A Complete Guide To General Contractors

The general contractor is paid by receiving a certain percentage of the total cost of the completed project. Some will charge a fixed fee, but in most cases, the general contractor will charge 10% to 20% of the work's total cost. This includes the cost of all materials, licensees, and subcontractors.

The general contractor is accountable for providing all materials, labor, equipment (such as engineering vehicles and tools), and services required to construct the project. The general contractor usually hires specialized subcontractors to perform all or part of the construction work. When using subcontractors, the general contractor shall be responsible for the quality of all work performed by any and all employees. The top priority of the general contractor is the safety of the worksite.

A "primary" or "direct" contractor is a contractor who directly signs a contract with the property owner. "General contractor" refers to the contractor responsible for hiring subcontractors and coordinating their work, keeping the work completed on time and on budget.

These terms are usually interchangeable. In many projects, the owner hires the general contractor, so they are also considered "primary" or "direct" contractors.

However, it is also possible to hire general contractors by project developers, construction managers, architects, or others.

Some general contractors rely on their work experience to gather the skills and knowledge needed to obtain a permit. Otherwise, they will work through trade schools or associations to complete the apprenticeship. Under these circumstances, it takes three to five years to become a general contractor.

Others interested in becoming a general contractor may take an academic path and earn a bachelor's or master's degree rather than or complement work in the construction field. General contractors with a bachelor's degree in construction management can become licensed contractors within four years, while those with a master's degree can be licensed within seven years.

To become a general contractor, you need to have at least a high school diploma, but the necessity to have a bachelor's degree or at least an associate's degree has increased. It requires years of experience in the construction industry. However, regardless of education level, industry experience is the most important requirement.

Acting as your own general contractor for a major redevelopment or construction project could potentially save you tens of thousands of dollars. But these savings come at a high cost in terms of stress, time management, and perhaps even the quality of your work. Don't take on this role unless you are confident in your abilities and have carefully considered the pros and cons.

Fee Percentage for a General Contractor. Management fees for general contractors typically range from 10% to 20% of the overall project cost. The ratio can be as high as 25%, depending on the nature of the project. The fees are measured using a material markup, subcontractor labor, and the overall job cost. The GC includes their charge in the net cost of all facilities. They pay for services, subcontractors, and materials on your behalf.

The general contractor collects overheads and profits ("O&P") as a project line in the maintenance or reconstruction budget. Insurance companies are sometimes reluctant to pay O&P fees. Still, they are legitimate expenses for conducting business, and policyholders have the right to collect insurance benefits in most cases to cover these expenses. Profit is what makes GC a living. O&P is expressed as a percentage of total work.

General contracting can be a good way to earn a living, especially if you are good at both hands-on construction work and people management. According to Indeed, in the United States, a general contractor's average salary is more than $80,000. Of course, if you own a large company, you can make a lot more.