Just looking for some advice/opinion
We have a subcontractor that carries out some work for us, and they charge on an hourly rate.
Now, as a firm we havent really been using any form of time sheets, not until covid and lockdown and then we began using Tsheets.
When two jobs by the subcontractor went to be signed off, we noticed what he had billed us in hours for the job was more than what we bill the client for the work! in affect costing us money, i dread to think how long this has possibly been going on for but needs to be addressed urgently.
The hourly rate clearly isnt viable, i wondered if any practices here use a subcontractor and how they pay them? a percentage etc? to lock in profit and not have cases like above.
We have too much work as it is and going forward need to find a better solution for such a problem if we were to use a few more subcontractors etc
Any advice is much apprecited
Replies (6)
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Either hourly rate or agreed "by piece" rate, Either way, you ought to be in control of the arrangement
I think you potentially should look at your charges whilst you review the subcontractor arrangement.
Is the subcontractor overcharging or is he doing a good job and you're not charging the client enough.
As a subcontractor myself, I've worked on both methods of pay. Both have pros and cons.
I get paid an hourly rate and the target number of hours for the job are given with each job. If I think the numbers of hours allowed (which are normally more than sufficient) are not going to cover the job, I have to get permission from a director to claim the extra hours.
This works well for me as I am relatively speedy at what I do. But I have noticed that other contractors regularly go over the allowed hours. When they have been queried on the extra hours, they normally say that they are very thorough, which is all well and good as long as there is sufficient money in the job, but sometimes this is not viable. And then there are the contractors who are just very slow.
Sub con work should be paid by the job, agreed in advance. I have been a subcontractor for years and it works well for both parties.
If the contractor is slow their hourly rate drops, if you send them messy incomplete work and then take days to resolve queries they walk. If they get a good job then they can make money.
Maybe you should be reviewing the quality of the work you are sending out. I have been sent some terrible jobs, poor book keeping, opening balances don't agree etc and then they take over a week to reply to queries. If that's the type of job you've sent out then you can expect to pay the price.