Subcontractor Concessions?

There are many factors that go into the costs that a contractor pays the subs; not only who is paying the workman’s comp & disability insurance; but also who orders and shops/delivers the materials. How often do they all work together/relationships etc. Who is managing the whole job?
I know many subs that will charge less to work with a crew that they have worked with for many jobs and far more for contractors that they are not so familiar with.
But for you as a consumer; if you have particular subs that you want in the mix, only then can you worry about what they are charging/getting paid. Otherwise let the contractor do their own bookkeeping and see if the cost & contract work for you, but do not count every screw etc. or try getting into their pockets, it is no way to start out a very long relationship.

resident2

in Renovation 7 years and 9 months ago

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ceylxxnsm | 7 years and 9 months ago

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We are examining a proposal from a contractor for extensive renovations on our Crown Heights brownstone. The contractor intends to use several subcontractors to complete parts of the work, and states that he passes through those costs directly to us without markup. That’s good, but it raises the question of whether it is normal for subcontractors to make payments (concessions, commissions, finders fees, ,whatever term you want to use) to the general contractors who hired them. Does anyone have any insight into this?

espeon | 7 years and 9 months ago

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There are no “kickbacks”. The GC’s profit is a percentage of the overall project which includes the cost of subcontractors. Additional markups would only make the quote less competitive.

dorkofwindsor | 7 years and 9 months ago

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Any so called “concession” is simply GC profit they are trying to hide if you are going to line item them. Better to look at job as whole, compare to other quotes and how they do the work (quality wise) and what materials they use. Finally, great subs are hard to find and are expensive – no one really has an edge in any of this. You can’t even compare one contractor to another’s subs. I just had some work done where the subs were amazing, but twice the price of other subs who competitors used. So while you think you can audit line item by line item, if you are a casual homeowner you can’t really price this on your own. Either hire a consultant who can talk shop and line item everything, or consider the quote as aa whole and how they do it / materials and people they use. It isn’t hard to figure out who are bullshitters (don’t like to talk details, just try to make you feel like they do this every day and do “all the neighbors” among other obfuscations. Goo d contractors don’t mind talking details if they know what they are doing, the bottom half talk generalist gibberish (its good, it will look nice etc)

ceylxxnsm | 7 years and 9 months ago

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Thanks xagor & dorkofwindsor. I’m wondering whether undisclosed “concessions” from subs to contracts is a widespread and accepted business practice in Brooklyn, or whether it’s only done by contractors who are on the shady side. If it’s widespread and accepted then I will feel comfortable asking the contractor about it as part of a negotiation of his proposed fees, which look quite high. Any advice is appreciated.

espeon | 7 years and 9 months ago

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There is no such business practice. On the contrary, the better the relationship between GC and subcontractor, the higher the potential for a competitive quote. Other factors notwithstanding, it is this cost saving which is transferred to the client.

daveinbedstuy | 7 years and 9 months ago

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What the others said. You seem to misunderatand the process and relationships and seem to be trying to find issues where none exist.