How to Run Your Own General Contracting Business

It might be difficult to be your own general contractor. Discover how to protect yourself legally while using subcontractors.

What you’ll discover:

What exactly does it mean for me to be my own general contractor?
How can I ensure that when I hire subcontractors, I am legally protected?
Is a license required to employ subcontractors to work on my house or property?
Is there any specific insurance I need to be my own general contractor?
What are the advantages and disadvantages of becoming my own general contractor?
How should I approach a disagreement with a subcontractor I hired?

Property owners may consider acting as their own general contractors for construction or renovation projects. Many skilled general contractors oversee construction projects by allocating particular responsibilities to subcontractors. Construction management services are sometimes expensive, and property owners frequently contemplate acting as general contractors to patch up their own properties in order to save money. It might be an excellent match for people with expertise, finances, and time. You may not possess every required talent, but you can identify the proper individuals for each position. Continue reading to find out how to be your own general contractor.

What exactly does it mean for me to be my own general contractor?

General contractors, as the name indicates, often manage a broad variety of building jobs. Some may specialize in new house building, while others may concentrate on renovations or additions. Each of these activities need the expertise of specialists such as roofers, plumbers, carpenters, and electricians.

The general contractor ensures that all of the project’s components function together smoothly. They get resources as needed and keep the project on track. They often deal with administrative issues such as permit applications, scheduling, and inspections.

Property owners, on the other hand, may manage a construction project on their own and engage subcontractors to handle each element of the job, although this can be difficult. Several variables influence whether you should employ a general contractor or do it yourself. These are some questions to ask yourself:

Do I comprehend the scope of the project?

Building projects need preparation. They also need to be adaptable in case anything goes wrong with the strategy. Many general contractors have a talent for assessing time and resources necessary for a job, and can predict or manage the anticipated problems.

Do I understand the local construction codes and other regulations?

Skilled general contractors understand not only how to construct anything, but also the local building rules and how to secure the necessary permissions from municipal or county authorities. When you serve as your own general contractor on a project, you are ultimately responsible for ensuring that all legal requirements are met.

Do I possess the required expertise and experience?

A general contractor must understand what abilities are required for a project and must prepare ahead of time to predict when each subcontractor’s services will be required. An electrician, for example, cannot install wiring in a new garage until the framer has completed their job.

Can I supervise many subcontractors?

As the general contractor, you have the authority to engage subcontractors, negotiate contracts with them, and oversee their work. Each stage in this process may consume time and energy, and having numerous subcontractors working on the same project at the same time can be difficult.

If the job is not good or completed on schedule, the general contractor must be prepared to fire the subcontractor and locate a replacement.

Do I have the time to commit to project management?

If you need the job completed soon, managing it may be time consuming. If your work schedule is flexible, you may be able to work around the schedules of your subcontractors and inspectors. Prolonged delays might result in significant charges if you are unable to align schedules.

Can I bear the risk of working without a general contractor?

Hiring a general contractor has the advantage of acting as a barrier between you and the many subcontractors. If anything goes wrong or someone is hurt, general contractors are usually insured and compensated for their mistakes. When acting as your own general contractor, you may benefit from obtaining a formal agreement and checking that you have enough insurance coverage.

How can I ensure that when I hire subcontractors, I am legally protected?

Be sure your agreements are in written and signed.

The connection between a general contractor and a subcontractor is formalized by a Subcontractor Agreement. It may safeguard both your rights and the interests of the subcontractor by outlining the terms of the agreement and what happens if the conditions are not followed. A Subcontractor Agreement may include the following provisions:

A start date, a timeline, and a finish date.
Specifics on the task to be done.
The amount and mode of payment.
Who is in charge of insuring, procuring supplies, and acquiring permits?
Contingency plans for running over budget or being late.

Consider adopting specialized agreements customized to various sorts of subcontractors. A Painting Contract is not the same as a Roofing Contract. A Carpentry Contract or Drywall Contract is not the same as a Landscape Contract.

Is a license required to employ subcontractors to work on my house or property?

Licensing requirements for general contractors and subcontractors vary from one state to another, and they may differ across cities and counties within a state. Several states do not need a license if you are solely working on your own property as a general contractor. Even if your state does not need any form of license, however, your city or county could. However, there may be further limitations on what work a property owner may conduct without being licensed.

You may also need to check the licenses of any subcontractors you engage. Using an unauthorized subcontractor may result in sanctions in certain places. If you are thinking about doing anything else, you should consult with a lawyer about the hazards.
Is there any specific insurance I need to be my own general contractor?

Insurance regulations differ from one location to the next. But, if you are employing your own subcontractors, you should speak with a lawyer regarding state and local legal obligations. You may need to modify your insurance coverage or obtain a supplementary policy to protect yourself, your property, and the individuals you hire.

Moreover, many building projects incorporate one or both of the following bonds, which function similarly to insurance policies:

A performance bond may be obtained by a homeowner or general contractor to guarantee that everyone completes the task effectively.
Warranty Bond: This bond protects the homeowner or general contractor against flaws in the job.

What are the advantages and disadvantages of becoming my own general contractor?

There are certain advantages to acting as your own general contractor:

You might save money by skipping the general contractor’s cost.
You may also save on material prices without a general contractor’s markup.
You retain control over the project’s timing and budget.
You gain information and create relationships in the business.

On the other side, there may be drawbacks:

You may experience a steep learning curve, which may result in increased expenditures.
Expense reductions frequently come at the cost of your time.
You are exposed to more risk if a subcontractor is hurt or fails to perform.
Inexperience may result in incomplete, unsuccessful, or poor initiatives.

How should I approach a disagreement with a subcontractor I hired?

Skilled general contractors have built contacts with a network of trustworthy subcontractors. In addition, general contractors often charge for overhead and contingencies, allowing them to absorb the expenses of a substandard subcontractor or other minor faults. When you operate as your own general contractor, you are responsible for any disputes with subcontractors and must bear the associated expenses.

A disagreement might cause a project to be delayed and expenses to skyrocket. Before taking any action, you should check your contracts and consult with a lawyer about your alternatives. To resolve disagreements fast, you usually have a few options:

Your contract may provide specific directions for resolving disagreements.
Discuss with your subcontractor how they may resolve the issue to your satisfaction.
Fire the present subcontractor and hire a new subcontractor to remedy the problem.

The greatest approach to handle a conflict is to avoid having one in the first place. Comprehensive research and reference checks before to engaging a subcontractor are beneficial, as is keeping clear contact with each subcontractor while work is being completed. When you uncover an issue with a subcontractor, you may wish to halt the job. Subcontractors are normally entitled to be paid for work completed, even if it is subpar, therefore discontinuing work might result in a financial savings.