Subcontract vs. Self-perform

One of the defining characteristics of the landscape industry is the essential role subcontractors play as a way to provide specialized services we don’t have in-house. Yet despite how important the relationship between landscape contractors and subcontractors are to project outcomes, the relationship remains ad hoc and needs-driven. Not surprisingly, the last few years of labor shortages saw landscape contractors increase their reliance on subs and use them in more creative ways.

Despite their critical value, the relationships with trade partners and specialized subs can be a balancing act. It takes years to build trust and ensure that everyone gets what they need. Yet despite the good working relationships, deciding whether or not to use a subcontractor is more nuanced. Conceptually, relationship quality and expertise matter. But as contractors, we have financial requirements and look at cost. On the other hand, subs and trade partners can increase productivity and ensure high-quality outcomes. More specifically, they can often help us win business and determine competitive advantage.

Snow season is a good example of when subcontracting make sense. If you’re a landscape maintenance contractor in the snow belt, winter is less reliable. Using snow subs to spread the risk in either a heavy season or a low-event season is a cost-effective option. Be sure to have a plan that makes the best of both lean and heavy snow seasons, and consider the safety and needs of your customers. While the amount and frequency of storms and winter weather are not in your control, details of the relationship and what you and your customer expect is. Work out the best arrangement before the season starts, not when you’re in the middle of a unexpected storm.

There are circumstances when self-performing the work ends up being a better option, but it’s not cut-and-dried. A good example is tree care. Doing tree care with in-house teams gives you better control over scheduling. Since tree care is a less frequent service, even for regular customers, tree jobs might end up being one or two a season.

Third-party tree services book themselves 4-to-6 weeks in advance if they are good, but they have little flexibility, which makes it harder for you to respond to your customer. If you have an in-house team, you can do the work but it’s a solution that creates another problem. You often do not have a lot of work to keep highly specialized, highly paid tree crews and expensive equipment busy. A simpler solution is also not cost effective. Subbing out tree care to higher-paid tree workers in maintenance increases your maintenance costs and hurts margins.

Although I started in the green industry as an arborist and love the tree business, I would rather make 20-30% on a sub than invest the capital (high-cost +/-300K per crew), and hope I can keep them busy and not eat up my profit when it’s slow. If you are successful, you work your way into a 6-week backlog situation and add a second crew. Maybe that’s when it’s time to have a subcontracting tree partner.
Some contractors have developed subcontracting relationships with employees who have experience and skills for small hardscape jobs and hire friends to help them. This makes them somewhat of a captive sub, where they give you priority for sending them work. However, their versatility is a plus. They can pitch in to help construction crews when needed. Make sure they understand the whole project, not just their role, and stay on top of project changes and scope of work.

The bottom line in self-perform vs. subcontracting is your customer. Given the complexity of the work, the variables and the service challenge you need to solve, what is the best choice you can make to manage the risk and the relationship, deliver faster, smarter and better than your competitors, and still make a profit?

Words of Wilson features a rotating panel of consultants from Wilson360, a landscape consulting firm. Bruce Wilson is founder and chairman of Wilson360 (formerly Bruce Wilson & Co. He can be reached at bruce@wilson-360.com.