Types of Building Contractors
There are several ways in which builders may contract your home
remodeling or renovation project. You can use either a:
- General Contractor – individual builder or builder under
a corporate entity
- Building Construction Company
- Building Management Company
General Contractors assume responsibility for the entire project.
- The building permit process
- The construction work
- The materials requirements ordering and delivery
- The subcontractors
The owners role is generally limited to overseeing the quality
of the work produced at a high level and that it is in accordance
to their expectation of the design specification. In addition, it
is the owners responsibility to secure finance and pay the contractor
according to the agreed schedule.
As the owner is not involved in the day to day operations, stress
levels are minimal, however great they may be.
A General Contractor will charge 15%-20% on top of the cost of
the project as their project management fee.
A general contractor may contract as an individual or through a
corporate entity. These options have significance if any litigation
results from the project. As an individual, you will have direct
access to personal assets of the builder. As a corporation, your
remedy will be against the company, which may act as a protection
foil against claims on the builder unless you can prove fraud. Ensure
your contract with any company entity includes personal guarantees
of the individual builder.
A Construction Company
A builder may contract his services through a construction company.
These companies offer financing, construction support, and may have
preferential material purchasing options.
They generally larger than local building companies and are sometimes
national brand companies with large customer bases. Local offices
provide on site supervision and contract management.
There are two different types of construction companies.
- A building construction company
- A construction management company
Building Construction Company
These companies generally have their own teams of builders and
trades people. These vary in size significantly, and with larger
projects, will be incorporated solely for a single piece of work.
Be very careful as to your rights to arbitration and litigation,
as this type of structure can act as a powerful shield against shoddy
building practices, as we are finding in the New Zealand Leaky House
Construction Management Company
Construction management companies only act as project managers
for the engagement of building contractors, subcontractors, materials
planning, supply and delivery. They are not generally on site during
construction, but do manage the quality checks and regulatory sign
off. The on-site construction management is left to the overseeing
Their fees range from several thousand dollars to tens of thousands.
Making The Best Choice
Hiring a qualified General Contractor is the easiest option, but
also the most expensive. With the rising cost of housing, it is
not always possible to pay a GC 20% of the total project costs.
A GC is also a more one on one relationship, and if things go sour,
it can be extremely stressful and difficult getting them to complete
You are also limited to either a single builder or a small team
of builders to get your project completed.
A larger building construction company has a large team of in-house
builders and other contracting builders. This provides for less
risk if unforeseen circumstances or disputes interrupt your remodeling
or renovation project.
A lot depends upon how much involvement you want with the building
process and contractors. If you like to play things close, then
the more personalised relationship of a General Contractor or small
Construction Company is the right choice for you.
If you are like me, and just want to concentrate on my own work
and let them deal with the whole project, subject to my evening
walk around to check on progress and anything that seems wrong,
then a larger professional Building Construction company is for
If you want to adopt an in-between approach, then using a Construction
Management company, or alternatively an independent Project Manager
is the answer.
Most construction management companies offer a number of types
of relationships to suit your preferences and needs. Some even provide
remodeling and renovation finance. This allows you to gain the assistance
you want, but keep control the process. Personally, I find them
a little too remote for my needs and sometimes just seem to add
just an additional layer in the process, and additional layer of
By taking a bit of extra time up front in choosing the right contractor,
and using a good contractor screening process, you can avoid the
downside and get the end result you want with minimal stress.
The key to making your decision as to which combination to use
is analyzing your particular needs and comparing them to the strengths
and weaknesses of each entity.
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More Building Project Management
Using A Designer As Project Manager
A Building Contractor
Types of Building