General Contractor manages construction projects from start to finish. Licensed contractors are required to have extensive experience in the construction industry, and many jurisdictions require that GCs obtain a license to practice in their area.
When hiring a General Contractor, look for the right fit for your project. While a fully licensed contractor with years of experience and dozens of glowing references are essential checkboxes, it’s also important to get along with your GC.
As the demand for construction projects increases, so does the need for licensed general contractors. Being a licensed contractor can significantly increase your earning potential because you can take on bigger and more lucrative jobs. The first step to becoming a licensed contractor is passing the state licensing exam. In order to pass the test, you need proper study and preparation. The best way to prepare for the exam is by taking courses at a contractor school. These classes are taught by industry professionals who are up-to-date on the latest regulations and exam standards. In addition, these courses usually provide study materials that are specifically tailored for the exam. These materials can help you focus your studying and reduce stress.
In addition to taking classes, you should also spend time reading and studying on your own. It is also a good idea to join a study group. By being part of a study group, you will have other people to practice with and talk through your questions. Additionally, you can get feedback on your practice tests from other members of the group. This is important because it can give you an indication of whether or not you are ready to pass the exam.
The exam itself consists of two separate parts. The business and law portion includes questions on topics like contracts, bidding, accounting, insurance, building codes, environmental laws and safety regulations. The trade portion of the exam focuses on subjects such as plan reading and estimating, site engineering, excavation, footings and foundations, concrete and masonry. The number of questions varies from state to state, but it is generally between 50 and 120. The exam is typically held over a period of 3 to 5 hours.
Once you have passed the state licensing exam, you will be eligible to work as a general contractor. You can perform all types of construction jobs for new buildings and structures as well as repair existing one-, two- or three-family dwellings. You can also do wood frame structures, masonry and pre-engineered metal buildings. You must pass a criminal background check in order to become a general contractor.
Contract Negotiation
Getting to contract negotiation is an important step in the process of bidding for a construction job. The contract sets the work terms, obligations, and responsibilities for both parties. A well-negotiated contract is a critical component of successfully performing the work on time and within budget.
As a general contractor, you need to understand the key contract clauses that pose risks to your company. These include indemnification clauses, change order procedures, and pricing provisions. It is helpful to have an attorney in the negotiations who knows state laws and how they affect contract language. If the GC or owner is unaware of these laws, you can use this knowledge to leverage a better deal in your contract.
The first and most critical point to negotiate is price. A general contractor will want to have a profit margin built into the contract so they can recoup costs for the project. To counter this, be upfront with the GC about your budget and what you expect to spend. Then you can negotiate a fair price that both of you can agree on.
Another area to focus on is the scope of work. Often, the GC will try to saddle the subcontractor with a lot of requirements that could potentially delay the project and increase cost. To avoid this, review the contract carefully with your attorney or HR representative and discuss the goals of the project and how they can be met within the current schedule and budget constraints.
One other issue to keep in mind is a project’s supply needs. Often, a GC will try to pass on the cost of purchasing supplies for the project to the subcontractor. By keeping the GC accountable for these expenses and negotiating with suppliers on your behalf, you can reduce the overall cost of the project.
Finally, a common issue for contractors is escalation clauses. These are a way for a GC to shift risk from the project to the contractor. By negotiating for minimum and maximum escalation limits, you can protect yourself from exorbitant pricing increases.
Project Management
After a contract is signed, the general contractor manages construction to ensure that all deliverables are met. This includes managing all subcontractors and the project team to get the work completed in the required timeline. They will also use formal value management to make sure all costs are in line with the goals of the owner and design team.
During construction, the general contractor will be responsible for obtaining building permits, securing the property, providing utilities on site, disposing or recycling construction waste and ensuring that all work is compliant with codes and safety regulations. They will also oversee all phases of construction including estimating, procurement, scheduling and workforce management.
A commercial general contractor specializes in construction and renovation of large commercial projects like offices, retail buildings and restaurants. They will work with the architect, engineers and client to ensure that the project is built on time and within budget. They will also use a structured delivery process such as Construction Management at Risk (CMAR) or guaranteed maximum price (GMP).
Residential general contractors specialize in the construction and renovation of single-family homes, townhouses, duplexes or triplexes, and condos. They will work with the architect and engineers to create the blueprints for a new home or remodel. They will then hire subcontractors to do the specialized work onsite, like plumbing or carpentry. They will also be responsible for obtaining permits, sourcing materials and ensuring that all work is in compliance with codes and safety regulations.
Both types of general contractors will have similar responsibilities, but they will manage these tasks differently. A general contractor will typically be hired once a design is in place and the project has been put up for bid. The low bidder will be awarded the contract. This is the process most procurement departments and project teams are familiar with. A project manager, on the other hand, will be brought in earlier in the design process to help with planning and estimating. They will then utilize a structured delivery process, such as CMAR or a GMP, to complete the project for a fixed fee.
Subcontractor Management
The process of procuring and overseeing subcontractors is critical to a General Contractor’s success. The GC must carefully assess each potential subcontractor to determine their strengths, weaknesses, experience and costs before selecting the best one for a project. The tendering process should also be open to multiple bidders, which encourages a competitive environment and ensures the GC has a comprehensive view of the available options for each trade. Obtaining multiple bids also helps to mitigate risks and negotiate the best contract terms.
Fostering a collaborative environment with subcontractors to identify and implement cost-efficiency measures is an important part of effective subcontractor management. In addition to reducing the overall project budget, it can help to maintain a high quality finish and avoid costly rework.
Another key aspect of effective subcontractor management is monitoring compliance. The landscape of legal regulations is a complex one, and the smallest oversight can have severe consequences. A GC must have clear procedures in place for tracking compliance with laws and regulations to safeguard the reputation of both the company and the project.
General contractors must ensure that all stakeholders are clear about contractual terms and site procedures from the outset. This provides a level of transparency that supports a positive relationship and minimizes the risk of misunderstandings and disputes. A centralized platform that allows for transparent communication between the GC and its subcontractors is a crucial tool for managing these issues effectively.
A GC must regularly communicate with its subcontractors to keep them updated on the progress of the project, to assess their performance and to identify any areas for improvement. Using software that allows for easy and transparent sharing of real-time project updates, including status reports, change orders and daily attendance records, is essential to ensuring all parties are on the same page.
Specialty trade subcontractors can offer invaluable onsite expertise and valuable insights, so it’s crucial for the GC to remain open to their input. This includes incorporating pull planning, a collaborative scheduling technique that engages subcontractors in the planning process. This can improve the schedule by reducing rework and helping to resolve conflicting priorities.