How Does Your Building Contractor Company Compare?

Building a home or remodeling is a big deal, so make sure you know exactly what to look for in a good building contractor. There are many factors to consider, such as cost, contract duration, and more. Here are some tips to help you decide.

General contractor vs builder

If you’re constructing a home, it’s a good idea to know the difference between a general contractor and a builder. A builder focuses on construction and a general contractor is responsible for managing a project.

Home builders are generally more experienced and have a better understanding of the building process. They can help homeowners navigate the whole process. However, home builders tend to charge less than a general contractor.

General contractors are typically more expensive than home builders, but they are also more versatile. For example, they can subcontract portions of the project to other trades. In addition, they can be much faster at completing a project than new home builders.

Many states require that contractors have a general license. The state will set specific requirements for licensing and certification, and these vary from state to state. Generally, contractors must pass a licensing exam with a grade of at least 70 percent. Depending on the state, they may be required to obtain an exemption letter from the state licensing agency.

Whether you’re building a brand new home or doing renovations, a general contractor can help. He’s the big picture guy, organizing a team of subcontractors and maintaining a schedule for timely completion.

Some general contractors are experts in home building, while others specialize in renovations or remodeling. Regardless of your preference, it’s a good idea to get a quote from several companies.

Contract duration

A good understanding of the contract duration enables a business to manage its obligations, such as renewals and extensions. As a matter of fact, a business without an oversight of this important metric could be stuck in a contractual rut.

A typical contract duration will range from one to four years. In some cases, it may be extended beyond this timeframe, especially if a business’ needs continue to grow. Keeping track of contract duration dates can ensure that a business is not left out in the cold should a contract expire, and that a client gets the best deal in the end.

While there is no magic number, it is wise to define a reasonable time frame. This is especially true if a business is looking to woo a new client, or retain a current one. Taking the time to properly define the contract’s duration can save you thousands of dollars in fees in the long run. It also helps you to manage customer expectations and ensure that you are not stranded with a hefty bill at the end of the contract.

Knowing the contract’s shortest and longest duration can also help you to maximize your revenue in the short and long term. In the construction industry, a contract’s longest duration is often determined by the longest time it will take to complete a project. For most projects, the time to complete controlling items is computed based on production rates applicable to the project.

Costs

A construction contract isn’t complete without the requisite markups and overhead. In addition to the usual materials and subcontractor fees, the contractor is often forced to take on the risk of cost overruns. The owner may also be forced to pay for labor hours beyond a normal workday. Keeping tabs on your costs is crucial to your profitability.

There are several different construction related cost-management systems to choose from. Some of these include the cost-plus-a-percentage approach, the cost-plus-a-fixed-percentage method, and the cost-plus-a-fixed-fixed-percentage method. Depending on your contract, you may be required to submit cost proposals on a quarterly or annual basis. Your contractor will also need to come up with an estimate of the actual direct job costs, plus a fixed percentage, to be paid in addition to your payment. For example, the total direct job costs might be as low as 50% of your total contract price.

One of the most important aspects of a construction contract is knowing what your costs are, so you can make informed decisions. This includes the decision to bid on a particular project. It also means keeping track of your cost of goods sold (COGS), which is the best way to measure a job’s profitability. Keeping track of these costs is a must if you want to get the most out of your contractor.