General contractors are the principal general contracting entity that manages the hiring of specific subcontractors and procurement of materials required to execute a defined construction project. The building contractors conduct both on-site construction management and the back office administrative management. General contracting serves both commercial construction and residential construction industries.
General contractors are also referred to as prime contractors as they are typically solely responsible for the performance success and the quality of construction. The primary motive and benefit for an owner of a property to contract for the services of a residential contractor or a commercial contractor, is that the general contractor is responsible to the owner for the construction process and contracted results of a project.
We will attempt to answer the following questions about these building contractors;
- What are general contractors?
- What do general contractors do?
- What are general contractor services?
- What are the types of service agreements do they offer?
There are many ways for an owner to assess the needs and benefits of using a GC. The most obvious reason is when the owner does not understand the basics of properly repairing or building something new from ground up. If the owner of the property does not understand the blueprints, construction sequences or methods of construction or the details related to the actual skills to perform the required task, it is best to hire a competent builder.
Understanding the builders project responsibility tasks provides a great deal of insight for an owner to determine if hiring a general contractor is the best choose to make for the project. A building contractor wears many hats before, during and after the project.
The GC facilitates the roll of the construction cost expert assisting the architect and the owner with such task as conceptual pricing and value engineering during the design stage. During the construction phase the general contractor is leading the project construction process with safety, shop drawings, construction scheduling and quality control. The following are some of the principal tasks and responsibilities that you can expect from your prime contractor.
Learn the tasks that General Contractors do in their profession
General Contractor Project Responsibility and Tasks
General contractors offer very defined services and duties to their clients. Their responsibilities include scheduling, construction administration, risk management and construction management.
- Construction Management
A GC’s primary responsibility is the construction management of a project. This traditionally includes all quality control techniques and methods to execute the performance standards of a project. Construction management also includes the control and oversight of scheduling, safety practices and material & labor logistics.
- Scheduling
GCs provide project schedule preparation and facilitation. This involves setting critical path items and defining long lead product orders. Scheduling is a critical element that requires great skill and collaboration with suppliers and subcontractors to execute to a client’s expectations.
- Risk Management
Risk management involves the mitigation of financial, liability and construction / design risk associated with the project. It also involves the active administration of job site safety, hazard awareness and preparation of unanticipated risk that may occur.
- Construction Administration
Construction administration represents the clerical functions of a construction project. These items are accounting functions, shop drawing approvals, contracts & insurances, product data sheets and facilitating owner meetings during the construction process.
After understanding the role of general contractor, the property owner is required to access the site-specific elements directly associated with the project. The owners needs and benefits for a general contractor are determined by many additional factors including financial, project complexity, location and time requirements. We will discuss the impact of these factors on the owner and project success.
Financial Factors
Most property owners consider the financial factors to be the highest priority when it comes to evaluating the need for a general contractor. These factors include the expense of hiring a building contractor, the financial exposure and project magnitude. These 3 financial factors significantly effect a property owners decision making criteria for commissioning a construction company.
- Fees– The typical fees for a contractor are associated with the size of the project, the risk exposure of a project and the type of construction management. For residential project fees can range from 18% – 28% depending upon the noted factors. On a large seven figure projects, the fee can amount to a large sum of money. This causes hesitation with property owners.
What many property owners do not realize is what task and responsibility the GC actually performs. It is far more than picking up the phone to schedule a subcontractor. The hours of planning, documenting and inspecting the performance of a project are countless. The responsibilities begin with reviewing and checking everything in an effort to avoid documentation errors that can lead to property owner’s cost. The GC fees can best be viewed as additional insurance to avoid countless cost overruns and the expense of continually redoing work poorly performed.
- Risk– One of the principal responsibilities of general contractors is to mitigate project risk on behalf of the property owner. This includes financial exposure resulting from liability risk exposure, design & construction errors and project cost overruns. Many of these types of errors can lead to large losses that can be catastrophic to a project’s financial wellbeing.
Project Magnitude
The actual dollar size of a project has a great deal of impact on the need for a GC. The more expensive a project is the greater the risk exposure is to the detriment of the project. In addition, the greater the size of a project the more complex the construction management becomes enforcing project controls.
- Project Complexity– The project complexity is a bi-product of a number of factors. Project complexity can be created from such factors as scope of work, design uniqueness and multiple critical path events. The more unique a projects design and function the more challenging it becomes. This results from the requirements for a higher skill level of tradesmen, construction managers and overall project leadership.
- Project Uniqueness– Is associated with one-of-a-kind construction design that few on-site personnel have direct experience in constructing. This may be the result of the construction methods used or the materials applied or the actual architectural design elements. Unique construction projects are very demanding and warrant a high-end management team those general contractors provide.
- Scope of Work– A highly defined scope of work and tight specifications can challenge the best craftsmen and project managers. These types of specifications reduce normal production rates for labor and can cause subcontractors to cut corners in an effort to make up for lost time.
- Project Location– The project location can present its own unique challenge like access and remoteness. Remoteness and access issues can be difficult to overcome and ultimately have a detrimental effect on the project cost and schedule.
Undertaking a major construction project without a qualified general contractor can result in significant unforeseen consequences for untrained property owners. One must ask themselves would I represent myself in a criminal court case or conduct local surgery upon myself. The answer is typically no for some very good reasons. For a deeper look at the quality standards of a general contractor, follow this link https://www.marwoodconstruction.com/quality-standards-for-general-contractors-near-me/
General Contractor Services
A general contractor plays a significant role in any major construction project. They are to a construction project what a financial adviser or attorney is to your professional wellbeing. As the prime contractor on any construction project, they hire, schedule, inspect and manage the project suppliers and contractors.
The selection of quality and competent subcontractors is contingent upon a viable budget and the general contractors ability to properly manage and facilitate a project. The old expression, “you get what you pay for”, addresses this exact point. It is logical to expect that if you hire a general contractor that has a budget or price that is more than 10% price difference, there is a high likelihood that there is either a substantial difference in product specs, lesser quality subcontractors or they have missed something in the plans. In the event of any of these possibilities, the owner will be the loser in the end.
There are many differences in the type of construction and the professional skill sets for each general contractor. The size of the firm also has an impact on the quality of the general contractor’s services. The combination of both personal service and construction industry segment can influence the construction experience and overall outcome performance. For an owner the challenge becomes understanding the consequential dynamics early in the selection process.
Selecting the right general contractor for your project needs can be challenging and will likely take a good deal of time. Without the proper vetting process, an owner can find themselves in a contractual relationship that is difficult to exit. We will discuss these differences and how they can mislead you in understanding which general contractor represents your best project and personal interest.
Construction General Contractor Industry
There are typically 3 primary construction general contractor industry segments that services overlap. These are high end remodelers that manage home remodeling, luxury home construction and upscale commercial construction. Although the products and general services will vary for each of these industries, the craftsmanship and construction process for higher end projects is often reliable and consistent.
The size of the builders will matter if you are in need of personal service. The larger the building contractor the less actual personal attention you will receive from the qualifying builder. Larger firms will have their staff carry out the day-to-day operations matters of the building process. The benefit of a small boutique building contractor is the close supervision and personal attention you will receive.
- Home Remodeling
Upscale home remodeling requires a special set of skills to be effective at achieving the owner’s renovation goals. Whole home remodeling requires the ability to visualize the options available for changing the structure that represent the new design plan. Most home remodeling projects have some degree of unexpected surprises. The difference in how the remodelers handles these surprises sets them apart.
In the case of the low bidder, it is likely to cost the owner a greater amount of both money and time. In the case of the remodelers that is a trusted adviser and a working partner is that they will likely explore all the options available with the owner. Assisting them through the decision-making process. For a comprehensive guide on the home remodeling process see; https://www.marwoodconstruction.com/home-remodeling/
Home remodeling is an emotionally charged process for the owner. Remodeling can be very invasive to an owner’s personal life. If your home remodeler has not properly prepared an execution plan to address the emotionally charged situations, the relationship between builder and owner can disintegrate quickly. Structuring scheduled meetings and effective communication methods will provide an open method to airing concerns and grievances.
- Custom Home Builders
Custom home builders are also general contractors that are home building companies. They hire subcontractors and suppliers to fulfill their construction obligations. The distinctive differences between custom home builders are the array of services they provide. These services are associated with architectural design and contracting services they offer.
There are typically two types of custom home builders, one of a kind home builders and semi-custom home builders. Semi-custom home builders will usually operate with base home plan designs. Whereas with one-of-a-kind home builders, to their name’s sake, will normally build unique home plans for a specific owner on a particular lot.
One of a kind custom home builders will normally allow architectural and structural changes to the home under construction. The semi-custom home builders will normally not allow such changes. The principal differences come down to service. The owner should expect that the custom home builder will spend more time with them on product selection, onsite walkthroughs and facilitating their design needs for a custom home. For a comprehensive resource about custom home builders and the process of building a custom home read; https://www.marwoodconstruction.com/custom-home-builders/
- Commercial Contractors
Our third construction industry general contractor is the upscale commercial contractors. These general contractors will undertake projects like tenant build outs, medical facilities, hotels and museums. A common factor of these types of buildings with high end residential are that they require seasoned highly skilled labor and products that are not regularly stocked at Home Depot.
Commercial construction varies from residential construction primarily in life safety and ADA requirements. A common difference is that most commercial envelopes use more steel or concrete in the structure then common residential structures. These are necessary due to the large expansive open areas. Although in recent years home remodeling and custom home trends are leaning toward the use of steel beams and metal framing to achieve contemporary architectural designs.
Many of the commercial finishes are also being incorporated into the luxury home architectural design. The use of glass walls, open stairs and natural stone & wood floors are blurring the lines in interior and architectural design. For more commercial construction resources please visit; https://www.marwoodconstruction.com/commercial-construction/
General Contractors Contracts
- Fixed Lump Sum Contract –A fixed price lump sum contract is an agreement that is a fixed amount for a specific scope of work. The risk is solely on the general contractor for operational and construction risk.
- Cost Plus Contract – This contract shares the operational risk between owner and general contractor. The value of the contract is based upon the actual cost of materials and labor plus a percent of the total cost as a fee for general contractor. These types of contracts are common when the building being constructed is not clearly defined.
- Unit Price Contract – Unit price contracts are agreements that are based on the unit quantities of material and labor used to build the facility. These agreements are frequently used with large civil projects.
- Time & Material Contract – The time and material contracts are similar to unit price contracts. Labor rates are established and receipts of materials are processed for payment.
- Construction Management Contract – A construction management contract is designed for the general contractor to manage the construction activities, quality control and the administration of the project. The general contractor will normally operate without the financial risk of construction cost overruns.
- Design Build Contract – The design build contract is when the owner hires the general contractor to design and build a specific property. This has proven to be an effective strategy for owners that want someone responsible for design & construction risk.
Conclusion
General contracting requires the services of knowledgeable construction companies with seasoned builders to carry out the many responsibilities of a general contractor – https://www.marwoodconstruction.com/ . Regardless if the project requires the services of a residential contractor or a commercial contractor, certain skill sets are necessary to fulfil the demands placed on a building contractor.
