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!
I find this very suspicious. I also don’t understand how he can already tell you that you can save 10-15% compared to a general contractor. 10-15% of what? There isn’t even a final total yet.
You’re all really excited now and trying to defend a concept you don’t understand. Impressive!... and all just because this “building project developer” is tempting you with 10-15% savings! Have you ever questioned how it’s possible that he claims to save you €50,000 and more around Stuttgart?
You’re all really excited now and trying to defend a concept you don’t understand. Impressive!... and all just because this “building project developer” is tempting you with 10-15% savings! Have you ever questioned how it’s possible that he claims to save you €50,000 and more around Stuttgart?
H
hampshire18 Feb 2019 12:58It is unusual for a construction project developer to hold power of attorney with the involved trade contractors. Naturally, this raises the question of why someone would offer such an uncommon arrangement. Calling it “shady” would be a value judgment, which cannot be made based on this alone.
At first glance, I find it incomprehensible and distrustful:
1. Which trade contractor grants power of attorney to an external construction developer?
2. How must a trade contractor be positioned in the currently strong economic climate for a fixed-price calculation by a construction developer to be worthwhile?
3. How confident can I be that I can enforce my warranty and defect repair claims against “such a company” (based on the answers to points 1 and 2)?
4. Whose side does the construction developer take if problems arise? (With the developer, it’s clear—they act in their own interest. The architect usually represents the client.)
There are many paths to building a house. I would not choose the path involving a construction developer who holds power of attorney with the trade contractors offering their services.
At first glance, I find it incomprehensible and distrustful:
1. Which trade contractor grants power of attorney to an external construction developer?
2. How must a trade contractor be positioned in the currently strong economic climate for a fixed-price calculation by a construction developer to be worthwhile?
3. How confident can I be that I can enforce my warranty and defect repair claims against “such a company” (based on the answers to points 1 and 2)?
4. Whose side does the construction developer take if problems arise? (With the developer, it’s clear—they act in their own interest. The architect usually represents the client.)
There are many paths to building a house. I would not choose the path involving a construction developer who holds power of attorney with the trade contractors offering their services.
I also have a site manager who organizes the various trades for me. He takes a great deal of the burden off my shoulders and handles any issues that arise. He also manages communication with utility providers (such as house connections and similar). He has his "own" companies he frequently works with. However, in this case, it’s different since the project developer is involved with the companies. I would say: read the contracts very carefully!
M
Markuss8518 Feb 2019 13:20Thank you all for your honest feedback!
One thing upfront: he doesn’t exactly “lure” us with a 15% discount; rather, we have received quotes from various general contractors (GCs), prefabricated house suppliers, and the project developer. While all but one of the GCs’ quotes are within a range of about 5%, the project developer is roughly 15% cheaper. For us, this can be explained by the absence of GC markups and the fact that we have to take care of a bit more ourselves.
I at least partly know the companies doing the work. We only came to the project developer through the shell builder (multiple recommendations from friends/acquaintances who built with him).
One thing upfront: he doesn’t exactly “lure” us with a 15% discount; rather, we have received quotes from various general contractors (GCs), prefabricated house suppliers, and the project developer. While all but one of the GCs’ quotes are within a range of about 5%, the project developer is roughly 15% cheaper. For us, this can be explained by the absence of GC markups and the fact that we have to take care of a bit more ourselves.
I at least partly know the companies doing the work. We only came to the project developer through the shell builder (multiple recommendations from friends/acquaintances who built with him).
Well, if you think it’s that great, then go ahead :-p
What is the expected cost?
And do you even have the time for it? Considering everything I have to do and coordinate, plus all the work my construction coordinator handles behind the scenes. Wow.
Coordination with the shell builder, creating your own electrical plans, window openings, coordination with the energy consultant, coordination with plumbing, stair builder, window manufacturer, carpenter/roofer, and much more.
I enjoy it and I have the time for it. But it is also very time-consuming. I actively spend about 2 hours daily on the construction, and even passively, my mind never stops thinking about it.
There is no standard process. Your building developer won’t just give you 3 or 4 options for you to pick the best one. No, you will develop these options yourselves and then agree on them together.
You won’t be handed a finished concept for you to decide on. You will actively participate in the process. It’s more than just a little involvement. Therefore, it’s not for everyone.
What is the expected cost?
And do you even have the time for it? Considering everything I have to do and coordinate, plus all the work my construction coordinator handles behind the scenes. Wow.
Coordination with the shell builder, creating your own electrical plans, window openings, coordination with the energy consultant, coordination with plumbing, stair builder, window manufacturer, carpenter/roofer, and much more.
I enjoy it and I have the time for it. But it is also very time-consuming. I actively spend about 2 hours daily on the construction, and even passively, my mind never stops thinking about it.
There is no standard process. Your building developer won’t just give you 3 or 4 options for you to pick the best one. No, you will develop these options yourselves and then agree on them together.
You won’t be handed a finished concept for you to decide on. You will actively participate in the process. It’s more than just a little involvement. Therefore, it’s not for everyone.
M
Markuss8518 Feb 2019 15:03Zaba12 schrieb:
Coordination with the structural builder, creating the electrical layout yourself, window openings, coordination with the energy consultant, coordination with plumbing, stair builder, window manufacturer, carpenter/roof work, and much more.
I enjoy it. I also have the time for it. But it is time-consuming. I actively spend about 2 hours daily on the construction and mentally I’m never off.
There is no standard solution. Your building developer won’t just give you 3-4 proposals and you pick the best one. No, you will develop the proposals yourself and then you’ll coordinate them together.
You won’t be handed a finished concept to simply approve. You will be involved actively. It’s more than just occasional attention. Therefore, it’s not for everyone.Oh dear, that scares me, that’s exactly what we wanted to avoid 🙁 At least regarding the building/performance specification, the general contractor and the building developer have basically the same wording...
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