CHOOSING A GENERAL CONTRACTOR

In This Article
Managing The Subs
Choosing A Contractor
Question To Ask A GC
Pros And Cons Of GCs
Hiring Recommendations     View all articles on BUILDING YOUR TEAM

Most medium and large construction jobs are handled by a general contractor or GC. The general contractor may be called a builder, building contractor, remodeling contractor, etc. What makes him a “general” contractor is that he enters into a contract with the owner to complete a project and takes full responsibility to get the job done for the bid price. In general, he purchases the materials, hires the tradespeople, and brings in subcontractors to get the work done. The subcontractors are responsible to the general contractor, not to you, the owner.

Choose your contractor carefully! No other decision will have a greater impact on the success or failure of your project. Great plans, contracts, and construction documents cannot get good work from someone lacking in skill or integrity. Find someone whom you can trust and feel comfortable working with. 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.

Assume that there will be problems along the way and select a person whom you feel will work cooperatively with you to find the best solutions.

Among the GC’s responsibilities are:

  • Estimating and bidding the project
  • Negotiating a contract with the owner
  • Hiring and negotiating contracts with subcontractors
  • Obtaining the necessary permits and scheduling inspections
  • Establishing a payment schedule based on work progress
  • Disbursing money to subs and material suppliers
  • Creating a schedule for workers, subs, and deliveries
  • Negotiating material prices and ordering  materials
  • Interpreting the plans and specifications
  • Supervising and coordinating the work of employees and subs
  • Troubleshooting job-site problems

While doing all of the above, the GC is often meeting with the owners to address their concerns, while juggling the myriad little things that can turn his tightly scheduled enterprise into chaos. For example, bad weather slows down the framing crew, so the plumbers and electricians need to be rescheduled, but his favorite electrician will not be available when needed, delaying the insulation crew. Later, the special-order windows are shipped with the wrong jamb profile, requiring custom shop work or another long delay. And so on…

In larger companies, the GC will probably have a 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. In any event, the GC is a busy guy or gal and arguably deserves the 20% overhead and profit they typically  (hope to) earn for holding it altogether. Their profit comes from some combination of marking up labor costs, subcontractor bids, and material costs.

MANAGING THE SUBCONTRACTORS
As you see, GC is a busy person – like the conductor of an orchestra making sure each section comes it at the right time.  A lot of this energy goes into managing the subcontractors. 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 the 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 will be ready for them when they show up. For example, the drywallers can’t hang their drywall until the plumbing and electrical are completed and the walls are insulated.

While some subs, such as insulation installers, are not known for the precision of their work, they know that if they want work from a particular contractor, they need to meet his standards.  Maybe they can charge a little more for the higher level of quality he demands, making it worth their while to take the time to do it right. In the end the owner pays a little more for a job well done – seems fair to me.

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.

CHOOSING A CONTRACTOR
If you are working with an architect, they will often provide names of contractors who they have worked with successfully. That’s a good place to start, but whether you are starting from scratch or with a list of names, the process is pretty much the same. The bigger the job, the more effort you should put in to finding the right contractor. One strategy is to hire them to do a small job and see how it goes.

In general, however, you find a contractor the same way you find a doctor, lawyer, or other professional whom you have to trust is competent and reliable. As with a doctor or lawyer, a lot is at stake if the contractor messes up. Problems can range from small annoyances (escaping pets, loud bad music) to major lawsuits if things go badly.

The best place to start, I believe, is with 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: new home, dormer, large addition, kitchen remodel, gut-rehab?  Ask who did the work,  and how it went, who did the design work, and so on.

Questions for former clients might include:

  • Have you worked with this general contractor (GC) before?
  • How did the job go? How did it compare with other contractors you have worked with?
  • Did the GC communicate clearly throughout the project?
  • Was the GC on the job frequently? If not, who supervised the work on site?
  • Were there any problems or surprises?
  • How was the work quality?
  • Were there cost overruns or delays, and why?
  • Would you recommend them for your type of job?

QUESTION TO ASK A GENERAL CONTRACTOR

  • How many jobs like this have you completed?
  • What is the average 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 something 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?

PROS AND CONS OF  HIRING A GENERAL CONTRACTOR
Hiring a general contractor, without the benefit of an architect to handle contract and job administration has its pros and cons, as follows:

Pros of working with a general contractor  (without an architect involved in the construction phase)

  • 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.
  • If you have a good contract, and a fair payment schedule, you will some leverage throughout the project. You should always make the final payment contingent on all work being completed properly.

Cons of working with a general contractor

  • There are no checks and balances, so you have to put a lot of trust in the GC.
  • 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 them for quality and completeness. Does the bid include everything you want done? (Oh, you wanted us to fill the 500 nail holes in the natural-finish pine trim? – that will cost extra.)
  • 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.

RECOMMENDATIONS FOR HIRING A GENERAL CONTRACTOR
Whichever way you go, there are no guarantees in life – or in construction. Even with an architect or professional inspector hired to inspect the contractor’s work, at the end of the day, you’ve got to hire someone you can trust to do good work and act with integrity. So really ask around, check with the Better Business Bureau, and check references. Find someone with an excellent reputation and strong track record in the community. Find someone you have a good rapport with. Find out if the contractor will be on the job site regularly and will be available to you if there are problems.

You and your contractor will essentially be business partners for duration of the job, so choose someone with honesty and integrity. Problems will arise during and probably after any large construction job, so it is important to find someone who you feel will act fairly and responsibly in resolving any issues that come up. Make sure the person you hire passes the Used-Car Test. If you wouldn’t buy a used car from this person, don’t hire him or her to build or remodel your home.

Choose a company that fits your style and personality. If you like a warm and personal approach, a small one-crew company might be just right for you. The contractor may be on the job daily swinging a hammer. The crew may do most of the work themselves and use relatively few subcontractors – usually better for finicky, specialized, or very customized work.  If you want speed, efficiency, and professionalism, a larger more corporate outfit might suit you better.

Whichever way you go, proceed with your eyes open. Be smart: Trust, but verify. By that I mean, make sure the specs provided by the contractor are sufficiently detailed and complete and will meet your expectations for quality (you can get a second opinion from a construction manager or architect if you’re not sure). Make sure the bid is realistic – that allowances are adequate for the materials you will probably choose. Ask to see certificates of insurance. Read the contract carefully – have it checked by your lawyer if it seems too murky or one-sided.

Finally, don’t expect to the get the best job from the low bidder. If one bidder is significantly below the others, either he is making a mistake (often due to inexperience), is planning to make up the difference in change orders, or is at risk of losing his shirt and may end up cutting corners or even walking off the job.

While I want a good deal as much as anyone, I rarely end up hiring the lowest bidder. Instead I look for the person I can trust the most to get the job done correctly. Often, the savings you thought you were getting with the low bidder later evaporate into the haze change orders, extras, inadequate allowances, and headaches.

Read more on Cost Overruns.                             Back to Top






Comments

  1. Contractor From Hell; No Written Contract

    We hired a remodeling contractor to remodel our kitchen, living room and stairway. There was NO contract ever created for this job. This was a personal friend, so we didn’t really question not having a contract. He is a contracting professional and should have known better and drawn one up. The job has been a disaster due to poor quality workmanship, cost overruns and schedule delays. We have communicated our concerns numerous times both verbally and in writing, and our concerns have for the most part been dismissed, laughed at and left unresolved. The job was estimated to take 6 weeks, it has now been over 6 months. We are tired of the whole thing and just want this contractor gone and the job closed; we do NOT want him working on our house anymore.

    He sent us a final invoice, which we believe contains excessive charges, ones that we never agreed to up front, he just billed us for them; also there are numerous quality issues, both large and small, unresolved. The total was around $50k, we had already paid over $40k. We got advice from both from an attorney and from other contractors telling us not to pay this guy another dime. However we wanted to resolve the matter equitably, so we sent a final payment that we believe is fair and reasonable, retaining around $2,000 to account for the excessive charges and unresolved quality issues. He is unfortunately now insisting on the remaining amount before closing the project.

    What are our rights?

    • buildingadvisor says:

      Sorry to hear about your situation – sounds like real mess. Choosing a competent, trustworthy contractor is the most important decision on an construction job, but it’s obviously too late for that. Beyond that, it’s critical to have clear plans and specs that describe the work to be done, and a written contract to cover each party’s rights and responsibilities.

      Regarding your rights at this point, you are asking a legal question and I am not a lawyer. So my first advice would be to follow the advice of your lawyer.

      Since you don’t have a written contract, it is difficult to say what exactly the two of you agreed to. Was this a fixed-price agreement or cost-plus (time and materials)? Was the “estimate” a binding bid or a guestimate? Did the scope of work change over the course of the job, making the original estimate no longer valid? Did you agree to changes in the plan and price over the course of the job? More questions than answers.

      Whatever the two of you agreed to would be considered an oral or verbal contract. To what extent an oral contract is valid for residential building projects varies according to state law. In some situations, a contract is even allowed to supersede state law. In states where oral contracts are considered valid for remodeling projects, there are often limitations. For example, each party may have less time to file a lawsuit and the contractor may have less time to file a lien for nonpayment.

      Even if one of the parties decides to sue (almost never a good idea for this amount of money), it would be extremely difficult for the court to determine exactly what the terms of the agreement were. This would weaken anyone’s claim including a lien. If a lien is filed, you have the right to contest it and might prevail. Again, these are tricky legal questions subject to state law, so it would be best to consult a local lawyer well versed in construction law.

      In a state with contractor licensing, it is a good idea to file a complaint with the state licensing board. You can also file a complaint with the attorney general’s office or office of consumer affairs, or the Better Business Bureau. These bodies can sometimes assist with resolving these kinds of conflicts.

      In the meantime, you should document as much as you can – keeping an organized file of written correspondence and dated notes of conversations, along with all invoices and photographs of incomplete or substandard work. This sort of documentation can be critical if any legal action is ever taken.

      Withholding final payment of contested charges seems like a very reasonable course of action – I would do the same. I would try to withhold enough money to get the work completed properly by another contractor. How to do this with minimal legal exposure is a question for your lawyer. In essence, you are terminating an oral contract. In a written contract, the conditions and procedure for termination would be spelled out. For example, see the clauses on Termination (18) and Dispute Resolution (20) in our Model Construction Contract.

      Next time you do any construction work, insist on a written contract and read through it before signing. Pay special attention to these critical contract clauses. It’s a pain, but a good contract helps avoid conflicts by communicating mutual expectations, and provide a roadmap for resolving the kind of dispute you find yourself in.

      I wish you the best of luck in resolving this conflict and getting the work completed properly!

      See also Construction Cost Overruns

      • Steve,
        Thank you SO much for the reply. “Next time you do any construction work, insist on a written contract and read through it before signing.” Boy have we learned THAT lesson. Fixed price or cost plus? I’m not completely sure of the difference, but from what I do know it looks like some of each. The scope changed somewhat, but the charges involved were either unclear or never explained. For instance, the original job included painting the kitchen walls, estimate $800; that seemed a little high but I guess reasonable. We decide to also have them paint the living room, hallway and stairwell. We figured another $1,000, $1,500 tops. The total paint charge came in at $5,000!!!. No discussion up front, “So you want these additional walls & ceiling painted, the estimate for that is -” Nope, no discussion at all, just hit us with an extremely high charge.

        The details of this whole disaster and the level of dysfunction is pretty extensive. In August I sent him our thoughts and concerns on the whole matter, to which we go no meaningful reply. Here is what we sent if you want to take the time to read it:

        Dear [Name Withheld],

        We seem to have reached an impasse in getting our remodel job completed. We hired you to do our kitchen remodel because we trusted that you, as an experienced contractor, would handle the job in a professional manner and do quality work at a fair price. You, and several others involved in this job, have fallen way short in all three of those areas:
        • From the beginning, there was no contract drawn up for the job. We both thought this was odd, but trusted that this was just due to the existing friendship and that even without a contract things would get handled well. We did not know what a huge issue this would turn out to be, and that it is standard practice for a construction contractor to draw up a contract, review it with the customer, and have it signed. You should have known this and drawn up a proper contract, explaining all aspects of the job and of your charging policies. You not doing this led to a wide variety of other problems.
        • Throughout this process there has been a lack of communication on your part, on key items such as fees, sub-contractor bidding, material purchases, days & times workers would be in our home, etc.
        • Overall there has been a lack of professionalism on your part; and we feel that our job has been treated much too casually. We have gone for long periods of time without seeing or hearing from you.
        • There have been an excessive amount of workmanship flaws and quality issues throughout this job. From the beginning we were proactive about pointing them out as the work was being done, wanting everything to be right as the job moved forward, and not allowing a long list of quality issues to accumulate. As customers paying for the job, this is clearly our preference for how we want the work done. Several weeks into the job, however, you informed us that this was not how you wanted it done. You mentioned a “punch list” process, one that you did not discuss with us up front, where quality concerns would be written down on this list and fixed toward the end of the job. This process was and is completely unacceptable to us. Here are just a few examples of the numerous quality issues:
         Flooring was installed with numerous excessive gaps between flooring pieces.
         Painting was poorly performed, with crooked lines and missed painting areas.
         Countertop installers joined areas of the slab where the pattern mismatched considerably, without consulting with us about it first. There was also a residue of adhesive that had to be cleaned off.
         A drywall worker did a poor job of mixing and applying the compound when skim-coating our walls. We made several attempts to point this out to you, and our concerns were shrugged off by you saying “it looks fine to me”. The finish had dozens of surface flaws, and the compound was unusually soft, leaving the walls easily damaged. The poor quality of the job was confirmed by two people from the same drywall company, and by the paint crew that painted right after the drywall work. So it turns out our concerns were legitimate, and the drywall company performed the rework required to fix the quality flaws.
         A drywall worker blanketed our house with dust due to improper performance of a sanding job. This dust will now be in our home for months, if not years to come.
         A worker signed a sheet saying that appliances were received with no damage, without unwrapping and properly inspecting them; it turns out there was a dent in the door.
         You and another worker attempted to fill in pock marks in the drywall after they were reported, then paint over those areas. This should have been left to the drywall and paint companies to handle.
         A worker, without being authorized, attempted to level our new refrigerator instead of letting appliance installers do it. He apparently does not have knowledge to do this task, and put a round shim under one of the feet, which is totally improper. We had to have an appliance technician come to our home to correct this.
        • You should have conducted weekly walk-throughs with us, asking about concerns and going over upcoming work scheduling, letting us know who would be in our home when; you did not do this. We have learned that this is standard practice among remodeling contractors. It would have made the job flow much better and would have prevented a “build-up of concerns” from occurring.
        • There have been numerous cost over-runs on items where an initial estimate was given, or where no up-front estimate was even given. In these cases you did not get approval on costs that had not been budgeted at all or were much higher than budget, e.g. the paint job. Had you told us the true actual cost up front, in some cases we would have elected to do the work ourselves.
        • There are a number of invoice fee items that you did not explain up front, and still have not explained.
        • You told us that we were getting parts of the job done “at your cost”. Then we see a “DSC Markup” on the invoice with no explanation up front that there was going to be this charge, and no explanation as to what the charge is, until we asked.
        • On the invoice there is a fee for “DSC Markup”; our understanding is that this is considered “profit”, some of which goes toward overhead expenses. There is another fee for “Supervision, Admin, Insurance, Mobilization”, and when contractors charge this most of it goes toward overhead expenses. We have come to learn that when contractors charge both, many refer to this as “double-dipping”. Is that what’s going on? To us, over $10,000 of overhead fees on a $40,000 remodel is excessive and completely unreasonable.
        • The countertops were a major expense item in this job. We looked to you to get a competitive bid from more than one company; that didn’t happen. You decided for us to go with a certain company without coming back and sharing the results of what other options were available. Instead of discussing all options, you made the decision for us.
        • You should have then given us the opportunity to come in person and select the quartz slab, and the seam issue should have been thoroughly explained to us at that time; neither thing happened. We noticed when the countertops were installed there was a very noticeable mismatch in the pattern at one of the seams. We addressed this to you and requested for situation to be rectified. Instead of supporting our concerns, you simply said that you would accept this in your own home and that you “didn’t see a problem”. Your only concern seemed to be whether or not we were “going to tell other people we are unhappy about it”. So you seemed much more concerned with your own issues than if we were satisfied with the product and service that you subcontracted for the countertop company to provide. Close to three weeks passed, nothing happened to resolved this, so we felt pressured into it accepting it.
        • When you purchased flooring for our job, you did not purchase the full quantity required for entire project from the same lot. Instead you bought it from two different lots; the flooring in the second purchase is different than flooring installed in first purchase in that it has beveled edges, the first batch does not.
        • The job duration was originally quoted as 4-6 weeks, and the go-ahead to begin work was given based on that time frame. The job is now over two months past the scheduled completion date. The main reason for this is the stair nosing issue. This should have been handled by you toward the beginning of the job. Once our flooring was selected, your experience should have told you that an acceptable/closest match for stair nosing needed to be found, purchased, ordered, and if necessary stained to match. This was not done until the project was almost finished, resulting in a lengthy delay. The job completion now seems to be delayed due to you declining to install the stair flooring until you receive final payment, which we perceive as an attempt to coerce us into paying fees that we have good reason disagree with.
        We were confident going into this job that it was going to go well, yet are very disappointed in how things have turned out. Our concerns have been continually dismissed, excused and laughed at. Your repeated comments about “this is the first time this has ever happened”, or “no one has ever complained like this” are irrelevant. How many other homes you have done projects in, how “beautiful” they turned out, or how much other customers allegedly did or did not complain, has nothing to do with our job. It is completely irrelevant what did or did not happen in other homes; what is relevant is what happened in ours. We have, in good faith, come to you with legitimate concerns in an honest attempt to get them resolved; in the vast majority of cases you have been unsupportive.
        It is our hope that we can close this job out soon so we can all move on.

  2. Check Contractor References

    Contractor experience is one of the best indicators of quality. Be sure to ask for references and visit houses they’ve already completed. Speak your mind about your preferences, but be open minded to your contractor’s suggestions, too.

  3. bill collier says:

    Is Client Responsible for Payment to Workers?

    What responsibility does the client have to ensure payments are made to workers and subs on a construction site they have contracted to build?

    • buildingadvisor says:

      Laws vary state by state and I am not familiar with Australian law (nor am I a lawyer).

      In general, it is the general contractor’s responsibility to pay his workers, subcontractors, and suppliers — not the client’s. However, a party owed money can place a lien on the client’s property if they are not paid. Lien waivers help protect owners against this risk.
      For help with lien waivers, you’d need to consult a construction attorney in your area.

      Read more about Lien Waivers.

      • Anthony says:

        A labor and material payment bond is usually required to protect the owner against the property or litigation by subcontractors and material suppliers. And the contractor is usually required to obtain lien waivers from the subcontractors and present them to the owner, if requested.

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