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How does your GC get paid?

Posted by Thewitchdoctor (My Page) on
Fri, Feb 28, 14 at 16:47

I'm wondering how everyone is paying their GC. I'm sure there are different ways to go about it. I wasn't home when my husband talked to the GC at the beginning and come to find out my husband said he will pay himself a percentage of material cost. Ths makes very little sense to me. Won't GC always be encouraging us to get higher priced stuff? There would be little motivation to help defray costs. We will be supplying some of our own beams and barn wood etc... So that's not going to work with that stuff either.
Any ideas or suggestions are appreciated. We don't have a "contract". This is a small town and the GC knows my husband very well. I'm going to suggest we put something in writing but I want options on how to suggest we pay him that benefits all of us. - With all due respect, no need to comment on the lack of written contract. We are very savvy people but things are a little different around here and we will be putting it in writing now!:)

This post was edited by Thewitchdoctor on Fri, Feb 28, 14 at 16:54

Follow-Up Postings:

RE: How does your GC get paid?

Just make sure you know what you want to spend on different materials and don't let him upsell you. Our GC is paid a flat fee but I believe it was calculated based on some percentage of the job total that we laid out in the contract. We have a fixed price build so there is no real opportunity to upsell.

RE: How does your GC get paid?

Our builder agreed to no allowance related fees. So if we choose pricier materials we don't pay their GC fee on top of that. Just the extra cost for the actual materials. We had asked for plenty of upgrades in the contract price itself, so I'm sure they got their fees in then. I don't mind, they are doing us a great service. So far I can't believe how this has all been like clock-work. Rough in had all the areas working together at once, then as soon as they were done the insulating started. The day the insulation was done, the drywall started. They've got it all lined up right in a row.

RE: How does your GC get paid?

We are doing time and materials plus his % markup on most, but not everything. You might think that would mean the GC had no motivation to help us manage costs, but that has not been the case. He's mindful of our budget because he wants us to be able to finish the house and to be happy! It really depends on the person (and we are also in a small community.)

Another benefit of having things in writing is just to get you on the same page-- the value can be from the discussion that gets you there as much as the final document. We actually got through foundation and started framing before our contract was finished-- (I know, appalling to many.) Our GC has also helped us out by having us pay some of the subs and materials directly, which means he does not mark them up. In some cases (cabinets), he did not have to spend his time dealing with them, but in others (foundation), he did. We have offered him flexibility in timing in exchange. (A later start than we'd originally planned, a month off in the middle for another project, and no hard move-in date because we aren't moving in for a few years.)

There are a lot of ways to do things. People can have great contracts and crummy contractors. Good luck with your project!

RE: How does your GC get paid?

You are apparently using a Cost of the Work plus a Fixed Fee contract. The Fixed Fee in this case is a fixed % of the cost of the Work. The cost of the work will include materials and subcontractors as well as the cost of his own forces and for himself he he actually works on the project in addition to supervising it.

When you supply materials the GC does not get paid a small amount of his Fee so just how much of that will happen should be discussed before the contract is signed. He would still get paid the cost of the labor to install it plus the markup on that cost.

RE: How does your GC get paid?

Oops!!! Wrong thread!!

This post was edited by robynstamps on Wed, Mar 5, 14 at 20:03

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