The GC

Most medium and large construction jobs are handled by a general contractor or “GC.” Other terms often used referring to a general contractor are “builder, building contractor, remodeling contractor, etc.”

A “general” contractor enters into a contract with a homeowner to complete a project and takes full responsibility for planning and tracking the project timeline, hiring all subcontractors, and the purchase of all building materials required to complete the job at the bid price. Subcontractors are responsible to the general contractor, and not the homeowner.

Assume there will be problems along the way. Since no other decision will have a greater impact on the success or failure of your project, select a general contractor who you feel will work cooperatively with you to find the best solutions. Great plans, contracts, and construction documents cannot produce good work from someone lacking in skill or integrity. If you have to pay a little extra to hire the right person, you won’t regret it. The savings from hiring “the low bidder” often evaporate as the job progresses.

THE ROLE OF A GENERAL CONTRACTOR

  • Creates estimates and bids the project
  • Negotiates a contract with the homeowner
  • Interpretes the plans and specifications
  • Hires and negotiates contracts with subcontractors
  • Obtains necessary permits and schedules inspections
  • Establishes a payment schedule based on work progress
  • Negotiates material prices and orders materials
  • Creates a schedule for workers, subcontractors, and deliveries
  • Supervises and coordinates the work of employees and subcontractors
  • Disburses money to subcontractors and materials suppliers
  • Troubleshoots job-site problems
  • Meets with the owners to address their concerns
  • Manages any schedule delay situations

 

In larger companies, the GC may have a team: foreman, lead carpenter, project manager, or superintendent (in a development), overseeing day-to-day job-site management. In smaller companies, the GC may be on the job site regularly, even swinging a hammer from time to time. Their profit comes from some combination of marking up labor costs, subcontractor bids, and material costs. An excellent general contractor’s margin is well-earned.

 

SUBCONTRACTOR MANAGEMENT

In general, smaller companies rely more on staff carpenters and larger companies rely more on subcontractors to get the work done. Nearly all companies use subcontractors for mechanical trades such as plumbing and electrical, and most use subs for excavation and foundation work, roofing, drywall, and painting.  On smaller jobs, they may do some or all of this work with their own crew members.

A good contractor has good relationships with competent and reliable subs. That means the subs will show up when needed and do good work with minimal supervision. They know what level of work the contractor expects, they know they’ll get paid promptly, and they know that the job site will have been prepared and for their work or installation when they show up.

Some companies use their own crews for framing and finish carpentry, especially  for finicky work such as built-in cabinets or ornate trim and other decorative details. It’s also best to use the in-house crew for special energy details, unusual wall systems, or other details that are not the domain of a specific trade.

SELECTING A GENERAL CONTRACTOR

If you are working with an architect, they will often provide names of contractors with whom they have worked with successfully. The bigger the job, the more effort you should put into finding the right contractor. Problems can range from small annoyances to major lawsuits if things go badly.

Start your search by interviewing your circle of friends and acquaintances, as well as neighbors who have had work done recently. Look for projects similar to your own in size and complexity.

 

QUESTIONS TO ASK:

  • How many jobs like this have you completed?
  • What is the average per square-foot cost for this type of job?
  • How much experience do you have with energy-efficient construction, green building, passive solar (or whatever your special interests are)?
  • Who will supervise the construction on site?
  • Who will I be working with once the construction begins?
  • What work will your own employees perform (as opposed to subs)?
  • How do you prefer to work: competitive bid, cost-plus, negotiated price, or other?
  • What is your company’s greatest strength?
  • (For remodeling): What efforts do you take to keep the job site clean and safe for children, and to keep dust out of the living quarters?

HIRING A GENERAL CONTRACTOR ON YOUR OWN

(When no architect is involved in the construction phase.)

Pros Cons
  • This is the simplest way to get a large project completed.
  • May be the least expensive based on competitive bidding (other than self-contracting)
  • One-point responsibility for materials, workmanship, scheduling, and budget controls. If there’s a problem, it’s the contractor’s responsibility to fix it.
  • A good contractor will have good subs, who show up on time and do work to the standards set by the contractor.
  • Having a good contract, and a fair payment schedule, will give you some leverage throughout the project. Final payment should always be reserved as contingent upon all work being completed properly.
  • If there are problems, there’s no one to mediate (although some contracts have a mediation or arbitration clause). You’ve got to work things out directly with the contractor, who probably knows a lot more than you about construction.
  • If the contractor writes his own plans and specs, it may be difficult for you to evaluate the bid for quality and completeness.
  • If the contractor cuts corners, or doesn’t properly supervise subs, work quality can suffer. How will you know?
  • If there are problems, delays, change orders, and upcharges, you have limited leverage in negotiations.

THE GENERAL CONTRACTOR:

  • Should have a good rapport with you
  • Is licensed and insured–ask to see certificates of insurance
  • Should have a reputation of excellence and a good track record
  • Should be on site and available to you during the project and for any arising problems

 

THE BID:

  • Should be realistic including adequate cost allowances for the quality of materials you will probably select

 

If you have doubts or are unsure about your contract specifications, get a second opinion from a construction manager or architect.

In California, there must be a written contract for all home improvement projects over $500 in combined labor and materials costs.

 

THE CONTRACT:

  • Should identify your contractor, his/her address and license number.
  • Should include warnings and notices about the your rights and responsibilities: the right to cancel, mechanics liens, and allowable delays. You may cancel within three (3) days of signing a contract, but it must be mailed before midnight of the third day.
  • Should be complete and provide detailed specifications meeting your quality expectations
  • Should contain everything agreed upon (including verbal agreements) by you and your licensed contractor
  • Should detail the work, total price, when payments will be made, and whether there is a cancellation penalty. You should expect to make a down payment on any home improvement job. That down payment should never exceed 10 percent of the contract price or $1,000–whichever is less.
  • Should specify who will obtain the necessary building permits
  • Should specify when the job will be finished
  • Should be reviewed by a lawyer if you are unsure about what kind of agreements you are entering into.
  • Should be updated to include any changes made (Change Orders). Once signed, “Change Orders” become part of the contract.

Don’t expect to the get the best job from the lowest bidder. If one bidder is significantly below the others, either they are making a mistake (often due to inexperience), are planning to make up the difference in change orders, or are at risk of losing their shirt and may end up cutting corners or even walking off the job. Often, the savings you thought you were getting with a low bidder later evaporate in change orders, extras, inadequate allowances, and headaches.