Business, Legal & Accounting Glossary
A general contractor is a group or individual that contracts with another organization or individual (the owner) for the construction, renovation or demolition of a building, road or other structure.
A general contractor is defined as such if it is the signatory as the builder of the prime construction contract for the project.
A general contractor is responsible for the means and methods to be used in the construction execution of the project in accordance with the contract documents. Said contract documents usually include the contract agreement including a budget, the general and special conditions and the plans and specification of the project that are prepared by a design professional such as an architect.
A general contractor usually is responsible for the supplying of all material, labour, equipment, (engineering vehicles and tools) and services necessary for the construction of the project. To do this it is common for the general contractor to subcontract part of the work to other persons and companies that specialize in these types of work. These are called subcontractors.
General contractors conducting work for government agencies are typically referred to as prime contractors. The responsibilities of a prime contractor working under a contract are essentially identical to those outlined above. In many cases, prime contractors will delegate portions of the contract work to subcontractors.
In the United Kingdom and certain former British Commonwealth countries the term ‘general contractor’ was gradually superseded by ‘main contractor’ during the early twentieth century. This followed the practice of major professional, trade and consumer organisations issuing standard forms of contract for undertaking the variety of construction works spanning the whole spectrum of the industry. It was and is usual for the term main contractor to be used and defined in all these contract documents, and as a result, the term general contractor became an anachronism.
Most contractors are required to be licensed in each state and may be required to take an oral and written exam. To check for contractor license requirements, you may contact the National Association of State Contractor Licensing Agencies (NASCLA) Association
Contractors are defined in the law by each state and are usually considered those who contract, bid, negotiate a price or offers to construct, supervise, oversee, schedule, direct, alter, repair, install, improve, move, demolish, furnish labour, etc. In addition, there are various types: building (residential and commercial), electrical, plumbing, mechanical, highway, environmental remediation).
Occasionally the entity commissioning the construction of the building chooses to act as the general contractor. In such cases, they work directly with the subcontractors and take care of the administration and organization of the various subcontractors.
Under these conditions, the owner takes on all liability for the proper sequencing of the work and dealing with the realities of construction.
Owners considering this approach should keep in mind that general contractors make a living working with known subcontractors. An established General Contractor will have established relationships that will outlast one construction project, and the subcontractors will acknowledge this with their cooperation. Owners seldom have this advantage, and most subcontractors will recognize the risk of working with a one time client with higher bids.
An owner or real estate developer would develop a program of their needs and select a site (often with an architect). The Architect assembles a design team of consulting engineers and other experts to design the building and specify the building systems to meet those needs.
Today contractors frequently participate in the design team effort by providing pre-design services where they will help in providing a more accurate estimation of budget and scheduling during design to improve the overall economy of the project. Otherwise, the general contractor is hired just to build the building(s) at the close of the design phase.
The owner, architect and general contractor work closely together to meet deadlines and budget. The general contractor then works with subcontractors to ensure quality standards in addition to timeline and budget. Often there will be disagreements between the contractor and the architect over style vs. function. These arguments may lead to lawsuits which most times can prolong or even stop a project.
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This glossary post was last updated: 5th May, 2020 | 7 Views.