They are the lead entity in charge of actually building the building. They have their own employees who serve as project manager or foreman with laborers who self-perform on projects or utilize a variety of specialty subcontractors. The General Contractor serves as the project manager coordinating the work of the subcontractors and serving as the liaison in communicating with the owner or architect on project activities.
While some General Contractors are awarded projects based on previous work or relationships with an owner or architect, General Contractors have to submit a competitive proposal for consideration. The General Contractors invited to bid are presented with completed plans and specifications from the architect from which they will base their proposals.
The General Contractor then collects proposals from various subcontractors usually selecting the lowest price bids to keep their overall bid proposal to the owner competitive and then includes any additional markup and overhead costs in their bid submission. After reviewing all the submitted proposals from several General Contractors, the owner usually awards the project based on price and quality. The General Contractor is fully motivated to keep the entire project within budget.
When the overall costs of the completed project come under the bid price, the General Contractor benefits and gets to keep those unused funds as profit. However, any cost overruns require asking the owner for more funds or changing project scope. That choice influences every phase of the project and impacts the budget, the schedule, and the quality of the completed work.
The standard approach is to hire a general contractor as part of a design-bid-build model. But is that really the best option? Which is better, a general contractor or construction management? In most cases, there is a clear answer. A general contractor is typically hired after the owner has a finalized design in place. The owner bids the project to general contractors and awards it to a low bidder.
This is the process most procurement departments and project delivery teams are familiar with. Unlike general contractors, construction management services contract with the owner for a fixed fee. This fee replaces the lump sum a general contractor would charge to cover their overhead and profit.
The project manager then draws up plans and procures the resources necessary in a collaborative and open-book fashion. Construction managers are also brought on board earlier in the project, often before a design has been finalized or costs can be fully estimated in detail.
Once a general contractor is hired in a lump sum or fixed price environment, they have an incentive to protect or enhance their profit margin. This places the general contractor on the other side of the table. They can define mark-ups during this stage, but hold off on defining final costs until the project is defined enough to convert to an at-risk value.
That way, work can proceed with reduced risk and cost to the owner and without delaying the start until the entire project is designed. It also shares administration of the project contingencies and means that any savings will revert to the owner instead of the contractors.
The construction manager can then solicit bids for subcontractors and equipment, involving the owner in the process so that the owner has the final say in the final budget. For example, the construction manager can draw up a foundation package and an equipment package, then bid each one to specialized subcontractors. This also comes with the added bonus that the project can move ahead even before the full scope has been defined. But what about the alternative of using a general contractor? Dealing with these numerous types of bonds can be a headache and can also result in considerable financial expenditures.
These are the problems that Surety Bonds Direct addresses for our clients by providing an easy way to procure a surety bond at a competitive rate. For construction managers and general contractors alike, Surety Bonds Direct has the bond solutions you need.
So, why does Surety Bonds Direct make it simpler, faster and often less expensive to get the bonds that construction professionals need? Because we've designed every aspect of our business to do just that:. Many different types of surety bonds are required or can be useful on today's construction site. Surety Bonds Direct is your all-in-one source for reliable surety bonds across the USA, whether you're a contractor, construction manager, supplier or another type of construction professional.
Whatever your responsibilities on a construction project are, Surety Bonds Direct offers a faster and easier way to get the bonds that help protect everyone.
We're a fully-licensed surety bond dealer and have the expertise to give you the key information that you need to make the best decision—and we offer contractor bonds, performance bonds and more at prices that won't break your budget. Or Call a Bond Specialist Search by Bond Type or State.
A General Contractor vs. A Construction Manager. What Is a General Contractor? From the beginning of the process to the end, common responsibilities of a general contractor include: Identifying which work will need to be done by which subcontractors.
Managing bids from subcontractors, selecting winners and putting together a bid package. Coordinating on-site work between numerous different subcontractors such as builders, plumbers, electricians and landscapers. Communicating with the project owner about project timelines, delays and additional needs. Coordinating with suppliers to ensure that all construction materials are ordered on time, in the correct quantities and to the correct specifications.
Communicating with architects and designers about change orders, supply issues and other potential hiccups. Working with regulatory authorities to ensure that inspections happen on schedule and that all parts of a project are compliant with building codes. What Is a Construction Manager?
What Are the Credentials for These Jobs? Some common points that many project owners use to make the decision are as follows: A general contractor may be right for a project if: The owner prefers the traditional construction bid system. The owner doesn't have the time to work closely with the people managing the projects. The owner would rather have the contractor take full responsibility for their subcontractors and their work.
The owner wants to employ someone who already has a network of go-to contractors who do good work. A construction manager may be right for a project if: The owner doesn't want to bother with a traditional general contractor bid process. The owner wants a more collaborative partnership that includes the manager's involvement at the design stage.
The owner would rather pay a flat fee. The owner wants the manager to have a more detailed and complete picture of the project's overall financial structure.
Common Bonds Construction Professionals Need Depending on your situation, many different types of surety bonds can be relevant to a construction project.
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