Hello everyone,
We had a consultation with a construction company that builds the shell of the house themselves and contracts out additional services for the turnkey construction to third parties.
The company offers everything from submitting the building permit / planning permission, architectural services, structural engineering, tendering and awarding contracts, as well as construction supervision.
This is nothing unusual so far.
The difference from a "general contractor" is that this company does not want to act as the contracting party to the third parties. Instead, a separate contract is made between the homeowner and each subcontractor for every trade and company.
The advantage of this approach is that each trade’s warranty is covered by a different company. In other words, if one company goes bankrupt, only part of the warranty would be affected.
Since I have not heard of this before, I’d like to ask a few questions here. :o
Is this approach known to anyone?
What are the pros and cons from your perspective?
Has anyone built a house this way?
We had a consultation with a construction company that builds the shell of the house themselves and contracts out additional services for the turnkey construction to third parties.
The company offers everything from submitting the building permit / planning permission, architectural services, structural engineering, tendering and awarding contracts, as well as construction supervision.
This is nothing unusual so far.
The difference from a "general contractor" is that this company does not want to act as the contracting party to the third parties. Instead, a separate contract is made between the homeowner and each subcontractor for every trade and company.
The advantage of this approach is that each trade’s warranty is covered by a different company. In other words, if one company goes bankrupt, only part of the warranty would be affected.
Since I have not heard of this before, I’d like to ask a few questions here. :o
Is this approach known to anyone?
What are the pros and cons from your perspective?
Has anyone built a house this way?
B
Bauexperte27 Nov 2013 12:01Hello €uro,
It would only be interesting if the original poster could choose the shell builder and all subsequent trades themselves; then we would be back to awarding contracts via an architect with all the pitfalls for laypersons.
This described setup reminds me of “instant soups” which usually contain too many flavor enhancers 😉
Best regards, Bauexperte
€uro schrieb:What if they don’t care because they already have their ducks in a row? This arrangement has often led straight into problematic situations in the past.
For a new build, a contractor hardly faces any risk in providing missing services at the fixed price! If not, they are out of place!
€uro schrieb:I see it differently, although I don’t know the general terms and conditions. You seem to overlook that the profitable margin stays with the shell builder.
Mistaken, there is no “all-inclusive fixed price guarantee” here!!!
That is exactly why this interim solution is so interesting!
It would only be interesting if the original poster could choose the shell builder and all subsequent trades themselves; then we would be back to awarding contracts via an architect with all the pitfalls for laypersons.
This described setup reminds me of “instant soups” which usually contain too many flavor enhancers 😉
Best regards, Bauexperte
nordanney schrieb:
I believe it won’t be that simple after all.
Contract Customer – General Contractor: Fixed price
Contract Customer – Subcontractors: ??? What is both simple and, at the same time, overall reasonable and economical? ;-) Claims that exclude each other due to competing individual demands! As already mentioned, also a fixed price! Makes sense! What unexpected issues could a heating engineer possibly face if all details are planned and defined exactly according to the provided design specifications? None!!! What difficulties would they have in providing a fixed price offer? ;-)
nordanney schrieb:
...What happens if the subcontractor contracts do not match the fixed price agreement? The fixed price always applies to the respective contract scope. nordanney schrieb:
...Who pays the subcontractors? Always the client, but only after verification by the independent from sales construction supervision, assuming the client was wise enough to arrange this contractually! Best regards
N
nordanney27 Nov 2013 12:41€uro schrieb:
As already mentioned, fixed price as well! Makes sense! What unexpected special issues could possibly arise for a heating engineer if all details have been precisely planned/defined according to the given dimensions? None!!! What difficulties would they have in providing a fixed price offer here? ;-) But the original poster hasn’t stated that yet! We don’t know what the contractual arrangements will be.
The question still needs to be answered, so the issues I raised are still relevant (for now).
If everything is fixed price, the risk is indeed manageable.
Hello Bauexperte,
Over two weekends, self-builders can complete the load-bearing masonry walls of a ground floor of a 1.5-story building including interior walls entirely! You really can’t save more money than that! ;-)
Best regards
Bauexperte schrieb:Which things exactly? I am talking here about my structure where the HVAC contractor is a direct subcontractor to the client!
...What if he’s not interested because he already has everything secured?
Bauexperte schrieb:That certainly depends on the individual case. When I advise clients regarding self-performed work, it is clear that self-work on the building shell is most effective, which completely invalidates the offers from so-called self-build or finishing houses!
... You seem to overlook that the profitable margin stays with the shell builder. ...
Over two weekends, self-builders can complete the load-bearing masonry walls of a ground floor of a 1.5-story building including interior walls entirely! You really can’t save more money than that! ;-)
Bauexperte schrieb:Not at all. Every detail can be handled and secured individually with a fixed price! That is precisely the advantage of this model of mine, which offering general contractors find rather inconvenient! ;-)
... then we would be back to awarding contracts via the architect with all its pitfalls for laypeople.
Best regards
B
Bauexperte27 Nov 2013 14:06Hello €uro,
we might be digressing a bit here, but now I’m curious 😀
Then comes another topic: time. A single-family house—and many try to complete this entire process as self-build—demands a high level of discipline, sustained over weeks or months. Not every partnership or marriage comes through this time unscathed.
In my humble opinion, you have focused too much on clients who are not willing to pay a fair wage for proper work. I keep reading this from you, especially when it comes to the costs of building services engineering (mechanical, electrical, and plumbing). Remember, we have exchanged emails about this once, and I think your pricing strategy will catch up with you... from another building services planner who is a bit cheaper. It’s a treadmill once started, lacking a brake.
No provider—even the low-cost ones—expects every inquiry to turn into a contract. The market is diverse and in the end, everyone gets what they deserve.
Best regards, Bauexperte
we might be digressing a bit here, but now I’m curious 😀
€uro schrieb:Margin & (almost) no risk
Which little lambs exactly?
€uro schrieb:Who prepares the necessary calculations? Who handles the calls for tenders? Who checks the incoming progress payments from the craftsmen? Who supervises the work? Who is responsible for the thermal insulation certificate and fills out, for example, the form 153 upfront, which financing banks usually require and must be confirmed before moving in? And so on and so forth...
I’m talking about my setup where the HVAC technician is a direct contractor of the client!
€uro schrieb:That is—at least theoretically—correct. But not every client is suitable as a self-builder, and building the shell structure yourself is not an option for everyone. The next question would be about construction monitoring during the self-build of the shell. I can hardly imagine a contractor being so foolish as to work on a shell that isn’t professionally supervised and accepted. Or the window installer, who will hardly be keen to come to the site often and verify the measurements for the windows. There’s a reason why experienced self-build house suppliers only sell with professional supervision, and by that, I do not mean the green or blue faction.
Self-builders complete the structural masonry of a ground floor of a 1.5-story building with interior walls entirely in two weekends! You basically can’t save more money than that! ;-)
Then comes another topic: time. A single-family house—and many try to complete this entire process as self-build—demands a high level of discipline, sustained over weeks or months. Not every partnership or marriage comes through this time unscathed.
In my humble opinion, you have focused too much on clients who are not willing to pay a fair wage for proper work. I keep reading this from you, especially when it comes to the costs of building services engineering (mechanical, electrical, and plumbing). Remember, we have exchanged emails about this once, and I think your pricing strategy will catch up with you... from another building services planner who is a bit cheaper. It’s a treadmill once started, lacking a brake.
€uro schrieb:I don’t disagree; I mainly referred to the frequently expressed opinion that finding a good architect is difficult.
Not at all. Every detail can be individually tied to and managed with a fixed price!
€uro schrieb:You may be overestimating yourself and your model a bit 🙂 But it is interesting that you have time for construction consulting alongside building services—you do supervise the tendering as well?
That’s exactly the advantage of this model of mine, which fully serviced general contractors (GCs) or general building contractors usually find less comfortable! ;-)
No provider—even the low-cost ones—expects every inquiry to turn into a contract. The market is diverse and in the end, everyone gets what they deserve.
Best regards, Bauexperte
P
PeterLustig4928 Nov 2013 10:43Thanks for all the replies.
OK. Will do! 🙂
He promised us an offer with a breakdown of all trades. So I assume it’s a fixed price. I will check.
Yes, he said he adds a little markup on all trades.
At least here we can choose whether we want a trade included or do it ourselves or bring in a different company. I doubt we can choose among his affiliated companies, but I will ask.
This company does all of that. Only the form 153 was not mentioned. I have to ask about that.
€uro schrieb:
However, I would definitely not leave the tenders, final awarding, and site supervision to them! ;-)
Without internal site management, no construction project can be realized, so this is by no means a selling point. What’s important is an external, sales-independent building supervision that keeps a close eye on the contractor! Only positive assessments from this supervision should justify partial payments! ;-)
OK. Will do! 🙂
nordanney schrieb:
We don’t know yet how the contractual relationships will be structured.
The answer to that question is still pending, so the issues I mentioned are still relevant.
If everything is fixed price, the risk is actually manageable.
He promised us an offer with a breakdown of all trades. So I assume it’s a fixed price. I will check.
Bauexperte schrieb:
I see it differently, although I don’t know the general terms and conditions. You seem to overlook that the profitable margin stays with the shell construction contractor.
Yes, he said he adds a little markup on all trades.
Bauexperte schrieb:
It would only be interesting if the original poster could select the shell contractor and all subsequent trades themselves; but then we’d be back to awarding through the architect, with all its pitfalls for laypersons.
At least here we can choose whether we want a trade included or do it ourselves or bring in a different company. I doubt we can choose among his affiliated companies, but I will ask.
Bauexperte schrieb:
Who prepares the necessary calculations? Who handles the tenders? Who verifies incoming progress payments from the contractors? Who supervises the work? Who takes responsibility for the thermal insulation certificate and completes, for example, the form 153 at the start, which financing banks usually require and must be confirmed before moving in? And so on...
This company does all of that. Only the form 153 was not mentioned. I have to ask about that.
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