ᐅ Differences Between General Contractor and Project Developer
Created on: 18 Feb 2019 08:03
M
Markuss85
Hello everyone,
as silent readers, we have already learned a lot from the forum, but now we have a question we haven’t been able to find an answer to yet. Please feel free to link the appropriate thread if this has already been discussed.
We originally planned to build with a general contractor (single-family home, about 140sqm (1506 sqft), solid construction, 2 full floors, basement, turnkey), since we wanted to have only ONE contact person and contractual partner. I often spend weeks abroad, so we can’t manage the construction full-time. However, during our discussions, we met a so-called "building project developer," who is about 10-15% cheaper than the other general contractor offers and leaves a very professional impression.
The "building project developer" also offers us the house turnkey at a fixed price (according to the construction and service specifications) and takes on the construction management role plus planning/coordination, but we would have individual contracts with the separate trades and pay the companies directly. Are you familiar with this arrangement? Is this "normal," or are there any significant disadvantages we might not have considered? Especially regarding a higher "supervision effort" on our part?
We somehow can’t really find anything about this kind of setup, or are we just looking in the wrong places? 😉
THANKS to all of you!
as silent readers, we have already learned a lot from the forum, but now we have a question we haven’t been able to find an answer to yet. Please feel free to link the appropriate thread if this has already been discussed.
We originally planned to build with a general contractor (single-family home, about 140sqm (1506 sqft), solid construction, 2 full floors, basement, turnkey), since we wanted to have only ONE contact person and contractual partner. I often spend weeks abroad, so we can’t manage the construction full-time. However, during our discussions, we met a so-called "building project developer," who is about 10-15% cheaper than the other general contractor offers and leaves a very professional impression.
The "building project developer" also offers us the house turnkey at a fixed price (according to the construction and service specifications) and takes on the construction management role plus planning/coordination, but we would have individual contracts with the separate trades and pay the companies directly. Are you familiar with this arrangement? Is this "normal," or are there any significant disadvantages we might not have considered? Especially regarding a higher "supervision effort" on our part?
We somehow can’t really find anything about this kind of setup, or are we just looking in the wrong places? 😉
THANKS to all of you!
Markuss85 schrieb:
Hmm, what exactly do you mean by "unclear"? We don’t really have any choice with the general contractor (GC) either; the GC selects the subcontractors they want, right?! And how else is the project developer supposed to offer a fixed price if we could choose the companies ourselves afterwards?!
What do you mean by "conflict of interest"? Of course, they choose the subcontractors/companies that offer the best price for the specified scope of work.The advantage of a GC is that you don’t have to deal directly with the subcontractors later when it comes to warranty issues. Subcontractors work according to the VOB (German Construction Contract Procedures), not according to the Building Code (I believe it’s safe to say that generally).
If electrician X does a poor job or plumber Y goes bankrupt, the GC is still responsible for warranty claims.
In principle, all subcontractors could botch their work and deliver a faulty house, and then you’d be overwhelmed by the ongoing costs of submitting defect reports — or is that not the right way to see it?
You can also build custom with a GC. Even your own projects can be incorporated. The GC may not prefer that, but you can arrange custom work directly with the subcontractors. It depends on the client and how much you want to be involved with your specific requests. That only works if you are present and in direct contact with the subcontractor. You can do it, but it’s not mandatory. After all, it’s not a property developer.
But as I understand it, you don’t want that anyway?!
Then I don’t understand why you’re doubting the GC at all?!
I would be interested in seeing the construction service specifications from that project developer. Please post the first two-thirds of the document (I hope it’s longer than 10 pages 🙂 ).
N
nordanney18 Feb 2019 20:20Bookstar schrieb:
And if your general contractor goes bankrupt, are you completely out of luck? At least the house is standing, even if it has some defects.
The transfer of the general contractor’s rights against their subcontractors can also be arranged. It should not be a problem to include this directly in the general contractor agreement (this is actually a common clause). Possible issue thus resolved.
A professional impression—what does that mean? A checked shirt (to appear like a tradesman) and a leased Cayenne (the man is obviously successful and doesn’t need to cheat me)?
Anyone who is truly an authorized signatory (which you can check in the commercial register) should not only make price promises but also be able to sign contracts.
10 to 15% is reasonable. Many people find it credible that a savvy person who knows many people offers this as a margin; at the same time, the advantage isn’t so large that alarm bells go off. And that’s almost the perfect setup for a down payment scam.
Even if the person isn’t criminal: in this scenario, I don’t see how they can provide any solid guarantees—for completion itself, or to ensure that the participant L steps in between K and M during the process (and doesn’t go bankrupt or drop out, leaving M without time later on (or only after their offer period expires) so you end up with construction progress only up to K and that’s it; the developer’s concept then fails, they get stuck, and their insolvency administrator wants the contract still to be fulfilled.
If the expected savings were necessary to make your building project financially feasible, you wouldn’t be able to defend yourself in a serious situation.
One would have to become a booby prize winner—those were the golden times, apparently ;-)
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
Anyone who is truly an authorized signatory (which you can check in the commercial register) should not only make price promises but also be able to sign contracts.
10 to 15% is reasonable. Many people find it credible that a savvy person who knows many people offers this as a margin; at the same time, the advantage isn’t so large that alarm bells go off. And that’s almost the perfect setup for a down payment scam.
Even if the person isn’t criminal: in this scenario, I don’t see how they can provide any solid guarantees—for completion itself, or to ensure that the participant L steps in between K and M during the process (and doesn’t go bankrupt or drop out, leaving M without time later on (or only after their offer period expires) so you end up with construction progress only up to K and that’s it; the developer’s concept then fails, they get stuck, and their insolvency administrator wants the contract still to be fulfilled.
If the expected savings were necessary to make your building project financially feasible, you wouldn’t be able to defend yourself in a serious situation.
One would have to become a booby prize winner—those were the golden times, apparently ;-)
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
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