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What Is a General Contractor?
A general contractor is a "jack of all trades" in the new construction industry. They have complete knowledge of building a home from start to finish. They understand not only what it takes to build the home but they also know how your home must be built to meet code requirements, zoning requirements, covenants and restrictions and more. They also know many cost savings alternatives for budgets that are tight and need a little more room.
The general contractor is also responsible for overseeing work done on site and managing the schedule that their work crew or sub-contractors must maintain to complete construction in a timely fashion. In order to save on the fee paid to a contractor, some of these duties can be limited based on what you may delegate to other professionals or decide to handle on your own. In these situations you may be hiring the contractor to act more as a site manager, sometimes referred to as project manager.
Do I Need a Contractor?
Whether or not you need a general contractor is very unique to every situation, and has a lot of considerations. Anybody can contract a home on their own with the right time and help. So why would anyone choose to work with a contractor? The answer is their experience. Most people feel more comfortable putting all of this responsibility on the shoulders of someone who builds homes for a living.
When considering if you will hire a contractor or not you must first consider if you can even meet your budget if you hire one to oversee your job or if you even want to pay them their fee. The next thing you must think about is if you would have the time to work on your own project. You will have to verify your home will meet code, schedule work, complete bid requests, purchase materials, pay sub-contractors and more. Plenty of people have no problem doing this work themselves where some will find it too much.
A great way to reduce the amount of work that can be involved in the construction process is to get help. It does not have to be help from people experienced in construction. For example, having people that send out bid requests and follow up on them to save you time. Any help that you can get to save you time and get answers will make it easier. Some people will get help by hiring a site manager or good sub-contractors.
How Do I Choose a Contractor?
Choosing a general contractor can be as difficult as just contracting the job yourself. You will use a lot of the same skills to do it. You must interview them, speak with references and verify their payment terms. Speaking with and interviewing about 3-5 general contractors will be about the right amount to consider. You will first have to get to the group that you will want to consider. Many people do this by wading through phone books, looking on the internet, checking with local material suppliers, and most importantly, speaking with anyone that you know who has built a home recently. Once you narrow this group down you will want to have very consistent interviews.
Having a questionnaire (find a sample questionnaire by clicking here) that you use is a great way to make sure that you ask every contractor the same questions. This is important so that you can verify which contractor/s are most likely answering questions in a way that satisfies you. We have assembled a sample list of things to look for in a contractor that you can find here.
Be sure that your questionnaire includes a request for various references and the draw schedule by which the contractor would want to work from.
Getting & Comparing Bids
You should get at least three competitive bids for your project. Bids will vary from contractor to contractor. Sometimes these bids will vary dramatically. Going for the lowest bid is the basic idea but, beware of the "low ball" bid. This can result in unsatisfactory work that will cost you more in the long run. Make sure that the bids include quality materials that are guaranteed by the supplier or manufacturer. Competitive bids are free of charge and will ensure you pay a competitive price for your project. Get three to five estimates on a major project, two to three for the smaller jobs. Fewer estimates won't properly compare products and prices, and anymore than that is unfair to the contractors that take the time to bid.
Selecting a contractor based on lowest price can lead to a catastrophe. The majority of problems that plague home contractors are usually a direct result of a contractor underbidding a job. If one bid is seriously lower than any other, ask that contractor why. It could have been a mistake. Most contractors purchase their building products at relatively the same price. Ask the bidding contractor to double check his specifications and his price. Ask the contractors that had higher bids why they charged more. Sometimes their reasons can make enough sense to sway your thinking. Often you will find many quality conscious contractors like to put more time and labor into a specific project, which can carry its own added value. Getting the lowest price on a contract is not worth the trouble it can cause.
Have 5-10 copies of your construction plans made. It's generally less expensive this way. You can also photocopy the prints if necessary. Always keep one print as your Master Red Line Prints. These are blueprints that reflect changes made during construction and that are marked with red pencil. They are used to update all other prints with red pencil so that new prints aren't constantly being made for each minor change.
Once the bids start coming in, you'll need to look at each one and compare them with one another. Each can look very different, but as long as they cover the same labor and materials, you'll be able to look for bids that are consistently lower in price. Often, a bid is lower due to cheaper materials. Check that all the bids include the same plan specifications. This way you'll know it's a fair comparison and be confident in going with the lower bid. Do not automatically accept the lowest bid in each area and build your house as cheaply as possible. For one thing, a small minority of subcontractors will provide "low ball" bids to get the job and then find a hundred extra things to charge you for. This is why you want the plans to be specific on what products and materials you want. To compare bids fairly, you need them to be the same.
Several work items like interior trim and exterior trim may overlap between subcontractors. Interior trim, for example, is often done by finish carpenters, but cabinet installation and countertop installation may be a separate contractor. You'll need to do some minor scrambling on bids for the overlapping and leftover jobs. But your subcontractors will usually take on these odd jobs if the price is right. You should check that what they'll charge for the job is reasonable.
Sometimes, the subcontractors you contact are too busy to fill out a detailed estimate. Instead, they'll give a price over the phone and promise to follow up with a hard copy bid later. It's not the ideal way to get a bid, but it does happen. You can start with the bid to get the loan process going and change it later if it's off — as long as the banker agrees. For remaining items you that you can't get a figure for, put in a realistic estimate and replace it with the exact figure later. It is important to use that estimate so that your whole budget isn't thrown off.
Ensure that you take a deposit from contractors that receive a blue print from you. $50 is standard. In this way, you will ensure that you get the blue prints back, even if the contractor doesn't bid your work.
Negotiation is a very difficult thing to do (for some people). Okay, you have three bids, and they are all real close. They have bid apples for apples. You like one of the contractors, and feel comfortable with him. But his bid is higher than the other two. What do you do? You call him up and ask him if he can meet a lower price. This is important! You don't want him to meet the other bids, but to be LOWER than the other two bids. Obviously, you don't tell him to beat the lowest price; you give him the price to meet. Wait and see what happens! If he can't meet the price, ask him what he can do. Most of the time he will lower his bid to get the job.
It is important that Contractors supply as much material for the job as possible. They can generally get a better price from suppliers than you can! Also, if the Interior Trim Carpenter has a door that is the wrong swing, HE must take care of it. You don't have time to get the wrong door from the home, go to the door shop and exchange it, and run it back to the home! Life's too short as it is. Ask that all contractors "Turn Key" the job. This means they will supply all labor and material to do their job. You should insist that when they bid the work, they include a material take-off for the job. You will need to compare the different take-offs to ensure they are close to one another.
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