Why Should I Hire a General Contractor – Part 2

Save Money
General contractors and builders make their money managing all the details and charge a fee for this. Roughly speaking this is about 12-15 percent of the total cost of the home and lot. So if you are building a home worth $300,000 (including the lot this price is just above the median home price in the Portland metro area), then you could expect to pay a general contractor about $40,000.

While that is a lot of money, remember the list in Part 1 – Save Time. How many hours do you think it will take you to execute on that list? For a $300,000 house I would think about 300 hours.

So if you’re doing the math in your head, you’ve divided $40,000 by 300 hours and come up with about $133 per hour. Unfortunately that’s not what a general contractor really makes. We need insurance, not just for the job, but for each sub-contractor on the job. We also pay taxes, worker’s comp, and any other overhead. Finally, our fees don’t include front-end planning or any warranty work we need to do after the project is completed.

Still, if you have the spare time and know-how it might be worth it to you.

I truly believe, however, that a general contractor is worth the money and can end up saving you money.

First is simply the experience we bring. Good general contractor will know names, contacts, and rates of subcontractors in addition to our own staff. We also are familiar with construction best practices and when presented with a plan we can often point to area where you can save money by making simple adjustments.

Second, contractors can get better rates on materials and sub-contractor fees. Suppliers and sub-contractors will charge more to people acting as their own builder because they take on more risk working with inexperienced people.

In these leaner economic times materials discounts might only add up to 5 percent, but I can often get my clients 20-40 percent off on labor costs. So if those costs amount to 75 percent of the total build cost, or $225,000, and you are saving, on average, 15 percent of that, then you would save $33,750, or close to the total you are paying the general contractor.

Third is protection. If everything goes perfectly, you could save nearly $7,250 on your home build by doing the general contractor work yourself. But things never go perfectly when you build a house. Who is going to pay for mistakes, such as ordering the wrong materials, not catching errors, or building things in the wrong place or to the wrong dimensions? Maybe your sub-contractor will, maybe not. With a general contractor, you are protected from these missteps.

In Part 3 we will examine another good reason to hire a general contractor: your sanity.

Part 1 – Save Time

Part 3 – Save Your Sanity

2 Comment(s)

  1. Excuse me for commenting OT but what Word Press theme do you use? It looks great!!

    jegoexceesy | Dec 11, 2009 | Reply

  2. We use a variation of this theme: http://www.solostream.com/2007/06/08/wordpress-theme-zeke-10-widgets-2-column/

    admin | Dec 13, 2009 | Reply

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