Expectations from a GC

7 Replies

Hi,
Can you all tell me what the normal procedures are when you work with a GC?
1) Do you pay something like 1/3 up front, 1/3 half way through and 1/3 when project is finished?
2) Do you get in writing a list of everything your GC said they would do for a certain price?
3) If your GC goes over the bid and asks for more money to complete a flip job, how do you handle?
4) Do GC's clean up the items to throw away when done?
5) When a kitchen needs new appliances, does most GC's include replacing those in their bid?
6) Are things like ceiling fans, lights, etc being replaced usually included in a bid price?
7) Any reprieve when the GC takes more than 2 times as long as said they would?
8) Does a GC make about 10% above their costs usually? In Oklahoma, for starters?
9) When a GC does a bid and didn't mention details about the outside of the home (i.e.- paint), is it assumed they don't touch the outside work?
10) Does a GC's bid include yard work normally or not?
Appreciate any and all input!
Thanks!

1) Do you pay something like 1/3 up front, 1/3 half way through and 1/3 when project is finished? 

    No,  we spell out in the agreement the pay structure.  We start with 25% down for our work.


2) Do you get in writing a list of everything your GC said they would do for a certain price? 

    Yes and No,  the GC doesn't always include everything in their quote, some are laughable how little they put in writing.  We write our own bid with a complete list of the work we expect and then make them sign it.  We use our own contract/bid sheet.

3) If your GC goes over the bid and asks for more money to complete a flip job, how do you handle? 

We make them show what they need more money for and why.  If it's legitimate we will come to an agreement for a fair price.  Let's face it, in this business not everything can be seen and it's not always their fault.   If they can't explain the need, the answer is NO.


4) Do GC's clean up the items to throw away when done? 

Yes to a degree, they pick up but generally don't do what I would call a final ready clean.   We do that ourselves.


5) When a kitchen needs new appliances, does most GC's include replacing those in their bid? 

We don't have GC handle appliances.  We can generally get that done ourselves for less.


6) Are things like ceiling fans, lights, etc being replaced usually included in a bid price? 

We include it in our revised bid if we want it.  The more you document the better, no questions from either side.  Another reason we write our own sheet.


7) Any reprieve when the GC takes more than 2 times as long as said they would? 

It shouldn't get to that point.  You should spot that long before it gets to that point.  Communication is key here, if they aren't meeting your expectations, let them know and talk it through.   If they still can't meet your expectations, get rid of them.  


8) Does a GC make about 10% above their costs usually? In Oklahoma, for starters?   

Sounds like you are referring to overhead and profit, those are usually 10% for each on remodel jobs.  We don't pay it out that way.  We lump it into our bid as a total amount.  It's in there still, it's just a matter of how you want the quote.


9) When a GC does a bid and didn't mention details about the outside of the home (i.e.- paint), is it assumed they don't

Not on ours, we spell out everything they are expected to do.

That's what we do, when we hire a GC.  But, with that said we rarely hire a true GC.   We are generally hiring subs and handling the GC part ourself.   When we do hire a GC, we have found  the above eliminates a lot of the problems you will run into.   Don't assume anything and communicate and things will usually go smoother.   

First sign of trouble, you should be having a sit down and set your expectations.  If they still aren't meeting them, don't prolong it.  Fire them and move on, it never gets better all of a sudden, so move on.

This is how we handle it.  Probably not a perfect method, in fact I know it isn't or I wouldn't have trouble with construction people on a weekly basis, but at least it's usually other problems like shoddy work or not showing up when they say they will.

@Kim Knaust @Ron Daugherty has it on the nose! The scope of work should be defined by you (or your architect/ designer) and the overhead and profit can be negotiated (mind you will get shoddy work if you negotiate down too much). The schedule terms (as in the project taking twice as long as agreed upon) can be given penalties in the construction contract (talk to your lawyer). The standard AIA contract allows us to use monetary penalties, i.e. $5,000 a week (spelled out and agreed upon by both parties lawyers in negotiation). This will protect you from job overruns that have no basis on original scope of work tasks (mind that if you change the scope of work there is a change in the schedule associated with that). All change orders, in both design and construction, are changes to the original contract, and are fully negotiable.

This probably repeats the other posters, but here is my take:

1) Do you pay something like 1/3 up front, 1/3 half way through and 1/3 when project is finished?

This is negotiated with the GC up front. I like to pay (I don't use a GC only subs) weekly if possible.

2) Do you get in writing a list of everything your GC said they would do for a certain price?

You create a scope of work sheet that the GC bids on. This needs to be specific to exactly what you want done through the entire house/project.

3) If your GC goes over the bid and asks for more money to complete a flip job, how do you handle?

The GC needs to reach out to you when they catch something that is not covered in the bid. If it is unforeseen and needs to be done, agree to a price/schedule to complete it. 

4) Do GC's clean up the items to throw away when done?

This depends on what your scope of work and then contract states. I would always include daily cleaning and subsequent removal of debris/trash.

5) When a kitchen needs new appliances, does most GC's include replacing those in their bid?

If you want them part of the bid, they would be on the scope of work sheet. 

6) Are things like ceiling fans, lights, etc being replaced usually included in a bid price?

If you want them part of the bid, they would be on the scope of work sheet.

7) Any reprieve when the GC takes more than 2 times as long as said they would?

There is a thing called "liquidated damages" that can be included in the contract. With that said, it I not a guarantee that if they go past schedule you can actually enforce and get those LDs back.

8) Does a GC make about 10% above their costs usually? In Oklahoma, for starters?

I have no idea what the typical profit is for a GC. 

9) When a GC does a bid and didn't mention details about the outside of the home (i.e.- paint), is it assumed they don't touch the outside work?

     If you exterior work part of the bid, it would be on the scope of work sheet.

10) Does a GC's bid include yard work normally or not?

To repeat myself again, if you want it covered, it needs to be part of the scope of work sheet.

Thanks all for your input. One other thing, do you see the breakdown of what each item costs or just a total amount?
i.e.- kitchen cabinets, $2,500; bathroom remodel, $5,000; carpet, $1,200; paint entire inside of house, etc...

Hello Kim,
Having a breakdown of what things cost and the price they are charging for labor is one of my lessons learned. I am flipping my first house now. I got an invoice for just a total amount. I went back to my general contractor and told him that I wanted a breakdown of all costs. And honestly, he did not blink an eye. He just said OK. To me I think it is important to get a breakdown. At least at the beginning of our real estate career’s. I do not have a warm fuzzy on what things should or should not cost. Or what labor should or should not cost. Until I have a good feel of that, I am going to ask for a breakdown. Even then i will probably continue to ask for a breakout. I can’t keep track of trends or spending if I do not have the data.

Originally posted by @Kim Knaust :

Hi,
Can you all tell me what the normal procedures are when you work with a GC?
1) Do you pay something like 1/3 up front, 1/3 half way through and 1/3 when project is finished?
2) Do you get in writing a list of everything your GC said they would do for a certain price?
3) If your GC goes over the bid and asks for more money to complete a flip job, how do you handle?
4) Do GC's clean up the items to throw away when done?
5) When a kitchen needs new appliances, does most GC's include replacing those in their bid?
6) Are things like ceiling fans, lights, etc being replaced usually included in a bid price?
7) Any reprieve when the GC takes more than 2 times as long as said they would?
8) Does a GC make about 10% above their costs usually? In Oklahoma, for starters?
9) When a GC does a bid and didn't mention details about the outside of the home (i.e.- paint), is it assumed they don't touch the outside work?
10) Does a GC's bid include yard work normally or not?
Appreciate any and all input!
Thanks!

 The more detailed your SOW (scope of work) is, the better it is for you as a client. Everyone's expectations are a little different.

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