it's actually easier on installations than service work. on a larger installation, you (or your chosen foreman) can provide better quality inspections than you can on a guy running 4 service type jobs a day
I disagree. Service work is much more black or white. You either fixed the thing or you didn't. It's fairly easy for the customer to tell whether you did your job properly or not. You could violate a number of codes on installation work without the customer ever knowing.
I think viewing this from a safety compliance aspect gives the best example of the problems involved. An employee on hourly rate has no incentive to skip safety requirements. An employee doing piecework does. And when an accident happens, who is going to be found guilty - the employer!
And yes one answer to this is supervision, but if I have to spend that much time on supervising piecework than that wipes out any advantage of having guys work on piecework in the first place.
I can only see disadvantages to having employees doing piecework rather than using subcontractors.