General Contractor fees
 

I am receiving bids from general contractors for a custom home I am building in the Sacramento, CA area and have a question.

In addition to profit and overhead, is it common for general contractors to add a fee percentage to the bids that the sub-contractors submit for the project. If so, what would be a typical amount?

Thank you for any and all replies.

Yes I think it's normal for a G.C. to mark up all costs associated to a particular project 20-30%, along with all change orders.:rolleyes:

i my area, the bids i got from GC were priced per square foot. ie: $75.00 to $110.00 per square foot for our house. of course we all know the difference could be in the materials which could make a big difference in price. one might use top end and the other the cheapest stuff on the market and the house falls apart in a few years.....so you would have to read the specs and brand names of mechanicals and lumber types and confirm during install what is being used. also, if the GC costs end up higher than his bid, he would eat the cost, but if he comes in lower he may pocket the difference (most likely). i have heard of some honest GC giving the homeowner the difference back.

Why? Are you looking to GC the job yourself or just avoid the GC mark-up?
This is how a GC makes his living. He marks up the subs bids, usually around 10%. In return he makes sure the subs are arranged and lined up so the work can progress without the subs stepping on each other. He also arranges permits and some inspections. It is pretty rare for GC's to actually do any work with tools. Unless of course they are also the carpenters which is pretty common.


In my area you would be lucky to build a "custom" home for less than $125-$150 sq/ft. $200-$225 is not nearly unheard of.
$100 or under is a bare bones, code minimum small house.

One of my friends who is a custom home builder charges cost + 15% and homeowner sees all invoices. This way if the homeowner makes changes it does not have a negative effect the GCs bottom line.

Did you ever find a GC for a good price? I live in the Sacramento, CA area too and am looking for a GC right now too. Were the 75-150 consistent with all bids? Any help helps! Thanks.

Dependent on the size and scope of the project, a 20% administrative & management charge is standard, but may be more.
Example - there may be aspects of the work to be done by a subcontractor that require direct supervision, or more time spent on oversight, than other subcontracted work. Procurement and delivery of the materials for a specific sub, may require more time, labor, & fuel use, on top of the 20%.
Some GC's who do custom builds, or higher end work, may add more than 20%, because they are in demand, and Clients want "them".

What can a good GC offer?
 

The fact is anyone can GC a project themselves, but experienced GC's have already learned expensive lessons and also have a team of contractors who they trust to build the project properly.

There are plenty of contractors out there who have been in the business for years, yet their work is still below par. Good GC's also provide exceptional warranties in addition to a fast turn around.

ADVERTISING LINKS/SPAM REMOVED

Yes it is typical for the GC to mark up subs bids as well as materials. Most GC's work on a profit margin of 10% to 15%. In addition to this you may also expect to pay construction management fees. Usually projects like yours are done on a fixed cost turnkey basis. In this type of contract the GC assumes quite a bit of risk. Proffit margin is directly affected by the risk involved in the project, that said, the GC may add a higher proffit percentage if that is the type of contract agreement you are engaging in.

I do not recommend you GC a build yourself unless you are well educated in all aspects of the construction process. I have seen people get in way over their heads and pay out a lot of more money then they otherwise would doing so. If you do decide to GC the build yourself I would recomend you hire a GC or home inspector on a consulting basis to guide you in the areas you are unfamiliar with. If you have hired an architect they will sometimes manage the build for an additonal fee.

If you do choose to have a GC run the entire build it is still a good idea to hire another GC or home inspector to check things out on your behalf. Most reputable builders won't have any issues with this as long as visits to the sight are scheduled appropriately and due not interfeer with the general scheduling or GC's insurance regulations.

Well stated! :yes:

How do I get a good deal from my contractor?
 

We are doing a big renovation of 2000 sq ft. that we expect to pay 250-300K or so to complete. No new kitchen, but a new master bath and 1 1/2 other baths plus bedrooms etc. Given the economy in 2011, I would hope that we could get a good deal, but I am not sure we are. We got 3 GC bids and they all want 18% or slightly more. Isn't that a pre-economic crash percentage? What is the best way to construct a counter offer so that we get a high quality job for the best price? Seems to me that the way these contracts are written, the owner is at the mercy of the GC.:eek:

How do I get a good deal from my contractor?
The nation's economy takes a nose dive and now you want a contractor to clip his operating costs so that YOU can save some money? What is it that entitles YOU to those savings, if there were any? Costs are costs, time is time, prices are up for everyone everywhere. You want to live in a $300K home but you want your contractor to live in a trailer park?

General contracting requires many skills that you don't have or you wouldn't be entertaining bids from generals. What kind of work do you do? How about YOU take a 10% reduction in YOUR wages?

This economic downturn isn't on the backs of the general contractors it is on the backs of the major banks and the government that allowed it to happen.:)

:laughing::laughing::laughing::laughing:

I'm just curious - have you used this phrase while speaking with any GC's yet?