What is a Commercial General Contractor? Key Functions and Benefits

Updated On 7 May 2024.

When your business is planning to start the process of a commercial construction project, then the first step you need to take is to hire the right “commercial general contractor” for the job. Why? Because,

The commercial general contractor manages your project from start to finish, ensuring that all aspects meet your vision, budget, and timeline. 

According to Mordor Intelligence, the market size for commercial construction in the United States is projected to grow from USD 171.26 billion in 2024 to USD 203.5 billion by 2029, representing a CAGR of 3.51% over the five-year forecast period. Whatever the nature of your commercial buildings, be it the development of a shopping mall, a hospital, or an industrial structure, you need to find the right commercial contractor. 

But what exactly is a general contractor working in the commercial construction industry? What responsibilities do they have? How to hire commercial general contractors? In this extensive blog, we will find answers to these key questions. 

What is a Commercial General Contractor?

A commercial general contractor may be an individual or a construction company, who has the knowledge, experience, and professional standing to take control, conduct, and complete large to substantial commercial construction projects. They come and take over the project from its planning stages at the earliest point in time.

They must have the necessary knowledge and experience in leading and completing large commercial construction projects. Generally, commercial contractors undertake a broad range of construction projects including: 

• Office buildings 
• Retail stores and shopping malls 
• Industrial facilities 
• Healthcare facilities 
• Educational institutions 
• Hospitality centers 
• Life science buildings 
• Sports facilities 
• Fitness and entertainment complexes

Regardless of what type of commercial building project they undertake, general commercial contractors strive to deliver the finished product on time and within budget, meeting client’s expectations. 

General Contractors vs. Commercial Contractors: What’s the Difference? 

We may use the terms “general contractors” and “commercial contractors” interchangeably but they differ in the scope and complexity of the projects they handle. 

General contractors typically manage residential construction projects, such as homes and small apartments, focusing on individual or family accommodations. They follow all necessary building codes and regulations linked to residential establishments. 

Commercial contractors specialize in larger, more complex projects aimed at business and public use, including office buildings, shopping centers, hospitals, and schools. Their work often involves stricter regulations, more extensive planning, and a higher degree of technical expertise to fulfill the unique needs of commercial and industrial clients. 

Understanding the difference between general and commercial contractors is important for hiring the right type of professional with suitable expertise. 

What Does A Commercial Contractor Do?

A commercial general contractor leads the entire project and oversees the complete construction activity from the project’s start until its completion in all senses. As such, they are in charge of managing all phases of the construction and handling the entire range of tasks connected with completing the construction work.

Commercial contractors take care of all the necessary building components like civil works, electrical and plumbing works, interior and exterior decoration, landscaping, and installation of all the HVAC and safety installations.

Real estate building sector is full of diverse challenges that can affect a project’s outcomes and its stakeholders. For example, cost overruns, labor shortages, inflating costs of different materials, safety risks, and unpredictable delays. An experienced commercial contractor is proficient in overcoming major challenges and ensuring that your project finishes within budget and schedule.

Key Functions of a Commercial General Contractor 

Let’s discover the main functions commercial contractors carry out throughout a project’s lifecycle.

1. Project Planning

Commercial general contractors plan and coordinate every construction phase. They break down the entire commercial project into smaller, interdependent phases, setting timelines and estimating costs for each phase. Furthermore, commercial contractors review plans to align actual progress with planned schedules, optimizing cost control and efficiency.

2. Human Resources Management

Commercial builders hire professionals across various specialties, including civil engineers, architects, and onsite workers, ensuring all personnel are well-coordinated and comply with building regulations. They also select the right building equipment and allied machinery for effective functioning. 

3. Subcontractor Management

General contractors select the right subcontractors for specific tasks, managing and supervising the work they are entrusted with. To maintain quality standards, they appoint a team of building inspectors who then generate reports of legal compliance.

4. Finance Management

Given the scale of a commercial construction project, general commercial contractors build a team of finance auditors specializing in accounting and cost estimation. A construction cost estimator can accurately forecast expenses using historical data and market conditions to prevent budget overruns. 

5. Vendor and Supply-Chain Management

A large commercial construction project requires the procurement of various materials including building supplies, electrical items, HVAC equipment, and safety gear. The commercial contractor selects appropriate vendors and manages supplies directly with production companies and their dealers, ensuring timely delivery to the worksite. A dedicated team of supply chain management and logistics professionals hired by the commercial contractor coordinates transportation to keep the project on schedule.

6. Communication Management

A mega commercial construction project requires the building contractor to set up effective communication systems to keep teams connected and informed throughout the project. The contractor also handles disputes between clients, subcontractors, third parties, or construction workers quickly to avoid delays and keep costs under control. 

7. Legal and Regulatory Compliance

Usually, a commercial general contractor is knowledgeable about local building codes and zoning regulations. A commercial contractor handles applications for building permits and licenses by the Licensing Board, joins the local inspector for property reviews to secure these permits, and ensures compliance. 

8. Health and Safety Management

According to the U. S. Bureau of Labor Statistics (BLS), around 150,000 construction accident injuries are reported each year. As a prime function of a commercial building contractor, they enforce safety measures, take care of equipment’s safe operation, and keep an emergency plan ready for unforeseen issues. Licensed and bonded contractors who have Workers’ Compensation Insurance are subject to legal and financial penalties if any worker gets injured on-site. 

These roles highlight the extensive responsibilities that commercial general contractors hold, which are crucial for the successful delivery of commercial construction projects.

Benefits of Hiring a Commercial Construction Company

Hiring a commercial general contractor is vital for the effective management and successful execution of commercial construction projects. These professionals offer specialized expertise and a coordinated approach that improves project outcomes. 

Here are the valuable benefits of engaging the services of licensed commercial contractors:

Streamlined Communication

A commercial general contractor serves as the single point of contact for all stakeholders, including suppliers, subcontractors, and clients. This streamlines decision-making and problem-solving, making the construction process more efficient.

Established Industry Network

They have a broad network of trusted subcontractors and suppliers, ensuring competitive bidding, better prices, and high-quality materials and craftsmanship.

Regulatory Compliance

Knowledgeable about local building codes, zoning laws, and permit processes, their expertise helps avoid costly delays and legal issues, ensuring compliance with all regulations.

Project Management  

Commercial general contractors excel in project management skills, from initial planning to final execution. They ensure your project stays on schedule and within budget, reducing risks and delivering quality results efficiently.

Risk Management

Proactive in identifying potential risks, from labor shortages to contract documentation, commercial builders follow risk management plans. To mitigate various risks, they devise a contingency plan to reduce their negative impact on the project. 

Quality Assurance

Implementing rigorous quality control procedures throughout the commercial project. General contractors procure high-quality materials from reliable suppliers and examine the subcontractor’s quality of work to ensure the construction project meets or exceeds industry standards.

Cost Efficiency 

They optimize the use of materials and labor, reducing waste and unnecessary expenses, crucial for maintaining financial control over large-scale projects.

Engaging a commercial builder ensures professional and efficient handling of commercial construction projects from start to finish.

How to Become a Commercial Contractor? 

Becoming a commercial general contractor is a rewarding career path that combines technical skills with business acumen. This role involves overseeing the construction and renovation of commercial buildings, such as offices, stores, and other structures. From obtaining the right education to gaining hands-on experience, here are the steps to becoming a commercial contractor. 

Meet Basic Eligibility – 

• Be at least 18 years old.
• Hold a high school diploma or equivalent.
• Allowed to work legally in the country.

Pursue Education – Enroll in a Bachelor’s Degree in Construction Management to develop skills in construction techniques, site management, and electrical systems, alongside managerial and business acumen. 

Insurance Coverage Requirements – Any reputable commercial building contractor will carry the right insurance coverage including workers’ compensation insurance, general liability insurance, and professional liability insurance to protect their business from unexpected risks. 

Obtain Contracting Licensing – Secure a contractor’s license from a State Licensing Board or your Secretary of State by passing relevant exams on business laws and building codes. For example, the state of California requires licensing and registration for contractors working on projects worth more than $500. 

Gain Practical Experience – Engage in internships to gain hands-on experience, focusing on tasks like order preparation and site safety monitoring, under the mentorship of experienced contractors.

Expand Professional Network – Joining industry trade groups and associations like the Associated General Contractors (AGC) and local chamber of commerce can help you build professional connections within the industry. Attending industry events and trade shows will increase your career prospects and keep you updated on the latest construction practices. 

5 Tips for Hiring the Right General Contractor for Your Commercial Project 

The success of your new building or project depends on the qualifications, experience, and professionalism of your commercial contractor. Make sure you select the right contractor keeping the following essential tips in mind:

Tip 1 – Verify that the commercial builder has proper licensing, insurance, and a strong portfolio in commercial construction.

Tip 2 – Contact past client references and read online reviews to evaluate the reliability and quality of the commercial building contractor.

Tip 3 – Hire a contracting company that excels in communication, critical to the success of commercial projects.

Tip 4 – Evaluate whether the commercial contractor has adequate manpower and equipment to efficiently manage your project.

Tip 5 – Analyze each bid from commercial contractors, focusing not just on price but on how accurately they meet your project requirements.

Conclusion

From initial planning to pre-construction activities and construction management to post-construction quality inspections, a commercial contractor performs multiple roles during different stages of the project. As the leader in charge of construction workers on-site, they efficiently manage the project with their risk mitigation strategies, quality control, and streamlined communication. Given the fact that they manage your entire commercial project from the ground up, choose a construction company that is reliable, experienced, and carries a successful track record.

If you think you would require commercial general contractor services for your commercial project in San Francisco, please feel free to contact us.

FAQs

How much is the fee percentage for a Commercial General Contractor?

Although the contractor charges depend upon the size of the project, expect to pay around 10% to 20% of your total construction costs.

What’s the difference between a Commercial General Contractor and a Construction Manager?

A general contractor is a business entity hired through a bidding process that physically remains on the project site and manages the construction of a pre-crafted design. While the construction manager is hired based on qualifications and works on behalf of the client from project design to completion.

What does a commercial remodeling contractor do?

A commercial remodeling contractor undertakes the job of altering the interior and exterior of an existing commercial building. They also manage and oversee the entire remodel construction from the initial phases to the completion.

Relevant Resources:

• Subcontractor Vs Contractor: What Does A General Contractor Do?
• Value Engineering in General Contracting Services