A general contractor is someone you hire to coordinate a home improvement project. Although most will take on any sort of project, they are normally used for bigger projects or in cases where there are multiple projects to be completed. Traditionally general contractors will have some workers on their payroll to handle demolition, carpentry, electric, plumbing, and other basics; for everything else they will hire various subcontractors, or "subs" (the balance of subs to staff varies). Often times, they will have a relationship with certain subs that they know and trust.

What does a General Contractor Cost?

Using a general contractor instead of "subbing out" the work yourself will usually cost around 10-20% more on average. In some cases, however, it may actually cost less than doing it yourself, particularly if you don't get multiple bids when hiring subs. Often the general contractor's staff can do certain jobs for less than subs.

What are the Advantages?

There are a number of advantages to hiring a general contractor.

• First, it makes larger, more complex projects more manageable, since you can leave many of the details to someone else (finding subs, making sure the work is done and done right, paying the sub, etc).
  
• Second, experience in coordinating some of the more general aspects of projects can be very valuable (e.g. knowing which parts of a project need to happen in what order, when and how to get permits, and issues of licensing/bonding).
  
• Finally, since general contractors have established relationships with certain subs, providing them with regular business, it is not uncommon for a general contractor to be quietly bumped up on the schedule of projects because they want to keep the general contractor happy.

In other words, a general contractor can make a project move faster and with less heartache for you.

Getting it Right

If you do decide to use a general contractor, interview him or her thoroughly. Be sure to check references, get multiple bids, and get a very specific itemized cost breakdown as part of the contract. It is customary to add 5-15% to a bid to cover unforeseen costs. Any use of this "contingency fund" should be formally approved by you. The best way is to use a "change order" form, so you have it in writing. Note that if you plan on getting a loan to do a major project, the lender will often require that you hire an experienced general contractor unless you can demonstrate substantial experience in the field.

There are cases where a contractor and owner disagree about the cost of a change to the project - the formal procedure for handling these is called a Change Order Request.

[This article was based on text originally written by Rick Hunter.]