Most subcontractors will agree that labor is their greatest risk. Yet most subcontractors invest little time and money in developing a highly productive workforce. I believe it was Rita Mae Brown who said, “Insanity is doing the same thing over and over again but expecting different results.” Many years ago my mentor, John Pinto, told me that, “Hiring is more important than anything else in this business.” When I say workforce I’m referring to trades people—the field people who supervise and perform the work on site. Developing a highly productive workforce may not be as difficult as one might think. Maybe your organization has already done so and is completely happy with the return on investment.
However, lenders have taken a different view of the contracting industry. Overall, subcontracting is a high-risk business that experiences extreme margin pressure, slower than normal collection rates, a reduction in retained earnings to finance losses, and, to top it off, a diminishing work force.