Who is a General Contractor? Why and How to Hire one

General Contractor

In the construction industry, the person called a general contractor oversees the construction project. Generally, property owners hire general contractors to safely complete a construction job on time by following all the specifications.

General contractors are often referred to as GCs and they are fairly important for both straightforward residential construction as well as complex commercial construction. However, specific tasks like laying new flooring or replacing a roof might not require a general contractor at all. They are needed for projects that need the coordination of multiple tradespeople or several stages to complete the job.

Read on more to learn about the role of a general contractor in the construction field, how to know if a general contractor is needed or not, and how they are licensed and paid.

What Does a General Contractor Do?

The general contractors are responsible for overseeing the construction projects under them go through smoothly from the beginning to the end but what does that actually entail? Basically, the general contractors act as a go-through between the owner of the property and others who are building up the property including tradespeople, vendors, and material suppliers.

The responsibilities of a general contractor depend on the method of delivery used in the construction project. For instance, for a design-build project, the general contractor might be responsible for managing both the construction and design of the project. For a traditional design-bid-build project, the general contractor only needs to manage the job after the specifications and design have been set by the architect. The GCs have important responsibilities before, during, and after the construction job. Let’s check them out!

Before Construction

Before the construction of a project begins, the general contractors are responsible for the following management tasks. The general contractor will continue to do these tasks throughout the remainder of the project as well.

  1. They need to collaborate with the architect to assure the design of the property has been accurately designed.
  2. They need to hire subcontractors to carry out the specialized tasks.
  3. They also need to create and manage a budget for the entire construction.

During Construction

During the construction of the project, the general contractors will tackle some of these tasks. The overall role of a general contractor is to make sure that everyone is working together and sorting out all the challenges that may negatively affect the project’s budget or schedule.

  1. They need to respond to schedule delays and other kinds of setbacks.
  2. They need to keep the project on schedule for its entirety.
  3. They need to oversee the construction work by following the specifications.

After Construction

Once the property’s construction has been completed, the general contractor still has some responsibilities left that include,

  1. They need to manage matters with payments down the payment chain
  2. They need to ensure that the subcontractors are getting paid for their work done.
  3. They need to track and collect lien waivers.

Since the general contractor is the main point of contact between the owner’s building and the subcontractors, it is they who have to ensure that the work specifications have met up to the standards and that the payment has been disbursed.

In other words, general contractors manage to spearhead the moving parts of construction works from beginning to end. Usually, on most of the worksites, general contractors will have a managerial position while the subcontractors complete the labor work.

While on smaller projects, general contractors can complete some of the work themselves while contracting only the specialized parts. There are several types of contractors and GCs are just one of them but they serve an important role in assuring that the entire project gets done precisely and the people involved in it get paid justly.

General Contractor: Licensing Requirements

Generally, the laws if the state needs contractors who have licenses to practice, and this includes general contractors also. Getting a license also has advantages for all the stakeholders involved in the construction work.  Working with licensed general contractors is a crucial part of making sure that people involved in the project get paid. Here are a few such advantages of getting a licensed contractor:

  • Municipalities and states use licensing to control general contractors and ensure that they follow all the policies for safety, taxes, and insurance.
  • Property owners benefit from licensing as well by finding contractors who are trustworthy and credible.
  • Contractors also earn benefits from being licensed such as the ability to guard their lien right in most states.

How to Find or Hire a General Contractor?

Working with an experienced general contractor is a crucial step in making a construction project a massive success. Whilst looking forward to hiring a general contractor, you need to keep in mind certain things like their reviews and payment profiles, any warning signs of unprofessionalism, and their history of work quality. Finding the right high-quality general contractor will help in alleviating difficulties with payment, construction, scheduling, and budget throughout a project. Here are the details of what you need to keep an eye out for.

1.     Prequalify a General Contractor

Have a look at the general contactors’ job and credit history to get an idea of their work quality. Reach out to the subcontractors who have worked under them to cross-check the facts. This prequalification process will reduce your worries down the line.

2.     Know The Warning Signs

Avoid GCs who show signs of a bad contractor like lack of professionalism or shady practices with permits.

3.     Search Reviews and Payment Profiles

Use payment and review profiles that are available publicly to make sure that the general contractor you are planning to hire is reputable.

General Contractors vs Others

General contractors are definitely the manager of the overall building process but they are not the only managers or contractors in a construction job. Most worksites, especially in large-scale construction projects, have a variety of other contractors too. These contractors are just a few key members of the workforce on a construction site.

  1. Subcontractors
  2. Prime contractors
  3. Construction managers

Here’s the difference between them.

General Contractor

Subcontractors

Prime Contractors

The general contractor is paid by the owner of the property.

The general contractor hires them for specific tasks on the worksite. Typically, they are paid by the general contractor.

Primes contractors hold the main contract with the owner. Mostly, the GC is also the prime contractor with some project-delivery methods calling on non-GCs as prime contactors.

General Contractor: Role in The Payment Process

Usually, the GCs are paid directly by the owner of the property being built. That said, payments in a construction job can be very confusing and the payment to the general contractors is no different.

The GCs are a critical part of the payment chain, i.e., the way money moves from the owner of the property to the various tiers of suppliers and subcontractors. Often, the general contractors need to collect lien waivers from people working under them on a particular project before they disburse the payment and get themselves paid. However poor visibility and communication may make this process difficult and slow. This will in turn lead to delayed payments for everyone on the project.

Here are some of the issues that general contractors face in the payment process for a project:

  • Limited visibility: General contractors may only be acquainted with their immediate subcontractors but not the suppliers or sub-subcontractors.
  • Inherent risk: General contractors may also face risks of non-payment if they fail to secure the lien waivers.
  • Contingent payment: General contractors have to fulfill the requirements to get paid as well which further complicates the flow of money down the payment chain.
  • Burdensome paperwork: The GCs who collect hard copies of lien waivers before they disburse the payment may have to spend weeks to ensure that they have successfully fulfilled all their contractual requirements.

Formutanley, there are some ways to speed up the process of payment in a construction project and to make sure everyone gets paid on time. Typically, maintaining open lines of communication, streamlining paperwork, and increasing the visibility of subcontractors go a long way towards resolving the issue of delayed payments.

The Bottom Line: What is a General Contractor (GC)?

A general contractor is someone who is in the managerial position of construction projects. They have to overlook the payment process, maintain the budget of the project, see that the project meets all the standard requirements, and make sure that the project is completed within the scheduled time. However, they are not to be confused with construction managers (CM). CMs are the ones who hire GCs and make a budget for the project proposed all the while overviewing how the construction is going on.

Who is a General Contractor? Why and How to Hire one FAQs:

1. What are the different types of general contractors?

There are 5 different types of general contractors:
  • Freelance contractors
  • Design and build contractors
  • Trade contractors
  • Electrical contractors
  • General contractors
  • 2. How do you become a licensed general contractor?

    To become a licensed general contractor, you need to pass the trade exam and business management exam. You also need proof of having an experience of 4 years with proof of a bond.

    3. What to study to become a contractor?

  • You need to get a degree in subjects related to construction technology
  • Gain a relevant position, experience, and skills in construction.
  • Create your individual business plan.
  • Obtain a license for a contractor.
  • Manage a contracting business.
  • 4. Define a lien waiver.

    A document from a supplier, subcontractor, contractor, or another party who has a mechanic’s lien is called a lien waiver. It states that they have been fully paid and that all the future lien rights to the property under dispute have been waived.

    5. How much do general contractors make?

    The typical payment of a general constructor is about $28 an hour or $57,309 a year. On the high end, they can make as little as $22,500 per year and as much as $116,00 per year.
    Property Geek

    Property Geek

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