contractors and oversee various parts of the job, including things outside their specific expertise.

That’s where subcontractors come in.

General contractor vs. subcontractor

When securing a project, a contractor assumes ownership of the work. In cases where the contractor takes on sole responsibility, they are often referred to as general contractors, or GCs.

In these cases, the owners hire one contractor (the GC). All subcontractors typically work for the GC, not the owner.

So, here’s how the hierarchy looks:

General contractor (GC) – This is the main contractor on a jobsite, hired by the owner to completely oversee the project from start to finish. The GC is involved in some combination of:

  • Performing the work directly
  • Hiring subcontractors and workers
  • Managing the work of subcontractors and their own hires

Subcontractor – Reporting to the GC, a subcontractor is typically hired for a specific portion of the job, usually related to an area of expertise. Depending on the jobsite, subcontractors might be able to hire their own workers, or may use workers hired by the GC. A subcontractor may be:

  • A licensed electrician tasked with all electrical work for a building
  • A demolition company tasked with demolishing and removing all waste from a property

Subcontractor vs. independent contractor

In addition to GCs and subcontractors, another role commonly referred to on a job site is an “independent contractor.” This difference in language reflects a different organizational structure in which owners hire multiple contractors.

Not all construction sites have one GC in charge of all other subcontractors. In some cases, ownership decides to hire multiple contractors directly, rather than one GC, to maintain more direct control over operations. In these cases, the managing function of the GC is taken on by a project manager who hires out independent contractors.

Here’s what those roles look like:

  • Project manager – This role is like a GC, but on the ownership side. A project manager is typically a representative or employee of the owner. This manager hires various contractors and workers and oversees their own work and hiring (if applicable).
  • Independent contractor – A contractor who’s hired alongside other contractors in a horizontal (equal) relationship to each other, rather than the vertical relationships between contractors and subcontractors.

What every contractor needs

Whatever role you play on a jobsite, your work as a contractor is your business. As such, there are certain essentials you need to have in place to get work and complete it safely. Some of the most important ones are:

  • Registration and licensing or certification
  • Networking, such as a strong online presence
  • General liability (CGL( insurance to protect you and your business

On that last point, it’s important to note that construction is an inherently risky field of work. From the various physical tasks it requires, the sizes and shapes of materials worked with, to conditions like heights and occupational hazards (steam, gas, etc.), there are always dangers.

All those factors, and more, make CGL insurance extremely important for everyone involved. But no one wants to pay for insurance when they’re not working.

Here at Thimble, we’ve revolutionized insurance coverage so that you can buy a policy that works when you do—choose a plan that goes by the hour, day, or month. Why pay for coverage for a whole year when a project is only slated to last a week?

Create a tailored contractor insurance policy based on when you need it and protect your business from third-party claims of:

  • Bodily Injury
  • Property damage
  • Defense and medical costs
  • Personal and advertising injury

Finally, our coverage is fast and easy to set up. Click on “Get a Quote,” or download the Thimble app, answer 3 simple questions, and you can get covered in under 60 seconds.

Building your business

It’s always important to stay current with terminology in any industry you’re looking to enter or grow within. Hopefully, this guide has been helpful in understanding where your construction business—existing or potential—stands in relation to your peers and competitors.

Even more important is making sure you’re covering all your bases to ensure your business is legitimate and secure. That’s true in any case: whether you’re a handy homeowner looking to expand your professional experience, a seasoned drywall installer looking to expand, or if you’ve been contracting long enough to spot code violations from a mile away.

Get covered so you can get back to building homes and your professional future.

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.

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