Should consumers act as their own General Contractor?

Remodeling or building a house is one of the biggest investments a person makes in his or her lifetime. Acting as a general contractor in one of the most important investments of a lifetime is similar to managing your own retirement investments in the stock and bond markets. Some of us do a good job and some lose their shirt and mind in the process.

Before taking the big step of acting as a general contractor, consumers should consider few issues and risks associated with this task. Let's first look at the definition of a general contractor:

"One who contracts for the construction of an entire building or project, rather than for a portion of the work. The general contractor hires subcontractors, such as plumbing contractors, electrical contractors, etc., coordinates all work, and is responsible for payment to the said subcontractors."
Source: www.titleguarantynm.com

As the description above implies, the general contractor is the ultimate authority and the responsible party in any construction project. Based on this description, there are important factors that a consumer who would like to be their own "General Contractor" should be prepared to handle:

1. Qualifying, negotiating, hiring and managing of subcontractors
• Good subcontractors are often very busy and very hard to secure.
• Most consumers are not experienced in construction business and do not know the market rates.
• Managing independent contractors is an art form.
• All of the above requires tremendous time and effort from a home owner acting as a general contractor.
2. Coordinating multiple subcontractors
• Coordination of subcontractors requires knowledge of construction business and building codes.
• Construction is often a series of sequential tasks requiring good timing and scheduling skills (and availability on behalf of subcontractors).
• Most consumers do not know enough about state building codes and construction business to be able to create a workable schedule for subcontractors.
3. Permits, Insurance, Liability and Risk
• When a consumer acts as the general contractor, State requires him/her to obtain a construction permit for the project.
• With the permit comes the liability for all persons coming into your property.
• This means that if a worker becomes injured while working on your property, you will now be liable for the workman's compensation of that person.
• You may also be exposed to other risks associated with law suits involving employees and their employers (subcontractors).
• Finally, as the general contractor, you will be the ultimate authority and responsible party for all aspects of the project and the finished work. If you do not like the finished project, you just have to learn to live with it.
  

The question then becomes, "Can you do it?" The answer can be found within you. Do you have the time, experience and the patience to manage multiple subcontractors for your project? Are you adequately insured to manage the risk of working with 3rd parties? If you answer "No" to anyone of the questions above, you should then employ a reputable General Contractor to do the job for you. Otherwise, trust yourself and your abilities to get the job done.

Murat Aksu
December 26th, 2006