Serving the Philadelphia area for over 35 years

Do I really need a General Contractor for my home remodeling/renovation project?

The more complex the project, the more important it is to involve an experienced General Contractor. The General Contractor (GC) is responsible for scheduling all of the trades and for sequencing their work so as to ensure that the project will progress without delays and on budget. The GC works closely with the architect and Owner and warranties all aspects of the work. There is a great deal of time and coordination involved in a remodeling project.

Some homeowners have taken on the GC’s role on their own projects and, while gaining the satisfaction of having done the work themselves, often overlook the amount of time that they had to devote to it and have not factored in the value of their time. Their spouses also are ready to kill them about half way through.

An established GC has nurtured relationships with the various tradespeople needed for a remodeling project and is able to ensure that they will be at the site when needed and will respond immediately to emergency situations. Since the GC’s tradespeople rely upon him for future work, they have a vested interest in providing pricing and service that will ensure future projects.

How do I choose a General Contractor?

All of our clients come to us by referral, either from the architect or from one of our existing clients. Until recently, Pennsylvania did not provide for a state license for General Contractors. GCs needed to apply for licenses in whatever city or township they would be working in. Pennsylvania now requires that GCs satisfy both experience and insurance criteria in order to be state licensed. You should make sure that any GC you are considering is licensed with the state and carries sufficient (not minimal) insurance coverage for liability, auto and worker’s compensation.

Prior to the start of the project, the GC should provide you with a Certificate of Insurance that lists their coverage with the Owner as the certificate holder. You also will want to choose a GC who has successfully completed projects comparable to the one that you are considering. While it is important to get a list of references from the prospective GC, it is expected that any references provided will be positive (it is unlikely you will be given the names of anyone who would not provide a positive reference). You should make sure that the references are relevant... other clients with projects similar to your's and the inclusion of at least one project that the GC is currently working on. The questions that you should ask the references are:

Was the project completed on schedule and on budget?

How did the GC deal with Change Orders?

Were they satisfied with the level of communication with the Project Manager?

Were they happy with the quality of the workmanship?

Was the house appropriately protected and kept reasonably clean?

Were Contractor warranties honored and addressed in a timely manner?

What, if any, problems did they encounter and how did the GC deal with them?

Would you hire the GC for future projects?

Do I need an architect?

The more complex a project, the more important it is to involve an experienced residential architect. GCs are construction people and not trained design professionals. Although involving an architect does add cost to a project, the gained value more than offsets the cost. The architect should be paid by the Owner and will represent the Owner’s interest in any conflict between the Owner and the GC. This is an important safe-guard that is missing when the architect and GC are part of a Design/Build company. The architect will provide the drawings needed to apply for the building permit and will take care of all structural elements of the project. While the architect will often consult with the Contractor regarding construction techniques and materials, the Contractor relies upon the expertise of the architect to create the space that best compliments the Owner’s desires.

MLC is a General Contracting company, not a Design/Build company and does not provide professional design services. However, we often recommend architects that we have worked with and whose talents, timeliness and affability we hold in high regard.

How do I select a General Contractor?

There are two methods for selecting a GC to work with on your project.

I. Competitive Bid
In this process, three qualified bidders are invited to provide a cost for the work based upon the drawings and specifications created by the architect. The Owners should meet with each of the GCs at their home to review the plans and answer any questions. This meeting is important in providing both the Owners and the GC with information about each other to help determine if there is a good fit between them. Remember, home construction is an intimate, stressful, invasive process that can go on for months. Neither the GC nor the Owner should enter into such a relationship unless both feel comfortable that they will be treated honestly, fairly and with respect. No amount of cost savings or gains will end up worthwhile if the months-long process is overly stressful and unpleasant.

Once the bids are presented, the Owner and architect review them to determine if they have complied with the bid instructions. Presumably, all of the bids will be within 10% of each other. If any of the bids are either significantly higher or lower than the others, it should be assumed that either that GC missed including certain scope of work from their bid or they received higher than expected estimates from their subcontractors. Of course, cost will be an important factor in deciding which contractor you will choose. However, it is important to select the GC who you feel you will have the best relationship with. A typical construction project can take 4-8 months to complete. If there is little compatibility between the Owner, GC and architect, this can result in a very unpleasant experience.

II. Negotiating Contract
In this scenario, the Owner selects the architect and the GC at the beginning of the process. A construction budget is established and the architect involves the GC during the design phase to monitor the cost effects of specific design elements.

What is a “qualified” Contractor?

There is a 95% attrition rate for General Contractors within the first 5 years of establishing their business. A qualified General Contractor has been in business for a minimum of 5 years, maintains an office (not a post office box), is state licensed, maintains liability and worker’s compensation insurance and has a history of successfully completing projects comparable to the one that you will be doing at your home. A qualified Contractor will not insist on a large deposit prior to the start of construction and will provide a fair payment schedule based upon work that has been completed and approved.

What are the pros and cons of “Competitive Bids” and “Negotiated Contracts?”

Competitive Bid

Pros: The Owner will get an actual cost for the project.

Cons: As do most established GCs, we will only schedule projects as they commit. Since the design phase can take as much as several months to complete, the project may not be able to be scheduled to start for several more months, depending on the schedule at the time. Since it is important that all bidders have as much information as possible (no one wants GCs to make their own assumptions), the required level of detail in both drawings and specifications adds time and cost to the design process. The risk of receiving bids that are not within the budget will necessitate further time and cost to redesign the project to fit the budget (if possible).

Negotiated Contract

Pros: Since the GC is selected at the start of the process, the project can be penciled in to start as soon as permits are approved. This can save many months in the design/construction process and result in a significantly early completion. The GC will be involved in estimating the construction costs early in the process. This will result in reduced architectural fees and eliminate the possibility that the project will exceed the budget. A relationship of trust is established that provides the best opportunity for the process to be amicable, less stressful and successful.

Cons: Since there will be no other GCs providing estimates, the Owner must have a “leap of faith” that the GC they have selected will be fair and honest in his pricing and will not take advantage of the non-competitive process.

Will MLC participate in a Competitive Bid process?

Over the past 10 years or so most of our work has come in the form of Negotiated Contracts. Our experience has been that this process is the most humane and results in mutually satisfying results. MLC may choose to participate in a competitive bid process depending upon the project, architect and assurance that the other bidders are also established, reputable General Contractors.

What are “Change Orders?”

A Change Order occurs when, during the course of construction, the Owner and architect decide to change a previously specified scope of work. This can also occur if the inspecting authority determines that an existing condition is in violation of a code. The Owner is then required to correct the violation before any final inspections will be made.

The only time that MLC will issue a Change Order is if there is an existing condition that neither the architect nor we could have reasonably anticipated prior to demolition. All other Change Orders could only be initiated by the Owner or architect. Prior to proceeding with any changes, the Owner should be presented with a Change Order specifying the change, amount and payment expectation. It is rare that changes do not occur on a construction project. We suggest that the Owners plan on a “reserve” of 10-15% of the construction costs to cover them.

What should I expect from the General Contractor once construction begins?

While the GC is certainly providing a product, the service that will be provided will ultimately determine the success of the project. Few people embark on a major construction project more than once in their lifetime. During the duration of the project your home will be invaded by carpenters, plumbers, electricians, drywallers, roofers, masons, tile setters and painters. Your lives will be disrupted in ways that would be hard to anticipate. It is critically important that the GC be available by phone 24 hours, 7 days a week to immediately respond to your concerns and any emergencies that might arise.

• You should expect that there will be no smoking in your home.

• You should expect that the GC will provide you (and the architect) with a timeline so that you can anticipate what will be happening. The schedule should be updated on a weekly basis.

• You should expect that there will be a Project Manager assigned to your project who will visit the site daily, be available to you and provide daily progress reports.

• You should expect that the GC will protect floors and other surfaces in your home that may be impacted during construction.

• You should expect that requests for pricing on additional work will be provided in a timely manner and that all correspondence responded to immediately.

• You should expect that the GC will ensure that everyone working in your home will treat it with respect and consideration.

Should I hire the cheapest Contractor?

If the plans and specifications are properly prepared and the bidders have been qualified by the architect, there should not be a significant difference in the bids. Assuming that this is the case and that you believe any of the bidders would perform professionally and that you feel equally comfortable with all them, it would be reasonable to select the lowest of the bidders.

However, if there is a significant (more than 5%) difference in the bids, this should raise a red flag. In this case, either the plans and specifications were incomplete, resulting in the bidders making differing assumptions that went into their pricing or one or more of the bidders did not fully understand the scope of the project. The architect would need to discuss the bids with the bidders to determine if there were too many assumptions made.

If one of the bidders is significantly lower than the others, the temptation to save significant dollars by selecting him should be resisted. General Contractors are second only to car salesmen in consumer complaints. While it is undeniable that there are a fair number of disreputable contractors, the reality is that most contractors are well intentioned former carpenters who believe they can estimate, perform, oversee and generally attend to the intricacies involved in successfully running a General Contracting company. Often, these “contractors” are able to cut costs by performing their own electrical and plumbing work and assuming the responsibilities of other specialty trades. The result is that the work related to a specific trade is not performed by a craftsman and will invariably take significantly longer to complete.

The vast majority of contractor complaints result from an Owner’s selection of a significantly low bidder. At some point in the construction process, the contractor will realize that he made an estimating mistake and either inundate the Owner with Change Orders or take on another project in order to pay his bills. Since he may have an expectation that the new project will be profitable, his attentions and resources will be focused on the profitable project rather than the underestimated one. The more complex the project, the greater the likelihood that an inexperienced contractor will underestimate the costs and realize at some point that the balance of the contract amount is insufficient to pay the impending bills. This begins a process of unavailability, inactivity and Owner distress. Should the contractor fail to complete the project or be terminated by the Owner, the likelihood of the Owner’s being able to hire a reputable contractor to complete the project is very low.