I have my own lot and my own blueprints to build a fairly large (5100 sq ft) home in NJ.
I’m going to be paying the subcontractors directly. The GC is supervising the construction, getting the permits, hiring the subs, etc.
What is a standard rate for this service?
Thanks.
Your general contractor should provide you with an estimate for the construction. His fee should be no more than 10% of the estimate, and should be fixed.
See http://www.bankrate.com/brm/news/real-estate/20041123a1.asp
I’m not sure that I completely understand your arrangement.
You are going to pay the subcontractors that are hired by the GC? What does that accomplish since the subs will be still be responsible to the GC? I see only confusion from this arrangement as how will you determine how to make partial payments to the sub (percent completion based on yours or the GC’s estimate). Another factor to consider is that generally the discounts offered to GC and subs is greater than those that you could obtain from suppliers.
The answer to your question also depends on several other “intangible” factors such as how busy the GC is and what their O&P (Overhead and Profit) is.
10%-15% is what I generally see IME. Of course, there are other factors such as what Waterman brought up.
The role of a GC is essentially to take liability away from the Architect*and coordinate the construction of the building. Generally, the subs are responsible for their trade-specific means and methods while the GC oversees the work and ensures that it’s performed according to the Contact Documents.
Be aware that the GC will also have a line item for General Conditions which include things like getting dumpsters, inspection fees and things that will be shared by many subcontractors. This is separate from OH&P which includes, well, Overhead and Profit.
I’m not sure I would agree with you entirely on this matter. The architect/engineer, through the contract documents does not define means and methods. The contract contracts will usually define the materials, design standards and other similar factors but the GC, along with their subs, are responsible for means and methods. Where things get messy is when the architect/engineer/owner starts defining means and methods to the GC, either directly or indirectly, and therefore runs the risk of taking on the liabilities.
In cases described in the OP it’s also imperative that the Owner not assume a role that deviates from the architect/engineers design because the Owner will start taking on that responsibility.
The roles of Owners and GC’s are a balancing of the risks associated with the project, which typically will include costs, schedules and material substitutions, etc.
I am in the process of doing the very thing you are contemplating.
It is a 3600 sf home so not so big, but I have some of the same issues.
If you are securing the financing the builder should cut you a break on his fee. This is a for sure profitable deal for him with no risk as he does not have to worry about the cost of money or having to sell the home if it was a spec.
I have seen two types of percentage contracts.
The first is cost plus 8-20 percent (yes those are the rates I have been quoted) this means whatever money is spent on the project the GC gets a set percentage but you get his price on materials and labor.
I hate this contract! It gives the builder no incentive to keep costs down!
If the framer comes in an extra $10,000, no problem! The GC just got a raise. If the entire home goes 30% over budget, Merry Christmas! the GC just cot a new car. And so on
In the home contract I just completed I had the GC do a line item bid sheet, framing material and labor, brick ,plumbing, ect,…. you know everything that goes into a house.
After we got a good estimate we negotiated a flat fee of $20,000. Then I included an incentive bonus of $5,000 if the project comes in under budget and on time. We also included and escape clause at every GC fee draw so that if the project is over 10% past the budget we agreed upon ( less increases in material prices) we could end the contract right their.
I did this with another house 6 years ago and came in within 3% of the bid price on a 4,500 sq ft home.
Hope this helps.
Sounds like you are using the gc as a construction manager (often done in owner builder situations). Going rate in FL is 10/15% of job amount for a cm.
Bolding mine in all cases.
Isn’t that what I said?
I suppose I didn’t specifically mention the role of the Design Team, but that should be obvious.
Agreed.
I disagree. IME, the breakdown of responsibility works out like this:
Owner: Person who wants the building. If they are not knowledgable enough about the process, they hire an Owner’s Rep. (OR). The OR keeps the Owner’s best interest in mind throughout the project and tries to mediate conflicts between the Architect and the General Contractor to best benefit the Project (not necessarily what will save the most money). IME, the OR sides with the Arhitect 9 out of 10 times.
Architect/Design Team: Designs the building and its systems to conform to the OR’s a) budget b) schedule c) performance requirements and d) local building codes. They review work performed by the GC and ensure that the work is according to the Contract Documents. If work deviates from the CDs, they make necessary changes to ensure the integration of systems.
General Contractor: Oversees the Subcontractors and coordinates their work including changes made to the Contract Documents. Establishes and maintains the schedule, budget and etc. Again, IME, nearly all liability is pawned off on the GC from the Subs (who can lein) and the Architect.
Subcontractors: Responsible for trade-specific work.
No, you said that the subs defined the means and methods but the GC had other responsibility. Read your statement.
Not entirely - if the Owner hires an independent OR, then usually the Architect/Engineer does not have a role in construction management. The A/E would perform submittal reviews, answer RFI’s, etc. Usually, in non-residential areas, the Owner will hire the A/E to perform construction oversight (or management - though the trend is away from using the term Construction Management