Hello everyone,
we are considering changing the general contractor. The bank has already approved this. My question is, what might be disadvantages of switching? Where could potential pitfalls lie? I’m simply hoping for your experiences so we don’t overlook anything important...
Background:
We signed the contract with the general contractor in August ’16, and in December received the completed applications for the building permit, which was granted in January ’17. We informed the contractor in December ’16 that we wanted to start as soon as the weather allowed at the beginning of ’17, which they confirmed. There is no contractually fixed deadline since, due to the planned owner-occupied work (electrical, garage, and floor work on the upper floor), the contractor did not want to commit to a schedule. Since then, communication with our contractor has not been satisfactory:
Our site manager was reportedly only informed at the end of January that he was to oversee our build and has appeared unprepared at every conversation so far. (For example, in every meeting, he has asked whether we were doing any owner-occupied work or not.) He overlooks small traps I include in our correspondence.
When some of our neighbors started in the second calendar week of February, we were still chasing our site manager to find out when work would finally begin. He tried to reassure us by saying he first needed to find a construction company. I replied that this should have been done back in December, when it was already clear that the building permit would be issued in winter (the typical processing time in our area is four weeks, which was also the case here).
It dragged on until mid-March before a construction company was even found (after, reportedly, another company unexpectedly withdrew a week before the planned start date). This company then took a total of three weeks to complete the foundation slab (on a flat, shallowly excavated lot without a basement). For our neighbors, this process mostly took less than a week. “Our” workers averaged two days per week on-site, while others had workers present daily.
Since then, there has been radio silence from the construction company. I have not been able to reach the foreman for over two weeks. He does not answer calls, voicemails, or emails. Our contractor’s site manager keeps promising at short intervals that work will continue—of course, without it actually happening. Several of our neighbors, for example, are receiving their floor slabs this week….
Therefore, we have now started talks with our bank and other companies who could take over the construction for us. I have already informed our current contractor and asked him to consider a contract termination. (So far, we have paid the contractor 2% for architect services and 10% for the “foundation slab” construction phase. A penalty for contract termination would be 10% of the contract sum, although I do not consider this justified given the significant construction delays.)
we are considering changing the general contractor. The bank has already approved this. My question is, what might be disadvantages of switching? Where could potential pitfalls lie? I’m simply hoping for your experiences so we don’t overlook anything important...
Background:
We signed the contract with the general contractor in August ’16, and in December received the completed applications for the building permit, which was granted in January ’17. We informed the contractor in December ’16 that we wanted to start as soon as the weather allowed at the beginning of ’17, which they confirmed. There is no contractually fixed deadline since, due to the planned owner-occupied work (electrical, garage, and floor work on the upper floor), the contractor did not want to commit to a schedule. Since then, communication with our contractor has not been satisfactory:
Our site manager was reportedly only informed at the end of January that he was to oversee our build and has appeared unprepared at every conversation so far. (For example, in every meeting, he has asked whether we were doing any owner-occupied work or not.) He overlooks small traps I include in our correspondence.
When some of our neighbors started in the second calendar week of February, we were still chasing our site manager to find out when work would finally begin. He tried to reassure us by saying he first needed to find a construction company. I replied that this should have been done back in December, when it was already clear that the building permit would be issued in winter (the typical processing time in our area is four weeks, which was also the case here).
It dragged on until mid-March before a construction company was even found (after, reportedly, another company unexpectedly withdrew a week before the planned start date). This company then took a total of three weeks to complete the foundation slab (on a flat, shallowly excavated lot without a basement). For our neighbors, this process mostly took less than a week. “Our” workers averaged two days per week on-site, while others had workers present daily.
Since then, there has been radio silence from the construction company. I have not been able to reach the foreman for over two weeks. He does not answer calls, voicemails, or emails. Our contractor’s site manager keeps promising at short intervals that work will continue—of course, without it actually happening. Several of our neighbors, for example, are receiving their floor slabs this week….
Therefore, we have now started talks with our bank and other companies who could take over the construction for us. I have already informed our current contractor and asked him to consider a contract termination. (So far, we have paid the contractor 2% for architect services and 10% for the “foundation slab” construction phase. A penalty for contract termination would be 10% of the contract sum, although I do not consider this justified given the significant construction delays.)
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Bieber081526 Apr 2017 15:01Caspar2020 schrieb:
I think what ypg means is when you come around with a plot of land, acting as a GÜ (and then handle the planning and build the house), but also buy up plots yourself and market and develop them as a general contractor, ultimately handing them over to the buyer. Yes, exactly, that’s how I understood it. I just wanted to clarify that this is not a buyer’s choice, meaning they can’t simply pick a contract type because the building partner is pursuing multiple paths. By the way, your post could definitely be pinned here in the forum.
By the way, roofers and similar tradespeople are also active as general contractors here. This is always possible when you have capital (or access to it) and access to plots of land (also known as connections).
Bieber0815 schrieb:
Yes, exactly, that’s how I understood it. I just wanted to clarify that this is not a buyer’s free-for-all, meaning the buyer cannot simply choose a contract type because the construction partner is working on multiple levels. By the way, your post could definitely be pinned here in the forum.
By the way, roofers and similar trades are also active as developers here. This is always possible when you have capital (or access to it) and access to land (aka connections).No, of course, it is not a free-for-all.
A client can hire company XY as a general contractor to build their house on the client-owned land, and then everything else is specified in a construction contract.
The same company can also act as a developer, selling someone a house with the land, where a purchase agreement governs everything.
Operating on multiple levels is neither illegal nor unusual.
Regards, Yvonne
T
toxicmolotof26 Apr 2017 23:20In larger construction companies, the shareholders often separate these construction projects legally. So, you might have ABC Housebuilding LLC and ABC Property Developer LLC... and ABC Construction Project LLC and so on, etc., etc.
I have encountered architects, engineers, and construction companies who refer to a company that builds a house on a client’s land as a developer. So, don’t get too worked up about this here. By now, I understand that we are all enthusiasts who discuss every little detail. But if the original poster wants to call the company a developer, then it is a developer—even if it is a general contractor. Only about 0.05% of those involved in construction make this distinction; for the other 99.95%, it’s a developer.
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toxicmolotof27 Apr 2017 00:10@Grym, I understand, but this is simply relevant for answering many questions!
It makes a difference whether you are the builder yourself or not.
If I, as the builder, want to remove a trade from the construction site, I can do so without any ifs or buts. In contrast, a "real" developer will remove the buyer from their construction site if they decide to do so.
It makes a difference whether you are the builder yourself or not.
If I, as the builder, want to remove a trade from the construction site, I can do so without any ifs or buts. In contrast, a "real" developer will remove the buyer from their construction site if they decide to do so.
Terminating a contract with a property developer becomes very costly when the project was individually designed for the client. The client is removed from the contract, the developer would then find a new customer and continue building – while the original client is left with costs, not to mention the loan already taken out...
But @jeti79 is handling the house construction or the termination without us; otherwise, they would have provided some clarification by now.
Regards, Yvonne
But @jeti79 is handling the house construction or the termination without us; otherwise, they would have provided some clarification by now.
Regards, Yvonne
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