Contractor vs. Subcontractor: Roles, Responsibilities, and Differences Between the Two

Construction roles and responsibilities are not always obvious, with tasks and authority changing and overlapping as many different businesses contribute to each project’s success. The contractor vs. subcontractor distinction is an example of how lines can be blurred if the scope of work for each category is not clearly defined. This RIB guide explores the main differences between these two important roles!

What Is a Contractor?

A construction contractor is an individual or company responsible for managing and overseeing projects. Contractors work with clients to negotiate contract terms, coordinate subcontractors, procure materials, and ensure work is completed on time and within the agreed-upon budget. As the primary point of contact for clients, contractors might also be heavily involved in construction risk management, safety training, and expense tracking activities. 

With the building industry generating over $15 trillion in revenue each year, becoming a contractor proves to be a great decision for many people, with the potential for high earnings, various available construction project types, and the flexibility to choose your own assignments. On the other hand, contractors must also shoulder the risks and responsibilities of running a business, accommodate seasonal work fluctuation, and often perform physically demanding work in hazardous conditions.    

General contractor vs. independent contractor

The terms “general contractor” and “independent contractor” are sometimes used interchangeably. This is understandable since the word independent describes almost any private business, but important differences exist. General contractors are typically involved with a project from start to finish and are held responsible for schedule adherence and quality. Independent contractors are brought in for specific assignments, sometimes just a single task, often without knowledge of the big picture. Additional distinctions include:

• General contractors are responsible for the safety of all workers on the job site, but independent contractors are only responsible for their own safety.
• General contractors are paid a set fee for their work, whereas independent contractors are paid a negotiated hourly wage as soon as their work is completed.

What Is a Subcontractor?

Subcontractors are independent contractors who play a vital role in the construction industry by completing specialized services like roofing, demolition, carpentry, or electrical work on a contract basis. To distinguish between an independent contractor vs. a subcontractor, the latter usually works under the direction of a general contractor, coordinating their efforts as part of the overall process. In most cases, subcontractors in the construction industry will also:    

• Provide their own workers, tools, equipment, and (sometimes) materials
• Collaborate with other trades to minimize rework, delays, and safety hazards
• Take responsibility for their own insurance coverage and trade licenses

Special trade subcontractors work on building and nonbuilding tasks ranging from painting and plumbing to concrete work, sign removal, and excavation. The expertise of these subcontractors allows them to perform complex tasks that would not be practical for general contractors to do themselves.

Is a subcontractor also a contractor?

The contractor vs. subcontractor distinction requires us to take a higher-level view of the definitions and their overlap. Subcontractors are not general contractors since they do not take full responsibility for a project’s outcome, but there are instances when they may be classified as contractors.

For example, if an electrical subcontractor is hired to complete the wiring for a new building but needs more workers and equipment to complete the task on time, they become a contractor if they hire additional subcontractors to address this need. Subcontractors might also be considered contractors when:

• They are hired directly by the client or property owner
• They have direct oversight for a large portion of the project
• They are responsible for negotiating the price and delivery of materials

Despite these exceptions, the roles played by general contractors and subcontractors typically form a hierarchy where the contractor manages budgets, timelines, and communication with the client. In contrast, subcontractors use their specialized expertise to help achieve the overall goals.

Subcontractor vs. Contractor: Key Differences

What is the difference between a contractor and a subcontractor? To answer this question, we need to examine their reporting structures, accountability, and specific roles and responsibilities.        

Reporting structure

The chain of command on a project provides a convenient opportunity to describe the difference between a contractor and a subcontractor. The latter is usually engaged by another contractor to perform specialized tasks, whereas the contractor is engaged by the client or project owner. This reporting structure extends to financial norms, with the contractor being paid by the client while the subcontractor is paid by the contractor.  

This conventional reporting structure insulates subcontractors from the scrutiny and expectations of the owner and puts the onus on general contractors to choose skilled and reliable specialists. The bid leveling process ensures work is not awarded on price tag alone by factoring reputation and relevant experience into the subcontractor evaluation process.  

Roles and responsibilities

A construction contractor is responsible for all phases of work throughout the project’s life. Their involvement begins during the initial planning stages and continues through execution and beyond. Some of the fundamental responsibilities carried out by contractors include ensuring compliance with safety regulations, subcontractor management, and materials procurement.

The role of subcontractors is much smaller by comparison since they are only assigned to a specific portion of the project and can focus on the task at hand with minimal disruption. Subcontractors still need to manage their own labor, equipment, and tools, meaning they are not able to completely defer to the contractor when it comes to providing adequate resources.

Financial responsibilities

The subcontractor vs. contractor hierarchy also helps set boundaries for financial issues and payment terms. This is another area where contractors shoulder more responsibility since they take ownership of the project budget, materials, and payroll. They also face more financial risk from delays or overruns since they may face penalties for failing to meet the original contract terms. 

Subcontractors bear some financial responsibility and risk since they usually need to invest in labor and equipment before being paid by the general contractor. Subcontractors may be paid hourly or in a lump sum when their tasks are completed. Financial responsibility and risk can also ripple from the contractor to the subcontractor when financial issues or delays are encountered.

Liability levels

What is the difference between a general contractor and a subcontractor regarding liability? Contractors take legal and contractual responsibility for everything from safety hazards and construction site accidents to workmanship issues and material defects. Importantly, they are also liable for any subcontractors’ performance and output. This can be challenging when subcontractors leave or are removed before their tasks are completed

Subcontractors are not completely irreproachable when it comes to liability. They are still responsible for complying with safety regulations, building codes, and industry standards, as well as any specific deliverables outlined in their contract. They must also carry their own insurance policies to protect themselves from legal entanglements. Despite these guardrails, the general contractor is usually liable for any quality, performance, or legal issues during the project.

How Technology Helps Contractors and Subcontractors Work Together

The relationship between contractors and subcontractors is central to the efficiency, quality, and communication in construction projects. Technology is now playing a larger role in developing and managing these relationships, with cloud-based construction management, monitoring, scheduling, and document-sharing platforms available to break down silos between teams and trades.

Technology also comes into play when mobile apps allow subcontractors to share information about task status from the field and instantly share photos of quality issues or safety hazards. Promoting collaboration between contractors and subcontractors and creating a digital environment are two of technology’s biggest contributions over the past two decades. 

Collaboration

Transparent communication and collaboration between stakeholders are essential throughout the project. Software-based platforms make collaboration easier by bridging the distances between teams, making closer coordination feasible. Centralized documents, drawings, material databases, and monitoring tools also improve cooperation by ensuring everyone has the most current information. For instance, RIB BuildSmart has an innovative subcontractor management module that tracks progress, completes payments, and communicates changes effectively, taking the subcontractor/contractor relationship to the next level.

A digital environment

The transition of construction processes from paper and pencil to computer, tablet, and internet has allowed the industry to move into a digital environment that improves real-time data sharing, decision-making, and efficiency. Centralized platforms and advanced data analytics have allowed digital construction tools like Building Information Modeling (BIM) to move the design, testing, and construction management practices into the digital realm.

Conclusion

The distinctions between subcontractor vs. contractor can lead to confusion when project demands force experts out of their lanes or turn generalists into specialists out of necessity. These nuances of responsibility reinforce the need for advanced tools to boost project management, procurement, estimating, bidding, and more.

RIB’s toolkit of specialized construction software solutions helps companies in the building industry save resources, reduce costs, and support sustainability throughout a building’s lifecycle. Get your demo and discover how next-level technology and collaboration can redefine your business!