During the planning stage of your new construction, the most important decision you need to make is the selection of the general contractor. But, selecting the right person as the general contractor is a big gamble, and if the selection goes wrong, you may not be able to conduct the project as you want.
Instead of taking this big risk, if you have enough time, some experience in the construction industry, and decent management qualities, you can act as your own general contractor. Officially, you will be acting as what is known in the construction industry as an “owner-builder”. You can take your project forward without involving a third party in the project and complete the project in all the ways you want.
Pros and Cons of Being Your Own General Contractor
“Some of the top things to consider when thinking about self-contracting are if you have the time, skills, knowledge and tools to actually execute the work required by the project,” says John Bodrozic, co-founder of the digital home management website, HomeZada. (Source)
Note: Every region needs some form of licensing for general contractors to work legally. Without a contractor’s license, you can undertake only small-scale building projects. For example, the state of California requires both licensing and registration to work on projects worth more than $500.
Qualifications To Become Your Own General Contractor
If you have decided to become your general contractor, you must have some of these qualifications to become a successful one, namely:
- Managing people like construction workers, subcontractors, material suppliers, hardware vendors, etc
- Manage and deal with finances and play multiple roles in managing and taking control of the finances for the project
- Knowing the latest trends in the construction industry and knowing how to bring these into your project
- Knowledge of finding the best materials at the best price and knowing how to enter into the best deals for your project
It doesn’t matter even if you don’t possess the above qualities, you can still manage a project if you have the willingness to ask questions and the knack of knowing the answers you want. As the person in charge of a large construction project, the owner-builder must have problem-solving abilities, patience to understand people, and devise effective solutions.
Before Becoming Your Own General Contractor, Introspect On These Factors:
Do You Have The Right Personality?
Imagine yourself as the general contractor; if a situation arises, then you will have to be firm on your subcontractors. While direct intervention in their work is not recommended, you must be extra attentive when indirectly monitoring their work. Neglecting this aspect would lead to chances of compromises in the quality of the work. Are you ready to do such type of patient monitoring, wherein you’ll have to maintain a professional distance, allowing subcontractors to do their respective tasks, yet intuitively knowing when to inquire about their work progress?
Do You Have The Time?
Though being your own general contractor won’t be a full-time job, on average, you might have to spend about 2-3 hours daily on-site. Also, you could be called for any unexpected events, such as in the case of an emergency. That is why it’s important to consider aspects like the distance between the site and your place of work. Can you reach the site during your working hours and are you easily available on calls during your working hours?
Can You Commit To It?
Deciding to become your own general contractor should not be an impulsive decision. You must not consider saving the general contractor’s fees as the only reason to become one yourself. If you fail to fully commit to the job and decide to hire a contractor midway through the project, you might find yourself spending more than the initial amount you intended to save by not hiring the contractor in the first place.
How to Become My Own General Contractor? (Top 8 Considerations)
Whether constructing a brand new space or remodeling an existing building, being your own general contractor is a huge responsibility. An expert general contractor must be good at planning, budgeting, and coordinating various tasks, among other skills.
Here are the top things you should consider before working as your own general contractor.
1. Develop the Necessary Skills
Professional general contractors have specialized knowledge, subcontractor relationships, and material discounts with suppliers that can save a lot of money and time. As a newcomer in the construction industry, it’s best to enroll in a construction management course and educate yourself.
You can develop practical skills like cost estimating, scheduling, construction contracts, building codes, and material procurement necessary for being your own general contractor. Moreover, reading general contractor books, online resources, attending workshops, or mentorships can enhance your knowledge.
2. Understand the Scope of Work
General contractors can understand the scope of work and easily figure out the pricing details. When self-contracting, you need to request multiple quotes from different subcontractors to understand the overall cost. If possible, ask a construction contractor for a free quote which will give you an insight into the cost, materials, and tasks associated with the project.
3. Evaluate Cost Differences
The primary reason owners decide to DIY their building work is to save money. So, how much will you save? A general contractor operating in your area will typically charge 10% to 30% of the total project costs depending on the scope of work, location, specifications, and size. However, you may end up overspending on materials.
For example, you visit big box stores and end up purchasing an expensive conference table worth $12,000 when a $8,000 table would serve the purpose well. Meaning, that you are going to pay three times the price for around 25% better quality. So, always evaluate the cost differences before making decisions.
4. Know Permit and Building Code Requirements
Every state, county, and even town has different permit and building code requirements you must fulfill to legally start your construction. Before breaking the ground, you have to research, apply for, and obtain the applicable permits. Not following the code requirements by the local building department may deprive property owners of a certificate of occupancy.
Obtain general liability insurance that will provide coverage if any worker suffers injury on-site or there’s property damage during construction. Also, workers’ compensation insurance will safeguard you from legal liabilities in case of accidents.
5. Hire the Best Subcontractors
Start looking out for the best subcontractors in your area as soon as possible. Note that subcontractors may not consider a newbie general contractor because of inexperience or may quote a higher fee than they normally would. Depend on research and referrals taken from local, trusted workers to hire the best companies within your budget.
When you directly work with specialty contractors under the Subcontractor Agreement, you learn finer aspects of the general contractor business.
6. Plan Your Construction Budget
When you are serving as your own general contractor, lacking budgeting skills will lead to cost overruns and unexpected contingencies. Identify your potential construction costs like labor, materials, permits, subcontractor fees, etc. Request quotes from multiple vendors and subcontractors to get hands on the best deal without quality compromise.
Allocate at least 10% of your total construction budget for contingency funds. Most importantly, prioritize non-negotiable expenses to save money. For example, cutting costs on paint finishes in order to buy premium quality roofing materials. You can monitor your expenses throughout the project using construction budgeting software.
7. Set Up a Schedule
When you are your own general contractor, there’s constant juggling between coordinating jobs, purchasing materials, and monitoring the work quality of subcontractors. Therefore, sticking to a planned schedule but being flexible when unexpected challenges come is a powerful skill you need to nurture.
Know the process of the construction workers, how long they will take to finish tasks, and whether they need special accommodations. This will help prevent expensive delays.
8. Manage the Project Effectively
Being your own general contractor means shouldering the responsibility of project management throughout the construction. As a project manager, you will have to carry out several functions including:
- Coordinating subcontractors’ schedules
- Procuring materials at discounted prices without undermining the quality
- Tracking project costs for adhering to a pre-planned budget
- Mitigating unforeseen issues delaying the construction work
- Supervising timelines to ensure a smooth transition from one phase to another
- Assure quality standards throughout the construction process to meet or exceed expectations
Besides the above-mentioned roles, a construction project manager also maintains clear communication between various stakeholders to articulate expectations and take regular follow-ups. This keeps everyone on track toward successful execution. Try using construction project management tools such as GanttPRO, BIM 360, or CoConstruct that will help perform your management tasks.
Why Should I Become My Own General Contractor?
There are many reasons why you should become your general contractor, and the most important among them is the payoff you will make if you appoint another person.
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To Save Money
General contracting is a business, and its motive is to make a profit out of your project. When you hire a construction contractor, it will add a considerable amount to the project cost. Normally, the remuneration for the services as a general contractor is at the rate of more than 10 to 30% of the project cost. You have to add the contractor’s profit in materials and employment of labor. Whereas, subcontractors will easily reach anywhere above 20% of the total cost. This is a considerably handsome amount that you will be able to save if you decide to become your own general contractor.
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Complete The Project As You Want
You can plan and execute a construction project in the desired manner when you are your own general contractor. On the other hand, when working under a professional contractor, they will conduct the project their way. As general contractors are more experienced in conducting construction projects, they will be operating the project in a particular manner, and you have no say regarding this.
Sometimes, the project outcome may not align with your goals, and the bad news is, that you cannot raise a complaint unless there is a wide variation to the planned project work. When you are undertaking the project coordination and constantly monitoring the project progress, you can easily find the deviations at the very start and correct them, thereby avoiding unnecessary wastage of labor and materials.
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Get The Project Done Exactly The Way You Want
As your own general contractor, you will be on the worksite and be constantly watching the project’s progression. If something goes wrong, it’s easier to spot the faults at the start itself and take corrective steps immediately, thereby assuring the project’s success. But if another contractor heads the project, it is not possible to be that involved with the project.
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You Can Spend All The Time On The Project
Working as your own general contractor provides an opportunity to dedicate time solely to your project. You can focus more on the project execution by minutely watching all the workers’ and sub-contractors’ work. As owner-builders are present at the construction site throughout the day, the quality of workmanship will be high.
On the other hand, as the general contractor is a business entity working with a profit motive, they will be looking for ways to multiply their profit by completing multiple projects at the same time. They might appoint someone else to oversee the operations which can downgrade the quality of leadership.
Thus, the person whom you have appointed as the building contractor will not be spending all their time on your work. This defeats the very purpose of their appointment, and hence this is also one of the reasons why you should become your general contractor.
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Make Decisions On The Spot
When you are managing the project as the general contractor, there’s freedom to make any decision without having to wait for anybody. Being the person on the spot and the one who is commanding and controlling the entire team, you can finish the project work without any hindrance. This is necessary for the project to proceed without any delay as per the planned schedule.
If the project is under the control of a third-party construction contractor, then the work has to be halted if an issue requires their intervention and decision. If they are not at the worksite, the workers will wait for their approval of the suggested solution for the issue. This further delays the project and causes a waste of labor and materials, adding to the total cost.
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You Need Not Have To Deal With Another Person
When you assign the project to another general contractor, they will not like your involvement at all times in the project. This is because they would want to conduct the project their way or reap profit as much as possible.
When you constantly ask and advise them about the interest of the project, it may add to their frustration. They may even become uncooperative and shun your presence on the construction site. This will fuel the animosity between you and your contractor, which will manifest in all possible ways during the execution of the project.
Thus, when you are hiring a person to be the general contractor, it may lead to interpersonal conflicts leading to serious consequences on the project site. Hence, it is better to act as your own general contractor and get planned results for your building.
What Are The Disadvantages Of Being Your Own General Contractor?
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You Don’t Have Relevant Experience.
Being a client, you might perceive the contractor’s job to be more about scheduling the project work and monitoring the ongoing project work. But the reality is, they have the experience, which is highly valuable for the overall success of any project.
Instead of gaining first-time experience as a owner-builder for your very own project, you should rather invest some money into a general contractor who has quality experience in projects similar to yours.
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You Don’t Have Relevant Contacts.
The general contractor’s list of diverse subcontractors, with whom they maintain working relationships, holds a value equal to their experience. It would be a challenging task for you to hire the same subcontractors as they are easily convinced to work under well-known contractors.
The type of subcontractors who’ll be willing to work under you would be inexperienced in the market or not considered as quality subcontractors in the eyes of reputable general contractors.
The professional contractor will surely know the most credible suppliers in the market and even be aware of the best-suited materials for your project. In your first attempt, you won’t be able to figure these out on your own.
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You Have No Idea Of The Legal Permits
When it comes to the legal permits for your building, the contractor, being an existing member of the construction industry, has the reputation and rapport they have built over time with the officials.
Due to their numerous visits to the permit offices in the past, the professional general contractor will be done with the legal permits in the most optimal time possible.
Since you as an owner-builder lack all these qualifications, it would be more of a trial and error work to get the permits; the time consumed would be way more than the contractor’s time to get the same permits.
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Waste Management Is A Big Deal
The disposal of waste generated is a key aspect of construction management; the contractor will have the most appropriate waste management solutions. If you manage the waste on your own, it would cost you quite some time and money to figure out the most effective way to do so.
To Conclude
You could save thousands of dollars by becoming a general contractor for your project. Still, you would have to go through huge levels of stress, consequences of improper time management, and to an extent, even make your health suffer.
Take up the role; if you are competent to handle the disadvantages mentioned above, you can follow these great resources for general contractor news. Ideally, if it’s a small project, then you could think of taking up the role. But if it’s a big project that is also your own, then just consider the services of a local and experienced general contractor for it.
If you think your project needs the attention of a commercial general contractor, then contact Constructive Solutions, Inc. today; we might be the perfect fit for your project.
FAQs
How much money can I save if I work as my own general contractor?
Working as your own general contractor will save you around 15% of the project cost, which is the contractor’s fee. For instance, your building project would cost around $800,000 if you hired a general contractor. A saving of 15% of that cost is $120,000, which is a huge amount.
Where can I learn more about self-contracting?
Joining industry associations and networking with expert professionals will provide valuable insights into self-contracting. You can read books on general contractors, attend webinars, or simply sharpen your skills with practical experience.
Will I get a construction loan if I work as my own general contractor?
Some construction loan lenders find it risky to finance someone who’s not a licensed general contractor. However, most lenders also provide owner-builder construction loans which ask for the same qualifications along with their lender-specific requirements.
Relevant Resources:
Constructive Solutions, Inc. is a full-service commercial construction company serving San Francisco and Bay Area.
Whatever your vision, we have the resources, experience, and insight to make your concept a reality, and a space where your business can flourish.
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