How to Manage Trade Partners
As a residential construction professional, you undoubtedly spend a lot of time working with trade partners. And doing so comes with its own set of challenges, from managing who they communicate with to how they conduct themselves on your job sites.
Navigating trade partner relationships can be tricky, as you want to foster collaborative environments and be able to hire them for multiple current or future projects, but you also need to maintain a sense of control because they are an extension of you and your company.
That means putting processes in place to manage how your trade contractors interact with your internal teams and your clients to ensure they're conducting themselves in a way that aligns with your brand.
The Benefits of Using Trade Partners
On any remodeling or custom home-building job site, there are always tasks that require specialized knowledge that may fall outside the skill set of your internal project team, or that can be executed more efficiently by a subcontractor. And there are certain tasks, like electrical and plumbing work, for example, that can only be performed by licensed professionals.
That's where subcontracting work out to trade contractors is invaluable. But because they aren't part of your internal team, they need to be provided with a set of guidelines for how they'll represent your company while on your job sites.
The Challenges of Working with Trade Partners
Your trade partners are small business owners just like you. They work for various general contractors and remodelers, each with a different process for managing relationships and executing the work.
Sometimes, situations arise where a trade partner steps over the boundaries by speaking directly to a client, not respecting the job site, or performing additional scope and presenting a bill for "extras" at the end. This might be standard practice in other businesses they work for, so they don't actually know they've overstepped.
Your Trade Partner Talks to the Client Directly
You're in the middle of a construction project, coordinating trade partners and ensuring everything is on track for your clients. Suddenly, you find out from your client that they've discussed a detail with a trade partner, and you're the last to find out.
As the project manager or business owner, being the quarterback of the project is critical not only for keeping the project on track but for ensuring that both the client experience and your company's profit are maintained.
Trade partners are experts in their specialty, but they don't have "big-picture knowledge" of the entire project or understand the nuances of the client relationship you've built during this journey. And clients need to understand that even the best trade partners will say "yes" to their requests because they are the client. But they won't tell the client what the financial impact of their request will be. This is why you or your project manager must be the central point of contact for all project details.
Your Trade Partner Isn't Respecting The Jobsite
Your job sites are a reflection of who you are as a company and how you work. And you likely have rules in place to ensure that the job site is treated with the respect it deserves - because, after all, it is somebody's forever home, not just your temporary workspace.
We call this a jobsite code of conduct, and every remodeling or custom home-building company should have one.
You've trained your internal team members to respect this, but how do you handle a trade partner who "bends" those rules by doing things that you deem inappropriate, like:
Smoking on the job site
Playing loud music that disturbs neighbors
Using foul language where neighbors can hear
Not using recycling/garbage bins properly
Not cleaning up after themselves!
Situations like this not only set a bad example for your team but reflect poorly on you as a company. This can lead to a frustrated client, causing you to lose out on word-of-mouth referrals, even though you provided exceptional service and delivered a superior finished product.
The Trade Partner Presents Their "Extras" When the Work is Complete
You've likely encountered a situation where a trade partner has agreed to a scope of work, made adjustments while performing that work without mentioning anything, and then presented you with a bill for 'extras' at the end.
This puts you in a challenging position because the changes were done without consulting the client, which alters their perception of your communication skills and how well you executed a positive client experience.
Three Key Strategies For Managing Trade Partner Relationships
You've likely encountered all of these situations and struggled with the additional complexity and challenges they add to your already difficult business. So how do you better manage your agreements and relationships with trade partners to avoid these pitfalls and ensure everyone is aligned on common project goals?
Foster Collaboration
Creating an environment where open communication and collaboration are valued will help build strong relationships between home builders and trade partners. This means early trade partner involvement - bringing them on-site in the pre-construction and design process, listening to their feedback, and incorporating it into the scope of work for the project. Like you, a trade partner wants the best results for the project and wants to make their work as simplified as possible while still maintaining the design intent. So let them be heard to achieve the common goal you share.
Sign a Trade Partner Agreement
The best way to ensure a smooth working relationship with trade partners is to arm yourself with a rock-solid Trade Partner Agreement that outlines the terms and conditions of your partnership on the project.
Set alignments with trades upstream to avoid problems downstream.
A trade partner agreement allows you to clearly communicate how you operate and outlines what they should expect from you, and what you expect from them so you can seek alignment before you agree to hire them.
Educate Your Clients
Let clients know early and often who their main point of contact is for their project and that this person's role is to manage all aspects of their renovation or custom build. Help them understand that they should communicate directly with them, and if they circumvent the designated point person, they risk time and cost overruns and/or re-work needing to be done on their project.
Using a Trade Partner Agreement
The best defense is a good offense, and starting trade partner relationships that way helps ensure the best outcome for everyone. One of the best ways to employ the tactics above is to use a Trade Agreement with each of your trade partners before the start of each project.
A trade partner agreement helps ensure that everyone understands the scope and ground rules for a project. And while it might generate pushback from frustrated project managers who don't see the need - or feel it's repetitive and time-consuming to use it with the same trade partners on every project, it will help ensure a better project outcome.
The trade partner trade agreement should outline all the details of the project they are being hired for, along with all the terms and conditions of working for you. This document is where you can outline communication procedures and expectations for how trades conduct themselves on job sites.
Items to include in your trade partner agreement:
Jobsite Code of Conduct: Define your expectations to ensure everyone knows what to expect.
Communication: Define who the trade partner should communicate with regarding the job site, scope of work, and pricing items.
Change Orders: Explain what process the trade partner should undertake prior to completing any additional work.
Scope of Work: Define the scope of work they are agreeing to and include any required cut sheets for products, etc. The details matter here!
Insurance and Worker's Comp: State the requirements you have in your municipality that the trade partner has to provide.
Supervision of Employees: Make it clear that the trade partner is responsible for overseeing their employees and that their employees adhere to your jobsite code of conduct.
Warranty Information: Make sure to input transferable warranty information from the trade partner.
Documentation: List any and all documentation that the trade partner is required to provide, from mechanical manuals to the labeling of the electrical panel, etc.
Project Schedules: Clarify the project's timeline and be specific about "time is of the essence" in completing the work.
Inspections: Identify who is responsible for inspections, from scheduling to attending.
Payments: Define the draw schedule, your payment terms, and your process for managing trade partner items landing on punch lists.
Health & Safety Policy: Provide your policy to your trade partners and make sure they understand they are responsible for upholding it.
Violence and Harassment Policy: Provide trade partners with your violence and harassment policy and ensure they understand their roles and responsibilities.
Most importantly, put the time in to develop trade partner agreements and get them signed. If you don't document it, it didn't happen.
Have Your Team Mirror the Behavior
People will mirror the behavior they see, so it's important to ensure that your internal team members follow the Jobsite Code of Conduct set out for your Trade Partners too. That means making your teams aware of the terms and conditions in your trade agreements and enforcing those rules on a job site for everyone involved, not just the subcontractors.
The Bottom Line on Managing Trade Partners
Collaboration is key in the construction industry, and cultivating strategic relationships with your trade partners will go a long way in securing better working environments and superior outcomes for your clients.
While trade partners may have valid reasons for wanting direct client communication, giving them the tools to effectively communicate and work with you while you maintain control ensures efficient project management, better quality control, and a better client experience.
If you're looking to implement Trade Partner Agreements for your projects, click below to learn more about the BUILD AND PROFIT SYSTEM and how we can help you to run a more profitable and efficient business.
