Should you be your own general contractor?
Should you be your own general contractor next time you do a major construction project around the house? Will being your own general contractor save you money? Will being your own general contractor save you time? Will being your own general contractor get you the best products for less money?
These are questions I hear from home owners all the time. Those are questions I asked myself years ago when my wife and I bought our first home while I was still working as a consulting engineer. In fact, I tried out that role when we completely renovated our 1950’s ranch. Today I manage a large division of a construction company that provides both general contracting services and full design build construction management services. This short informational post will give you my thoughts on those questions.
Should you be your own general contractor?
This is a hard question to answer in my opinion. I’m writing this post today because last night my wife and I were watching the TV show Flip This House on A&E. The woman flipping the house was an accountant by trade and decided she wanted to flip a house so that she could make some money and still spend time at home with her kids. Her flip was fairly successful but she made quite a few mistakes along the way that reminded me why it’s a good idea to hire a general contractor.
What most people don’t realize is that general contractors have two big advantages over the typical do-it-yourself home owner. First off they have relationships with sub-contractors that make it much easier to develop a schedule and stick to it. When I call an electrician and ask him to start a job the day after the plumber has finished I know he will show up and get the job done. When we lived in our first home and I called an electrician as Mr. home owner the guy basically said he’d show up as soon as he could but that might not be for a few weeks. The reality is most sub-contractors make general contractors their priority because the sub-contractor is the guy feeding him 75% of his work. So if you plan on being your own general contractor don’t plan on having a sub-contractor at your beckon call.
Will being your own general contractor save you money?
Again this is a hard question. Depending on the situation I think you can save some money. However, that may very well come with a time price tag. You can probably save money on the management side of your project but you most likely will not get it done as fast as a general contractor. Depending on how you finance the project that money saved might be used paying extra finance charges so it really does depend on the project.
I’d also argue that hiring a good general contractor may actually save you money. This is especially true if you try managing the project yourself and end up making poor decisions. Also, a really good general contractor may be more expensive on the initial estimate, however, when the job is complete his estimate will probably still be accurate and the low bidder might have hit you with lots of change orders.
Will being your own general contractor save you time?
I would say that almost every time you compare the time frame of a project that a general contractor built versus a project that was managed by the home owner the general contractor will have completed the project quicker. Again the reality is that a general contractor has more resources and a very serious interest in completing the job a quick as possible and moving on to the next project. The general contractor knows exactly what sequence things need to be done in, knows which inspections are required at the appropriate times and how long each task will take. That knowledge gives the general contractor a serious leg up on you even if you’re fairly knowledgeable about construction.
Will being your own general contractor get you the best products for less money?
Often times people think that general contractors are looking to use the cheapest products or “contractor” grade in order to pad their profits. I don’t think this is the case with reputable contractors. The reason I say this is fairly straight forward. When I build a project for a customer I like using the best quality products that the project can afford. By using the best quality products you reduce the likelihood of having call backs for warranty work. I’d rather spend a few more dollars on better products and know that I won’t be returning to fix a door knob that was 10% cheaper.
My advice is if you’re planning a major renovation or new construction project to sit down and evaluate your skills, construction knowledge, communication skills and connections within the construction industry. If you have good connections and a strong working knowledge of the type of project you’re going to build then it may be a good idea to take control of the general contractor role for your project. If nothing else some of you may find it very interesting and fun to work in that role. Expect to spend many hours chasing down sub-contractors, estimates and material orders if you want your project to be a success. The other thing you’ll want to do is spend plenty of time planning the project and asking lots of questions from each of your sub-contractors. Ask them how long their task will take and which tasks need to be done before they show up on your site.
The other thing you’ll really want to do early in your project is find out if your bank or financial institute will allow your to act as the general contractor. There are quite a few banks that will not allow you to fill that role. You may not end up saving any money or time but you may find that you enjoyed the battle! Have fun and good luck.
Excellent post. Makes me think alot about GC’ing some major home reno plans in our house (kitchen, bathroom)… You know well I’m an avid DIYer, but most of my projects of any scale take YEARS to complete. I’m ok with that, becuase they *mostly* don’t interfere with our life… I think when it comes to kitchens, baths, and other essential rooms, contracting a GC can make ALOT of sense.
@Fred – I still think that people with plenty of DIY experience can be an effective GC. However, you just need to allow the proper time commitment and understand what you’re getting into. It’s also important to note that no ones time is free, including the home owner, while sweat equity is an excellent way to cut costs you need to remember that you’ll be blowing off some other project. I think the real key is understanding how much time it takes and planning things in enough detail that you don’t end up spending more money fixing things.
One of the the majority significant financial and personal decisions we will make in life, it should also be one of most enjoyable experience.
Going with a reputable and professional general contractor will definitely save you time and money. It may seem cheaper to figure things out yourself but it really ends up you trying to take on a new profession and learn things that are sometimes just outside of your comfort zone.
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Saving money is a great reason to consider being your own general contractor, but as with all aspects of your project seek professional advice that will help you along the way. Do not forget insurance. Whether you hire a general contractor or hire multiple prime contractors, it is essential that you request and receive insurance certificates from all contractors and subcontractors that work on your home. Insurance certificates are not enough. Your insurance requirements should be in writing and made a part of your contract(s). Your insurance requirements should specify a minimum insurance carrier quality standard, the types of coverage necessary, your minimum insurance limit requirements and specifically require such things as additional insured endorsement(s), waivers of subrogation and notice of cancellation. Additional insured endorsements are particularly important even years after your project is completed. A qualified insurance professional will be invaluable. They should help you understand the issues and consider using insurance certificate tracking software of some kind. You may also want to outsource insurance certificate management for the best and most hassle free results.
Always carve out a decent amount of time for your renovation projects. The biggest problem I always see is people think it can be done in a weekend or a day. Some projects take time and patience.
Adding value to your home is always great, but make sure its done right!
My wife and I just finished building a home and we acted as the general contractor. I felt the benefits outweighed the negatives. It might not be for everyone but it worked in our situation.
Glad to hear you had a positive experience! Did you have any prior experience? Did you do much research ahead of time?