There are a few things to consider in making the decision whether to be your own general contractor or managing the construction of your own project. Once you make the decision to be the contractor, it may be costly, and/or have an effect on the time to complete the project if you change your mind in mid stream of the project.
Before you begin please take the time to evaluate your finances. Will you be financing the project from savings, a home equity loan, a mortgage, or a bank construction loan? Establishing a realistic budget is prudent before you leap into your project. Local builders, architects or realty firms may be able to help you evaluate the square foot costs of building in your area. Most geographic areas differ in building costs. Factors such as weather, availability of trade persons, and contractors play a large part in determining the costs in any area. Our information packet will show you the steps.
Start with our guide that helps you develop a budget work sheet. Before you go to the bank or mortgage company they may want to see your budgeted project costs. In preparing your budget you should include all costs associated with building your project. Besides the actual cost of building there are other factors such as the architect/engineering fees, permit fees, furniture, fixtures, utility company start up costs,etc.
Our work sheets show you how to set up costs for each trade. Work sheets allow you to track each trade cost and compare bids received from each subcontractor. This is a valuable tool to help you keep track of all your costs.
After you’ve had a chance to review the information on this site you’ll need to evaluate the amount of time you have to manage the project. There are several phases of any project that dictates the amount of time required, some require very littleof your time, and others much more of your time. For example, if the site needs to be cleared of trees and topsoil you may want to first be there to meet with the contractor to review what you expect to be done. When they are actually clearing the site you may not have to be there watching every day. Each phase varies and you’ll be able to gauge your time by the amount of work needed to be done, its complexity, and the confidence you have in the contractor performing the work.
The amount of time you’ll be able to spend monitoring the
process may be dictated by the distance you are from the project.
If you are a long distance from the site you may want to consider
paying someone to watch the contractors, either on a full or part time
basis. This person could be a retired person with some knowledge
of construction or a local contractor who may be willing to check the
work as it progresses.
In these days of the internet and technology various forms of communication make it much easier to monitor projects from afar; whether it be cell phones, computers, digital cameras, a Blackberry type device, or lap tops.
If you’re the type of person who generally likes do-it-yourself type projects you may find it very satisfying to act as your own manager. Some management or organizational skills will be helpful when contracting the work yourself. Unsure if you can manage all the details? Click here to for information on our project management assistance.
You will want to evaluate the amount of savings to be gained by subcontracting directly to the different trades (as opposed to hiring a general contractor to do all the work), and determine if it’s worth it for you to be your own general contractor.
Generally speaking, the cost of your project will be 15% and higher (sometimes much higher) when you use a general contractor who then hires sub-contractors to perform the work. Some general contractors act as a broker and subcontract all the work to others, some will perform portions of the work (typically carpentry) and sub contract out the balance of the work. Remember, the general contractor will usually add an overhead cost on top of each subcontractor's price and pass that cost on to you. You are essentially paying them to administer and supervise the project
When using a general contractor they typically provide you with one lump sum price. Because of that you will not know how much they are including for overhead and profit or how much they are adding to each subcontractor’s price. When you act as your own contractor, you know exactly how much each trade costs and can pocket the general contractor’s mark up on these subcontractors. Just be aware that while you may accrue savings you may be required you to spend much more time administering the project and all the subcontractors.