You can’t do it all yourself.
As much as we’d all like to be completely self-reliant and have ownership of the entire oilfield process, you’re eventually going to need the assistance of subcontractors. Whether you need help with site excavation, material hauling, land reclamation or project management, having reliable subcontractors will help make your efforts, and your investments, a success.
Oilfield operations are too precarious; profits are too thin to rely on undependable subcontractors. Remember these tips and you’ll be better equipped for long-term profitability.
Part of a good screening process is to make sure that any company you hire is properly licensed, bonded and fully insured. While these three important aspects won’t guarantee quality, they go a long way towards ensuring a favorable outcome. Licensing is especially important in the oilfield business, especially if the company is involved directly in any of the drilling or reclamation phases.
Like licensing, bonding and insurance, the amount of time a company has been in business won’t guarantee success, but it is a strong indicator. There’s an important distinction, however. You should not focus on how much experience the team leaders or employees have, but how long the business itself has been in operation. Individual experience is great, but if the specific company has been successfully serving the industry for decades, it shows they have a strong foundation and have helped achieve the goals of many people in the industry.
When it comes to finding subcontractors for the oilfield, make sure you get at least four bids from different companies. When contractors are submitting bids, be sure they provide a detailed breakdown of the specific costs and items in the bid. This should include labor, material costs, equipment purchases and any other expenses that will be involved in the contract.
It’s often advised to toss out the lowest bid, as this is likely a poor-quality bid and you don’t want to be stuck with the bottom-budget services. While we won’t tell you to automatically throw out the lowest bid, we will advise you to avoid any bid that is significantly lower than the rest.
References matter. Request references from any subcontractor that you are considering and follow up in a thorough manner. A good subcontractor will have nothing to hide, so be wary of any company that seems hesitant to offer references.
When you are checking through the references, ask about the company’s track record, including whether they met deadlines, arrived to work as expected and completed the tasks in an appropriate manner. Did they stay organized throughout the job? Did they deal with other companies in a civil, cooperative manner? Understanding how they work can help you make the right hiring decision.
Before you sign a contract, do your best to meet face to face with company leaders. If a face-to-face meeting is not possible, a phone conversation will do, but meeting in person is by far the best bet.
Having a real conversation lets you understand the personality and leadership of the company and can give you the final assurance to hire, or even the needed warning to choose a different company. It might not always be possible, but face-to-face conversations can be very effective for your final oilfield results.
Operating an oilfield comes with numerous expenses, including the costs of hiring the right subcontractors. Unfortunately, profits often don’t reach your bank account for weeks or even months. TCI Business Capital can help you get the financial foundation for successful oilfield services, so contact us today to learn more about our comprehensive services. We’ll handle your cash flow. You focus on growing your oilfield business.
TCI Business Capital is an invoice factoring company serving businesses across the United States. For more information on factoring, call (800) 707-4845 for a free, no-obligation consultation and quote.