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Am I totally nuts to be my own GC?

Posted by SweetFish (My Page) on
Sun, Nov 11, 12 at 9:15

Am I completely nuts to consider acting as my own GC for building our new house? I dont have any construction experience but do have experience coordinating teams, planning, budgeting, negotiating and dealing with people...overall I would say I have a strong business sense. I fully understand that these skills do not qualify me to be a GC and thats why I would look to hire a GC to act in a consultative role. I would look for this individual to tell me which type of subs to hire, when to to schedule them and what they need to deliver, materials to purchase, assist with the permit and inspection processes, verify the subs are delivering on their commitments and verifying the quality of the work..basically Im paying him/her for their experience.

Long story short..I was going down he road of hiring a GC but started to get the feeling that the value added by a GC was not worth the price they were charging me. Dont get me wrong...I definitely understand the benefits of a GC but Im not sold on if those benefits are worth 20% to 30% of the overall project costs.

Here's what I expect:
* The project will prob take twice as long
* I will not be able to get the same price on subs as a full time, professional GC
* I will not be able to get the same price on materials as a full time, professional GC
* I will prob make mistakes that will eat in to my cost savings
* It will take up a lot of my time

The overall project is for a 3500 sq ft house in northern NJ. GC's in this area were bidding at $150 to $165 a sq ft. My guess is that I may be able to save somewhere in the range of $100k to $150k by acting as my own GC.

What do you guys/gals think?


Follow-Up Postings:

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RE: Am I totally nuts to be my own GC?

"...am I completely nuts...?"

Well you've listed your relevant experience, and your expectations. I'm not sure how you think you may save $110-$150K in light of experience and expectations, but if you are a gambler and an optimist, why not?

After all, what could go wrong?

Good luck on your project?


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RE: Am I totally nuts to be my own GC?

I think the savings usually would be more like 10% but it is certainly regional. Mistakes can eat a lot of that 10% pretty easily.


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RE: Am I totally nuts to be my own GC?

It will occupy half your time so unless you would have nothing else to do with that time you might actually lose money.


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RE: Am I totally nuts to be my own GC?

My analysis as one who is a GC: To pick a number from the range you mentioned, at $160k per foot let's say one of the bids is $560k.Unless there is a shortage of qualified GCs in your area the gross markup for a GC (to include overhead and profit) should be no more than about 20% of the "sticks & bricks" cost, or $90k. So the material and subcontractor labor cost is $470k. Of this $470k, some of the material is purchased directly by the GC (framing lumber and windows for instance)and it represents about 1/3 of this cost, or $160k. The rest is wrapped up in combined labor and material pricing from subcontractors (vinyl siding, electrical wiring, house plumbing, and drywall to name several) which amounts to $310k. Let's assume you are able to strike a deal with material suppliers and buy at about the same cost as a GC by offering payment terms that are very favorable to them. That likely won't happen with the subcontractors however. Around here (Midwest) they generally mark up pricing to owners 15%-20%. Let's use $50k of extra cost to you. So your savings by going it alone is about $90k-$50k or $40k; less what you pay the consultant.

One more thing about a builder consultant: I'd be very surprised if they turned over their subcontractor list for you to use. That vetted list of subcontractors is part of what you are paying a GC to provide. It represents the years of experience they have invested in the business. Finally, even the very best subcontractors need a lot of supervision for things to turn out right. Things will definitely go wrong without a strong day-to-day onsite presence by someone to direct and inspect the work.

Good Luck!


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RE: Am I totally nuts to be my own GC?

Make sure your calculations include the additional interest you'll pay on the building loan due to the project taking longer (while you are presumably paying to live elsewhere).


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RE: Am I totally nuts to be my own GC?

I seriously considered acting as my own GC with our current build. I'm highly organized, detail oriented and have a background in management so I figured I could handle it. Hubby put his foot firmly down and once we got started I was so very glad he did as there were several challenges from footing thru framing that needed expert guidance.


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RE: Am I totally nuts to be my own GC?

What GC costs 20-30%? In this economy?


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RE: Am I totally nuts to be my own GC?

I'd check first that the lender will advance you funds considering your complete lack of building experience. I had been renovating and running a rental portfolio of up to a dozen homes but was still required to hire a project manager for my first new build.

Doubling the build time and running up costs all along the way doesn't add up to much savings. The way I see it anyway.


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RE: Am I totally nuts to be my own GC?

Builders here in Texas are in the 10% range for contracting it out for you. I have a friend that is a builder in a couple counties over and he swears you just cant win as an owner builder. He said you will never get the same price as a builder would with the subs. He said you will pay 5-15% more. Then there is less accountability about showing up and completing their job on time. You may run into a hit and run sub that runs off with the money and never shows back up. Add on to not knowing code and general construction...you wont win.


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RE: Am I totally nuts to be my own GC?

Yes.


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RE: Am I totally nuts to be my own GC?

My area we are in the 20-30% range as well (other side of the country). SOOO wish we had TX or GA prices.


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RE: Am I totally nuts to be my own GC?

A key to a successful build is to have control of your trades. Trades don't answer well to homeowners. When something goes wrong, you can bet the trades will be pointing fingers your way. It's quite eye-opening to see all that can go wrong, the list never ends. I agree fully with 8mpg.

We paid around 10%, was well worth it. We priced a few things on our own and the GC did much better. He also afforded us time to deal with the hundreds of decisions required on any new build.


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RE: Am I totally nuts to be my own GC?

In my area 20% - 30% standard. I told builder 10% - he told me no way.

In Indianapolis area there are very few foundation companies - so we know what pricing is, even thou we can not get big builder discount. GC license is $50, you can join HBA/IBA. Question is if you have vetted list of contractors. In some cases you can get better pricing (dealing with individuals).

Dealing with a company prices are ripoff. HBA offers 10% rebates on GE, pella, moen, etc.

You need to get bids before you decide. Price could be as little as $38/sq ft or as high as $160/sq ft.

Pick a decent project, and estimate. Get trades prices.

Brian


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RE: Am I totally nuts to be my own GC?

20-30% is AMAZING and I apparently am in the wrong business. Combined with high costs of building in areas of the country, these guys need to build 2 houses a year and be setting quite well.


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RE: Am I totally nuts to be my own GC?

8mpg - I am with you on that one!

I think it's CRAZY pricing. Keep in mind I still have a doorman condo on Central Park. So I am used to high prices. But even with a gut reno of our bath and kitchen in 2009, 20-30% was a stretch. I think it was 15%. I have a friend who built in bridgehampton and think his costs was maybe 20%. But is is the HAMPTONS and one block from the beach at that!

Anyway...I guess it is what it is. I personally would have a hard time GCing. Although I have read books about it and a million videos I think it would be so stressful and tiring. Our GC has been INCREDIBLE. He is fast, prompt, attentive, communicates without me initiating it, does quality work...so he was worth the costs for me. All his trades seem to hustle as well since he throws a lot of business their way. His prices were very reasonable too. We are not done yet, but at this stage I am very happy with him. I know every builder is not that great, so take it with a grain of salt.

So to finally answer the question, Yes, I think GCing would be insane for me. Only you know if it is right for you. If you have that much free time and don't have a full time job or an extremely flexible one, do not have younger children, and have no other extracurricular activities to do, then it may be worth a shot. However, I think the time spent doing it, mistakes and trade issues will probably kill most of what you save. But others have done it successfully so I do not want completely knock it.

Have you thought about doing a reno of an older house. That might be easier to tackle?


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RE: Am I totally nuts to be my own GC?

If you do not have any construction experience, there is no way I would recommend GCing your own house.

With my work background, I have managed over 200 houses built and I am now on my third personal build as we speak. In today's market, building has really changed since I did my last house in 2008. Working with the banks and appraisals are a nightmare. The only reason I was able to get a loan to build and GC myself this time, was my work background and the fact this is my third personal build.

With no experience, you will not know what issues to look for. Every house has issues. Every. Single. One. You can hire the best of the best subs and pay top dollar, but there will be issues. The time and effort it takes to deal with these issue will be more than you can handle if you do not have any experience.

A few questions you need to answer before you even consider this:

1. Who will permit the house with the local Building dept?
2. Who will draw the plans, or are they ordered online?
3. Who will estimate ALL of the materials needed for the construction? ( if you think the online plans with estimates from frank betz, etc. will work, you are sadly mistaken)
4.Who will schedule delivery of all of these materials to the job site?
5. Who will coordinate with the bank for draws so that your subs can be paid in a timely manner?
6. Who will be responsible for any warranty work?

These are just a few of the questions that need to be considered. A lot construction practices will depend on your location. Hope this helps.


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RE: Am I totally nuts to be my own GC?

Cleanfreak's comments are cogent.

In addition, for a first-time project (and perhaps only) owner-builder:

--Why would the best subs be interested in your one-time project when there are projects available from repeat builders?
--Why would suppliers and vendors give you a good price?
--Why would any workers or suppliers give your project priority over those of repeat business general contractors?
--Why would anyone really care when you have a change or a problem?

Of course, a project by an owner-builder is the most important one in the world (to the owner-builder), but it's just a small frog in the pond to everyone else! It means higher prices and less commitment, in many cases.

But America was founded on a pioneer spirit and hopefully some of that still exists, sufficient to overcome every hardship and obstacle.

For me, I'd find a reliable and experienced builder I had confidence in and spend my time and money in a more reliable and enjoyable way.

Only a thought!


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RE: Am I totally nuts to be my own GC?

i would rather die than be my own GC. i don't have a lot of patience, however, or enough time to manage that kind of project.


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RE: Am I totally nuts to be my own GC?

I'm early in the process but also weighing whether I should GC our build. I have more construction experience and available time, however I still have not built a home before.

I've gotten quite a few bids and every sub is willing to recommend someone they know and like working with and then it is up to you to check multiple references to make sure you are comfortable working with them. I started with a few friends I know and trust (electrician and a former superintendent for a builder). I've gotten some of my better quotes this way. I think homes with more involved architectural features and higher end finishes will require a significantly greater amount of time and attention and if you are busy you will have to strike a balance as to how particular you are able to be with their work.

When I look at my numbers currently I feel like I'm getting a higher level of quality in my home with the bids I'm putting together compared to the homes I have walked through made by local builders at a similar cost. If I were to GC my own project and account for the value of my own time I don't think I would end up saving money, but I work on my own home and friend's during my free time and I enjoy it.

I am getting quotes for others to GC the whole project and taking it into consideration FWIW.


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RE: Am I totally nuts to be my own GC?

We are doing the GC on our house. We have extensive remodeling experience although this is not our business. We bought a farm years ago and finally decided to go for it. We have done several building projects with contractors
A house and a couple office buildings. With those we had some real issues and ended up having to do most of the heavy decision making that makes a project work smoothly.
From permits to tweeking plans to "no really this CAN work this way" we found that with these other projects all of the really important stuff we had to either do our selves or make it happen. Its not that I had issues with the other GC's (...ok some) It's just that the GC's kept coming to us with ok what do you want done about this... and some of the subs truly were lacking.
We started with getting the bids and permits tried to get a friend who is an architect but he was too busy. And honestly it was just too much of a hassle to hire someone else. Not to mention the bids were sky high. So were are doing it. From house design to site plan to permiting all of it.
Getting the subs to function in a timely manor is the most difficult thing- although this is a design as you go project so part is my fault.
We 've just had our inspections and should be drywalled by months end.
My DH and I can do everything ourselves from there, but will hire out a few things to get this finished before we're eighty!
Is doing this for everyone? NO. But for us it is the only way we could afford to get the house we wanted at the price we could live with. Its a farm with a barn build next and a couple outbuildings down the line. No way I would have been able to deal with a contractor thru this.
My husband runs his own business I work there part time but this build is my full time job and his part time job.
No question of any importance has come up that we have not been able to solve or would have had to have a GC figure out for us.
Plus were still having fun...but ask me again come Feb :)


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RE: Am I totally nuts to be my own GC?

Have you considered getting your house finished to a certain point and taking over from there? My builder is giving me a bricked in, metal roofed home. It will look finished from the outside. I have to take it from there....electrical, plumbing, AC, insulation, drywall, kitchen, interior trim, etc....


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RE: Am I totally nuts to be my own GC?

We became the GC on our new home when the builder declared bankruptcy. The house was sided, roofed and most of the plumbing and electrical was complete. We were supposed to move in within two months. That soon turned into another six months. With that came the expense of carrying the construction loan for almost another complete term. We are now closing on the mortgage.

The skill set you described is very much similar to mine. My job is demanding, I travel and there is a staff that expect me to answer questions for them and be their leader. By being the GC, I spent no less than 10 hours weekly on the job site and another 20 hours researching materials and products. I met with all the subs and selected each of them. We chose to not use the usual subs of the builder, this required more research that equates to time.

I left my office no less than 2 times a week. No one ever said anything to me, but I felt guilty and we have a very open work policy.

Would I choose to be the GC again? Simply no. It was too stressful, too demanding of my professional and personal time, and we did not save any money.

My post is not to sway you from being the GC, but to have a realistic picture of how demanding the role is. I wore very rose colored glasses in building this house. Everyone looks at the bottom line of the cost to build with little or no regard to time, let alone window treatments, area rugs, landscaping, and so on.


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RE: Am I totally nuts to be my own GC?

It�s not as hard as everyone making it seem I started out just like you but with a lot of research and checking sub work, I GC build my house sold it and built and sold 5 other, your foundation and framer sub are key to your build going good. You will save a lot of money on not paying for change orders and upgrades and it was not hard getting GC pricing.


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RE: Am I totally nuts to be my own GC?

You may have excellant ppl skills and you may even be a bean counter, but what do you know about the suttle problems that arise from building code issues?

Here is a simple question to ponder:

For slab construction, who determines the minimum finished elevation of the slab?
1. The Home owner
2. The GC
3. The Foundation contractor
4. The Plumber
5. The Framer
6. The Electrician


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RE: Am I totally nuts to be my own GC?

If you are up for it, I would say go for it. I can say from our build we moved into recently that our builder is still having a hard time getting subs to come back out correct some of their mistakes. If the subs are making the builder wait and working on "their own timeframe" what incentive would they have to listen to littel ole' me!

just my .02 cents FWIW!

I want pictures which ever way you decided :)

Good luck!


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RE: Am I totally nuts to be my own GC?

I don't think you are nuts at all. There is no way to know what problems will occur or be avoided by going that route. We are in month 17th of what our experienced and highly recommended GC estimated would be a 9 month job.

Yes some things changed along the way but most were not major. We had to have trees taken down and it turned out the wood was excellent so our paneling and floors will be solid wood that had to be rough milled, dried, and finish milled. That was it for major changes. Contractors, chosen by the GC, were mostly excellent (some problems with insulation folks created problems that have been corrected). Our costs are going to end up well over 20% higher than estimate and we are still several months from finished because GC began another job last June. So work is excellent, rising expenses keep us awake at night, and we don't have a home to use after all this time.

We are considering taking over as GCs, which the bank would allow, but we are building from a distance, except for a few months each summer. If the house is not finished for the summer then we will do that. We still have some small hope that it will be. Although we have no plans to use this knowledge, we have learned that building a unique home should not be undertaken lightly.

Compared to others we seem to be getting off relatively lightly. We have friends who have taken over as GCs after walls were put in 2 feet from where they were in the plans, among other problems.

Best wishes with your project.


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RE: Am I totally nuts to be my own GC?

Here is a simple question to ponder:

For slab construction, who determines the minimum finished elevation of the slab?
1. The Home owner
2. The GC
3. The Foundation contractor
4. The Plumber
5. The Framer
6. The Electrician


This is a great question and I will try to explain just how difficult the answer would be.

The first thing to look at is the Flood zone. If you are in flood zone "X" there will be no minimum floor height required. If you are in Flood zone "a" or another, there will be a minimum floor height required. This will require the extra expense of an engineer to provide a flood letter stating the height and a surveyor to verify you are indeed at the correct height when you finish your floor.

Now the tricky part is working with the health dept. If you will need a septic tank, the health dept will determine the size of the tank and drain-field needed to accommodate the size house you want to build. It is very possible that if you live in a low lying area such as Florida, you will need a "mound" system. If this is true, then your required height stated on the engineers flood letter is only a starting point and to get the flow needed by the plumber, it may need to be even higher.

Like I said, there are a lot of these types of issues that may need to be resolved. Without the knowledge you will become very, very frustrated.

Oh yeah, good luck in getting the appraiser to add in all these extras if needed. Especially if the 3 most recent sales did not have any of these issues.

Good luck. :)


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RE: Am I totally nuts to be my own GC?

In all cases the plumber will first establish the minimum elevation for the slab.

Long before groundbreaking ever occurs we have to apply for the house sewer permits. If we are building on a lot with a septic tank we generally have a lot of lattitude, but if we are connecting to a municipal sewer, when we get the permit the municipal sewer provider will indicate the exact location where they will put the sewer tap. We then have to go to the property and shoot the grade from the sewer tap to the furthest watercloset in the structure and determine the length of run, required pitch and the resultant drop plus 1 foot for the closet bend under the WC. The resultant height of the top of the closet bend is then the minimum height of the slab.

I saw lots of situations in the sunbelt where the structure was on the upstream end of the municipal sewer, where the sewer line was relatively shallow and they proposed a long setback from the street to the house when we computed the house sewer pitch it worked out higher than the proposed slab elevation. In that situation we simply went to the GC and told him we either needed the slab x number of inches higher or move the whole house x number of feet closer to the road. A trained GC just takes that in stride and goes to the foundation contractor and says we are gonna need another layer or two of block on the footer wall.

On the other hand, I have worked jobs where the homeowner was acting in the capacity of GC, and when we told them they need to raise the slab it turned into an hour or two discussion while we tried to explain why, followed by three or four days delay while the homeowner went home and posted on a forum to find out if we were right.

Believe me, the biggest reason why homeowners who want to act as GC have difficulty finding subs is because most reputable subs simply don't have the time to stand around the job and try to educate you before they can get a simple answer that a competant GC could provide instantly.

Before I retired I had a firm policy. If a homeowner wanted to discuss having me do the plumbing for them I would simply say, yes, have your GC get in touch with me. NO GC- no deal.


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RE: Am I totally nuts to be my own GC?

About 15 years ago, my then neighbour asked for a quote on a new 4000 sf home on his lot. He later told me my quote was virtually the same as the other bids he had gotten. But he decided to save the gc fees and do it himself. Both he and his wife were teachers, so it wouldn't be a big deal.

A year and a half later, after I had moved away, I bumped into both of them shopping at a store looking years older, haggard and worn. Yep, they had finally finished. "But," said the husband, "I don't see how you guys do it all the time. It was way more work than we ever expected."

Reminds me of an ex-building partner who said, after every excavation he felt like he was digging his own grave. Eventually, he went back to his less demanding career as an elementary school principal.


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