Recently, an acquaintance asked me about becoming their own general contractor to save money on a large home renovation project. In his case, I advised no, because he does not have construction experience or enough relationships with experienced subcontractors to pull it off. For him, having the oversight and management of a licensed general contractor would be invaluable. However, for others with construction experience and depending on the job, it could be the right choice.
What is an Owner-Builder?
Being your own general contractor or owner-builder is the situation where you as a homeowner take on direct responsibility for an overall job, which may include items such as workman’s comp, taxes (state and federal) and additional legal liabilities. Becoming one’s own general contractor (GC) when building or renovating a home is a tremendous job in and of itself. The pressures and complexity of the task may be much more than what you as a homeowner might anticipate, which could be costly and disastrous.
When is Becoming Your Own Contractor the Right Thing?
However, taking on the role of GC could be the right thing for someone experienced in construction. Moreover, it is more of a supervisory role. You won’t (unless you want to) be latching on a toolbelt or wielding a saw. If you do, however, truly want to get your hands dirty with some aspects of home building or renovating, you must have some construction skills in those arenas. You will also need to be comfortable with tools, as well as have the necessary equipment.
It can become rather costly to obtain all the equipment to build or remodel a home. If you take on a significant amount of the carpentry, you would definitely need a crew (a small one at the minimum). However, many homeowners take the plunge and decide to become their own contractor for construction and renovation projects.
We have developed this guide for the DIY crowd to help you decide: Should you become your own general contractor? Let’s find out.
What Does it Take to Be a General Contractor?
Is being your own general contractor is a huge pain in the bum? Well, it depends…
As an owner-builder, you will need to locate, negotiate, and employ your own specialty contractors for each individual task that arises.
As a general contractor, you will need a lot of time management, organizational and people skills. You should be ready for planning each day, scheduling, supervising and paying sub-contractors, making daily inspections at the site, researching and ordering materials, negotiating fees and terms, obtaining required permits, and more. You should not attempt to be your own general contractor unless you have a pretty good comprehension of the construction process and enough of your time to devote to the following kinds of tasks:
- If you decide to take on these responsibilities, be certain that you are up to date on building codes, are able to run to your locality’s department of building and safety (over and over!) and can coordinate and inspect, accept bids, and other necessities.
- As a general contractor you will be the principal person responsible for organizing the availability of materials in time to keep the building schedule running smoothly. General contractors typically have their own team frame the house so that is another job you will need to hire a carpenter to perform.
- Even if you are not building a brand-new home, however taking on a remodeling task such as a space expansion, you need to prepare thoroughly. Adding a new room is no little undertaking, especially when you intend on being your very own general contractor or doing most of the work yourself.
- Prior to you even beginning with something as big as a space addition, you need a precise cost estimate, and if you’re like most homeowners, you probably have just a specific amount of funds set aside for home renovations. Computing costs at the beginning is essential to remaining within budget.
We are not raising the points above to dissuade you from being your very own GC. It is simply vital to make sure you understand what’s involved before making that huge choice.
What about Contractor’s Liability Insurance?
This is a huge one. One draw back to being your own basic contractor is that getting contractor’s liability insurance and security bonding can be hard. If you assume the duty of being your very own General Contractor, you might need to buy Worker’s Comp Insurance prior to your employment of sub-contractors.
A Word (or Two) on Hiring Subcontractors
By being your own general contractor, you likely may not have all the subcontractor contacts you would require to complete your job. Without working with a licensed GC that knows other building specialists in your location, this might trigger even more time for your job, disappointment and could cost you cash as well. Many building specialists work together and generally a local licensed general contractor can help you get competitive proposals and pick service providers that satisfy all your requirements.
A subcontractor is more most likely to do (or not do) things that will certainly optimize his revenues if you are unable to distinguish (particularly if it is not pointed out in the agreement). Do not depend on a Building Inspector to assess quality; they are there to make sure the structure satisfies the building code requirements.
Why Should Anyone Building or Renovating a Home Choose this Path?
So, why does anyone decide to become their own general contractor? Well, because serving as your own general contractor could wind up the quickest and best way to save a great amount of money when building or renovating your own home. Especially if you are building a customized dream home, you could save as much as 10 to 30 percent in project management costs IF you are knowledgeable about construction. If you are not knowledgeable and capable of being your own general contractor, you could, alternatively, spend just as much or more than if you had used another licensed general contractor to build your home.
However, the potential up side could be huge. Purchasing a house wholesale from a dealer and being your own general contractor could save you a lot of money. The savings might potentially permit you to construct a house that otherwise you could not afford to own.
Those who have successfully completed projects as their own GC would argue the benefits outnumber the downsides by a mile, and you could never imagine how satisfying it could be to be your own until you try it.
The Bottom Line on Becoming Your Own General Contractor
Being your own general contractor is definitely not for everyone!
When it comes to becoming a contractor, good experience and connections in the home construction trades is critical to make sure you realize the anticipated savings from taking on the multitude of tasks associated with being a general contractor. If you do not know the difference between high and low quality output, you could actually stand to lose as a result of being your own General Contractor.
On the other hand, there is no question that you could save a great deal of money by being your own general contractor. Plus, the immense sense of satisfaction from successfully seeing a project through to completion can be its own reward.
So, we have given you all of the most pertinent pros and cons. What will you decide?
The complexity involved in being one’s own general contractor has pushed countless homeowners to their wit’s end. You might even not save as much as you though to take longer than expected and make other errors that cost real money and precious time.
However, every job is different. The best thing you can do is to research the job thoroughly before deciding.
For licensed general contractors with a potential client who is on the fence about whether to become her or his own contractor, share this guide as a resource to help your client make the decision with eyes wide open. They will thank you for it later!