Deciding Between a Sole Proprietor or Full-Service Refractory Contractor
If you’re a plant engineer at a large multi-national industrial manufacturer, you probably have the expertise and bandwidth on staff to manage all of the maintenance for your heat processing equipment.
It’s common, however, for small to mid-size manufacturers to lack the resources or knowledge to take on maintenance and repair projects by themselves.
Because cost is always an issue, this entices some to use a sole proprietor or small specialist firm to handle their refractory maintenance or repair projects. This can be a good decision… or a bad one, depending on your situation.
If you’re deciding on which type of refractory contractor to use, here’s a discussion of different factors to consider before making your decision.
Cost
The sole proprietor will have much lower costs out the door, since you are only paying wages. But don’t forget to consider overhead, management time and total downtime. These costs will add up quickly – they’re the hidden costs that sneak up on you. Sometimes the sum of all the costs of using a sole proprietor can equal the cost of a full-service firm.
Speed
A full-service refractory contractor will most likely be able to perform the work quicker, which outweighs the cost savings from using lower cost labor. Getting things done under tight timelines is very important (especially when one hour of downtime can cost $100,000+ in lost revenue).
Management
A sole proprietor typically requires a fair amount of management. Make sure to budget that time into your calendar. If you don’t have time to monitor the work closely, you could end up with safety issues, quality issues or rework. With a sole proprietor, you may also be responsible for ordering parts, prepping the maintenance area and the cleanup afterwards. With a reputable full-service firm, you receive general task directions and allow the firm to complete the job from start to finish.
Technical Expertise
If you have questions concerning your project such as refractory selection, installation method, time to complete, refractory dry-out procedure, material storage etc., your best selection would be a full-service contractor. Refractories are not a commodity and something simple as storing a castable at the wrong temperature can cause significant problems.
Guarantee
Sole proprietors won’t provide a guarantee. If you need a guarantee from a contractor, always clarify what type of written guarantee they will offer. Do they guarantee their work, their materials, or both? In general, full-service firms will provide a more comprehensive guarantee. Be sure to understand what will happen if something fails after the project is complete. The last thing you want is the so-called “taillight guarantee” that ends as your contractor drives out of your parking lot.
Insurance
If there is an insurance claim during or after your project, the sole proprietor normally has only limited insurance coverage. Full-service contractors have extensive insurance coverage for all types of claims. Make sure you always ask for a current copy of the Contractor’s Certificate of Insurance before entering your facility.
Licensing
If you’re using a sole proprietor, there’s a good chance that he doesn’t have his general contractor’s license. This can be problematic for three reasons: you’ll have limited recourse if something happens during the project, the lack of legal certification regarding his quality of work can create uncertainty, and he may or may not file the appropriate tax returns or meet the financial requirements to qualify for a license.
Safety
Whenever there’s work on industrial heat processing equipment, safety is paramount. Nothing can replace a strong baseline of safety training, along with the approval of third-party safety administrators. If your project has increased risks, such as heights or high temperatures, be sure you understand the type of safety training your contractor provides.
If you’re not sure of whether you need a full-service firm or can get by with a sole proprietor, reach out to us. We’ll be happy to provide our recommendation. If using a sole proprietor is truly the best option, we’ll tell you.