General contractor or individual contracting - what is the better choice?
Questions about questions. Do I just want to make it easy or do I want to save? Do I have the work done by individually mandated companies or do I hire a general contractor ? Anyone who plans building a house with all the details will sooner or later face an important decision.
But the decision can not be made quite that easily. A general contractor is not always the more convenient choice, and a single order may not be cheaper in all cases. There are several criteria one should choose.
To decide which is the better choice, it is best to look at the definitions more closely:
The general contractor: The general contractor provides all (or a large part) of the construction work required for the construction of the building. The building is usually made turnkey by the general contractor (abbreviated to GU). The construction contract is concluded as a general contractor. The builder concludes a contract with the JV, the JV, on the other hand, does some construction work himself, but also hands over many works to other firms and concludes these contracts. The builder, however, has only one contract with the JV. In most cases, general contractors build the shell themselves, other executing companies are subcontracted for woodwork, roofing, painting, windows, etc.
Single order: For individual orders, each item (shell, roofer, painter, electrical work, etc.) is separated instructed. The client concludes individual contracts with each of these companies. For individual orders, the client and architect have several contact persons . The trades are not coordinated by a general contractor. This task is usually done by the architect. In advance, the individual trades are usually tendered individually for individual orders. The exporting companies then submit offers.
Both variants have advantages and disadvantages. So you have to decide on a case by case basis which variant is better for you. The architect of trust should provide support to this decision. He usually knows best which of the two ways is better for his own specific case. Nevertheless, you should know the advantages and disadvantages yourself in order to have a say:
What speaks for the general contractor?
For a builder, a general contractor offers the advantage that it only a single contract exists. If problems occur during the construction or if defects are discovered after completion, the client only has to contact the general contractor and does not have several contact persons who accuse each other. Deficiencies can often be difficult to assign to a single one of the various trades. However, in the case of GU contracts, the prime contractor is alone in the defect elimination obligation and can not get away with it.
In addition, in a joint venture agreement, the coordination between the trades is not performed by the client or the architect got to. The architect can therefore not charge for this service. Not every architectural office is well-positioned and experienced in terms of Trade Coordination . Here a lot can go wrong, which is simply not the responsibility of the client and architect in the case of GU contracts.
What speaks for the individual award?
The higher price level is certainly the most important criterion for deciding against a JV. After all, the prime contractor undoubtedly needs adequate compensation for his coordination work between the individual trades. It is common that the general contractor for some trades Subcontractor commissioned, and then passes on the invoiced services of these companies with a surcharge of 15% to the builders. Through this 15%, the JV secures its Coordination Remuneration and also a risk compensation. However, one has to say fair that the JV can subcontract usually cheaper than a client alone could. Thus, the 15% relativise.
Another disadvantage is that a certain degree of control is relinquished to the JV. Anyone who commissions individually, of course, has all the reins in his own hands. This can also be beneficial in some situations, especially in the selection of exporting companies. If you would like to use the company of your trust for certain tasks, then you are only able to have a say in the individual contract which company is selected for which trade.
In addition to the general contractor and the individual award, there is also one few alternative options, which may not be quite as common, but quite possible. In some cases it can make sense to choose one of these alternatives. Two of the most important are partial general contractors and total contractors.
Partial general contractor: One alternative is so-called Part-General Contractor . Here only some trades are assigned to a JV. Some trades are awarded to individual (self-selected) companies. An example: The construction (roof, facade, shell) is commissioned by a partial general contractor. Other trades such as painting, electrical work, etc. are commissioned separately. In this way, one can hand over related trades to the JV, but leave other trades under their own control. This approach is quite feasible and in some cases very common. It enables the logical summary of trades which have a high coordination requirement .
Total Contractor: The total contractor (abbreviated: TU) not only handles the construction work (see GU), but also one Most (or even all) of the planning services. The TU therefore also appoints planners themselves (for example the architect or the structural engineer). The client only has a contract with the general contractor. This coordinates all planners and construction companies. All contracts are concluded by the TU on its own name and not on the name of the client. The total contractor acts as the developer for the planners and executing companies. They have no contractual relationship with the actual client.
It is only possible to decide on a case-by-case basis which is the better choice. It makes perfect sense to seek offers from general contractors and to compare them with individual orders. However, one must also bear in mind that the additional coordination costs for a general contractor can also be expected for individual orders. However, these then appear elsewhere. For many construction projects, individual awarding or the employment of a general contractor is more appropriate.
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