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Contractors are hired to complete a project as it is laid out in a contract. They are not employees or a part of the company that hired them. Contractors perform the work in the contract, then move on to the next project and/or contract. There are no lasting ties to the employer and no obligations, such as unemployment insurance or taxes. Prime contractors and subcontractors are different types of contractor. Each has a role in the project.
A prime contractor is the primary contractor on a project. This individual or firm is responsible for the entire project. It must complete the project on time and under budget. A subcontractor is hired by the prime contractor or project owner to complete a certain task. Subcontractors also work under a contract. When the assigned task is finished, the subcontractor is off to the next project.
A prime contractor hires a subcontractor to do a job, but there is no supervisor-subordinate relationship between them. Both are hired to do a certain job; the subcontractor’s job is simply more specific. For example, while a prime contractor is charged with renovating an entire building, a subcontractor may be responsible only for putting in new windows.
Subcontractors can exist on a project without a prime contractor present, and a prime contractor can perform a job alone. The terms “prime contractor” and “subcontractor” may not be used during a project, but the respective roles are the same.
Prime contractors are used when the project owner wants little to no part in the project. They handle the details, reporting back to the owner. Using subcontractors on a job, in the absence of a prime contractor, means that you, as the owner, plan to have a hands-on relationship with the project. You hire the subcontractors, manage the budget and keep the project on-time.