Wearing the Pants

TL;DR:

Prime contractors control the project, schedule, and risks, while subcontractors must adapt to the prime. Choose your role carefully, considering your capabilities, project scope, and the potential impact on your bottom line.

In construction, the “prime” or “general contractor” holds a contract directly with the main customer who foots the bill. Meanwhile, a “subcontractor” works under the prime contractor, responsible for a specific scope of work. The prime contractor is responsible for managing subs and final delivery of the project.

How do we figure out who is prime versus sub? It depends on the work scope, contract value, and contractor capabilities. If the project is driven by bridge work, a bridge contractor is the prime. If the contract is mostly asphalt, a paving contractor has the best shot at taking the lead. In building projects, general contractors delegate most of the work to subs. Some infrastructure projects even mandate that the prime performs a minimum percentage of the work (e.g. 50%) with their direct-hire crews.

As a prime contractor, you're in the driver’s seat, making key decisions that shape the project. As a subcontractor, your role is more reactive, adapting to the prime's schedule and priorities.

It’s like the difference between a chef and a line cook. The chef designs the menu and sets the pace in the kitchen, while the line cook adapts and execute the chef’s orders, even when the timing might not align with their own rhythm.

Working as a prime contractor and as a subcontractor are two different animals. Here are the distinctions, how to choose the right role for your company, and strategies for success in each scenario.

Determining Prime versus Sub

Here are some questions to help you decide:

1. Does the total work scope fit my company’s capabilities?

   • If yes, proceed. 👌

   • If not, ask yourself:

     • What doesn’t fit and why?

     • Is this something I want to change in the future?

     • What would need to happen for me to feel comfortable bidding as prime?

     • Is there potential for a joint venture if I can't handle the entire scope on my own? Remember, JV’s carry their own risks.

2. Who are the potential prime contractors I will be pricing?

   • What will it be like working for these people?

No one job is the same, so take your time. The prime or sub decision is often irreversible.

If you have to make long lists of pros and cons, the answer is probably no.

Considerations as Prime

• You own the schedule, the risk, the reward, and the money.

• For public work, you can show up to work when you want as long as you meet contractual requirements. This flexibility is highly underrated. 

• For private work, the owner will want you there on their timeline.

• You can move crews in and out as you see fit, without worrying about a subcontractor’s crew schedule.

• Success on sub-heavy jobs often depends on your organization and communication with internal stakeholders, suppliers, and subs.

• Monitor subcontractor clarifications closely: safety, quality, money, and schedule are all on you.

Considerations as Sub

• The prime contractor controls the schedule, risk, reward, and money.

• I’ve never seen a prime who was ahead of schedule. Ever.

• You must show up exactly when called upon per the contract terms. As a paving sub, make sure to outline clear expectations about crew lead times, weather, and base prep. Expect last-minute calls asking you to show up on Monday after weeks of silence and a lot of rain. This inflexibility is often overlooked at bid time.

• Factor inconvenience into your profit margin.

• Protect yourself with strong clarifications on escalation, schedule, grade, and payment terms.

• Know how you are getting paid and what game you’re playing. If you are paving lump sum or by the square yard, yield matters more to your pocketbook than labor, equipment, or trucking.

• Some contractors “play well” with others, and some don’t. Know which one you are and proceed accordingly.

• Sometimes, as a paving contractor, it’s great to show up near the end of the job and make a lot of money while the prime takes most of the risk and headaches.

• Your word is your bond. The construction world is small. The best compliment a prime can give a sub is, “They did what they said they were going to do.” If you commit to something, follow the NIKE rule: just do it.

• Document, document, document.

• Be aware of “phony backlog”: It feels great to toss 100,000 tons for a general contractor on the backlog based on an optimistic schedule. But things happen that we cannot predict and even the best run behind. Don’t default to passing up on good work that conflicts with the schedule the general contractor gave you. Things have a way of working themselves out when you have a lot of backlog. Assume the general contractor’s schedule will be somewhat off. If you don’t, you’ll be left holding the bag with crews that have nowhere to go.

4 tips when paving on someone else’s base:

1. Always send someone to check grade 1-2 days before moving in equipment.

2. Provide verbal and written feedback on base conditions after site visit.

3. Once you pave the first lift, you’ve “bought” the base, overruns, and drainage issues.

4. Follow the first 3 tips when paving on your own base 😉.

Final Thoughts + Free Template

Work as prime when you can, but don’t take on complex work you’re not qualified for. No deal is better than a bad deal. Never take a prime contractor’s word that the job will run perfectly on schedule. It’s not their fault; it’s just part of construction. Backlog you control is more valuable than backlog you don’t.

Here’s a fun exercise to see how you’ve historically performed on prime versus sub work - apologies to the CPAs:

1. Download this template.

2. Ask your CFO or Controller to use the end-of-year WIP to fill in historical job performance for prime and sub projects.

3. Analyze the trends and adjust accordingly.

Thanks for reading this week!

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Coming Next Week

Next week, stay tuned for a new educational series about bid tabs!

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About the Author

Tristan Wilson is the CEO and Founder of Edgevanta. We make software that helps contractors win more work at the right price. He is a 4th Generation Contractor, construction enthusiast, ultra runner, and bidding nerd. He worked his way up the ladder at Allan Myers in the Mid-Atlantic and his family’s former business Barriere Construction before starting Edgevanta in Nashville, where the company is based. Reach out to him at [email protected]