ᐅ The Same Old Problem – Turnkey Contracting vs. Individual Contracts
Created on: 6 Nov 2014 09:52
N
Neubau82
Good morning, dear new building community!
I am facing the classic decision... whether to go for a turnkey build or to contract everything separately...
First, here are my key data:
Plot size – 805 m2 (8,663 sq ft) available
Living area – 160 m2 (1,722 sq ft)
Roof – gable roof 22°
Floors – 2 full floors
Basement – fully cellar
Heating system – air heat exchanger
Heating – underfloor heating on ground and upper floors
Windows – plastic frames, triple-glazed
Bathroom – shower/bath/2 washbasins on upper floor
Toilet – WC/shower on ground floor, prepared connections in basement
Garage – double garage 9 x 5 m (30 x 16 ft)
Floor plan – simple, rectangular without slopes or offsets, symmetrical
Dormers – none
For the above building project, we have received a turnkey offer of €345,000.
I am now very uncertain whether I can actually save anything by contracting the entire build separately... I also know that the construction industry can be quite hectic, and one often a) waits ages for quotes, and b) has trouble finding anyone with availability.
I am skilled in crafts myself (trained carpenter) and also have many acquaintances in the construction industry (bricklayers, carpenters, electricians, etc.). Unfortunately, you still have to present figures to the bank... which in turn require reliable data... leaving aside the mental strain...
After extensive research and discussion, I have gathered many opinions and perspectives. The following comments from my friends and acquaintances have been on my mind day and night:
- Don’t contract the trades separately, you won’t save anything; in fact, it might even be more expensive. General contractors negotiate completely different prices than you can (structural engineer)
- Based on experience, contracting separately at this scale leads to additional costs of about €100,000. General contractors negotiate very different prices than you can (architect)
Since these statements come from very experienced people, I think there must be some truth to them...
What is your opinion?
Be brave and contract separately?
I just want to sleep well again... well, I guess I can forget about that for at least a year anyway.
Thanks for your advice!
I am facing the classic decision... whether to go for a turnkey build or to contract everything separately...
First, here are my key data:
Plot size – 805 m2 (8,663 sq ft) available
Living area – 160 m2 (1,722 sq ft)
Roof – gable roof 22°
Floors – 2 full floors
Basement – fully cellar
Heating system – air heat exchanger
Heating – underfloor heating on ground and upper floors
Windows – plastic frames, triple-glazed
Bathroom – shower/bath/2 washbasins on upper floor
Toilet – WC/shower on ground floor, prepared connections in basement
Garage – double garage 9 x 5 m (30 x 16 ft)
Floor plan – simple, rectangular without slopes or offsets, symmetrical
Dormers – none
For the above building project, we have received a turnkey offer of €345,000.
I am now very uncertain whether I can actually save anything by contracting the entire build separately... I also know that the construction industry can be quite hectic, and one often a) waits ages for quotes, and b) has trouble finding anyone with availability.
I am skilled in crafts myself (trained carpenter) and also have many acquaintances in the construction industry (bricklayers, carpenters, electricians, etc.). Unfortunately, you still have to present figures to the bank... which in turn require reliable data... leaving aside the mental strain...
After extensive research and discussion, I have gathered many opinions and perspectives. The following comments from my friends and acquaintances have been on my mind day and night:
- Don’t contract the trades separately, you won’t save anything; in fact, it might even be more expensive. General contractors negotiate completely different prices than you can (structural engineer)
- Based on experience, contracting separately at this scale leads to additional costs of about €100,000. General contractors negotiate very different prices than you can (architect)
Since these statements come from very experienced people, I think there must be some truth to them...
What is your opinion?
Be brave and contract separately?
I just want to sleep well again... well, I guess I can forget about that for at least a year anyway.
Thanks for your advice!
D
DerBjoern10 Nov 2014 13:35I agree with Yvonne.
Besides, most issues are usually clarified BEFORE signing the contract. We have also settled additional costs resulting from later change requests directly with the tradespeople, just like you do with individual contracting...
I think you are making the mistake of always comparing this to the rather "lower-quality" general contractors (GCs).
And anyone who, as a layperson, manages individual contracting and supervises the work themselves is, in case of doubt, just as vulnerable as someone who builds with a GC without having their own technical expertise.
Besides, most issues are usually clarified BEFORE signing the contract. We have also settled additional costs resulting from later change requests directly with the tradespeople, just like you do with individual contracting...
I think you are making the mistake of always comparing this to the rather "lower-quality" general contractors (GCs).
And anyone who, as a layperson, manages individual contracting and supervises the work themselves is, in case of doubt, just as vulnerable as someone who builds with a GC without having their own technical expertise.
D
DerBjoern10 Nov 2014 13:39No klblb, what you are describing is building without your own building supervision.
D
DerBjoern10 Nov 2014 13:59The argument I keep reading that general contractors (GCs) excessively pressure their subcontractors on price is not true. Don’t architects do the same when they put projects out to tender? Architects who really tender everything to several contractors push prices just as much as a GC who sends out multiple requests. In reality, most architects (at least here) have their preferred subcontractors. The tender usually goes to the same one or two contractors. It’s no different with small general contractors.
klblb schrieb:
The response from @ypg is a clear example of how general contractors keep their clients busy: with, literally, "superficial matters." The issues that truly affect the durability and functionality of the house are handled quietly among themselves. I, however, prefer to discuss topics such as:
- Details of window lintels to avoid thermal bridging
- Thickness of the "black" insulation at the base of the house
- Precise installation of the underlay membrane on the rafters and how and where it interacts with the insulation. This decides whether your roof will last forever or rot away in 5 years.
- Installation technique of the roofing membrane (glued, nailed, welded, or a specific combination of all), type of roofing membrane, details of the plumber’s work in the roof area
- Ventilation of our 3° (5.2°) single-pitch roof (which is still incorrectly specified in the standards, but recent findings will eventually be incorporated)
I could write two more pages and still not be finished.
You have influence over all this during the construction phase or in preliminary discussions beforehand, and you can positively impact it if you work with a clever architect and choose individual contracts.
The general contractor just builds as usual, and the expert inspects afterwards. Many things cannot be changed then, or only through major disputes.I don’t believe that you or other homeowners really have deep discussions with the architect. Unless you are or they are in the construction industry themselves.
I think you confuse "asking questions" with "discussing." We certainly asked plenty of questions... but to the tradespeople. Yes, it’s true that we chose the general contractor to conveniently order from a catalog. Irony aside: we also researched how he builds before starting. But only to a certain extent, because we trusted him. It wouldn’t have been any different with the architect. And we didn’t question how or if thermal bridges occur. The architect doesn’t control that either, since the tradespeople build according to current technical standards, which is what we all hope for.
Your architect will ultimately have preferred construction methods. That means even an architect can steer you in a particular building direction during your discussions. And whether the tradespeople actually build exactly as planned in the contract or tender is also sometimes questionable.
But I don’t want to put down the architect—I just want to clarify that it depends on what you make of it and how you proceed. There are actually many similarities between general contractors and architects.
By the way, here it is the "superficial matters," as you say, that are praised in the discussion: "you can afford more in terms of finishes"—that’s how it goes. Most people aren’t interested in the waterproofing slurry (only afterwards, when it’s missing).
Regards, Yvonne
P.S. My general contractor charges about $47 for an outlet... our electrician (working for the GC) billed us directly about $20 (or $26?). I know others charge more, but you can clarify that upfront before signing.
At least, that was my experience with the contractors I spoke to.
Electricians, plumbers, and tilers have been working with our general contractor for many years.
With these jobs, they generally managed to maintain a basic workload, but without making any profit.
Since they were confident that most homeowners would not stick to the standard options, they made their profits from the upgrades.
This benefits the contractor, as they can save on sales and marketing costs, but in return, they become dangerously dependent on the general contractor.
And bear in mind, we were not in the low-cost segment.
For architects, the tendered contract must be profitable for the contractor. If the contractor does not submit cost-covering bids, they will not remain in business in the long term.
It may be that subcontractors receive more follow-up orders from a low-cost general contractor than from a high-end one, which would significantly affect the subcontractor’s cost calculations. This could explain the phenomenon of a "cheap standard house" combined with "high surcharges for additional services."
Electricians, plumbers, and tilers have been working with our general contractor for many years.
With these jobs, they generally managed to maintain a basic workload, but without making any profit.
Since they were confident that most homeowners would not stick to the standard options, they made their profits from the upgrades.
This benefits the contractor, as they can save on sales and marketing costs, but in return, they become dangerously dependent on the general contractor.
And bear in mind, we were not in the low-cost segment.
For architects, the tendered contract must be profitable for the contractor. If the contractor does not submit cost-covering bids, they will not remain in business in the long term.
It may be that subcontractors receive more follow-up orders from a low-cost general contractor than from a high-end one, which would significantly affect the subcontractor’s cost calculations. This could explain the phenomenon of a "cheap standard house" combined with "high surcharges for additional services."
@ypg
You don’t have to believe me, that’s just how it is. I’m not interested in convincing anyone here, nor do I want to be told by you how an architect supposedly works.
It’s simply a fact that when contracting services individually with an architect, you have much more influence than with any other approach (general contractor / construction manager / developer, etc.).
Your statement
shows that you have little understanding of an architect’s role.
An architect is definitely responsible for ensuring that thermal bridges, for example, do not occur. Only the architect has the overall perspective that individual trades cannot have. The architect defines how elements like rafters, insulation, windows, various vapor control layers, vapor barriers, and roof waterproofing are to be installed at critical points. The architect specifies what the trades must do and in which order.
And if you believe that tradespeople always build according to the current state of the art, you are very, very naive. There may be exceptions, but generally speaking, tradespeople are not examples when it comes to continuing education and knowledge of the latest technical rules, standards, and guidelines. However, they can be very convincing in making you believe they know what they’re doing.
You don’t have to believe me, that’s just how it is. I’m not interested in convincing anyone here, nor do I want to be told by you how an architect supposedly works.
It’s simply a fact that when contracting services individually with an architect, you have much more influence than with any other approach (general contractor / construction manager / developer, etc.).
Your statement
ypg schrieb:
And we have not questioned how and whether thermal bridges occur. The architect cannot control that, since the tradespeople build according to current technical standards, which we all hope for.
shows that you have little understanding of an architect’s role.
An architect is definitely responsible for ensuring that thermal bridges, for example, do not occur. Only the architect has the overall perspective that individual trades cannot have. The architect defines how elements like rafters, insulation, windows, various vapor control layers, vapor barriers, and roof waterproofing are to be installed at critical points. The architect specifies what the trades must do and in which order.
And if you believe that tradespeople always build according to the current state of the art, you are very, very naive. There may be exceptions, but generally speaking, tradespeople are not examples when it comes to continuing education and knowledge of the latest technical rules, standards, and guidelines. However, they can be very convincing in making you believe they know what they’re doing.
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