Your Thoughts on Construction Consulting Co.
#1
02-06-05, 07:24 PM
Your Thoughts on Construction Consulting Co.
I found this article interesting 
http://www.fredericksburg.com/News/F...242004/1502264
Hmm... You know those consulting firms that handle the entire builiding process. The idea being, "By being your own general contractor and cutting out the middleman (The Builder) you can build your home your way and keep the equity in your pocket instead of his."
All subcontractors work directly for the homeowner thus cutting out the “builder mark-up”...
Is this all a scheme or does it really save a home builder money??
http://www.fredericksburg.com/News/F...242004/1502264
Hmm... You know those consulting firms that handle the entire builiding process. The idea being, "By being your own general contractor and cutting out the middleman (The Builder) you can build your home your way and keep the equity in your pocket instead of his."
All subcontractors work directly for the homeowner thus cutting out the “builder mark-up”...
Is this all a scheme or does it really save a home builder money??
#2
02-08-05, 08:48 AM
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Dana1000,
What you read is a fact, in part. It is not a scheme but the truth is that you as the homeowner are still responsible for the overall construction, not them. True, you are saving money but the real question is, how much? In their article, they indicated 6% fee for Consulting of the construction estimate (company distributes the plans to its stable of subcontractors, obtains a building permit and prepares bank financing.) To put this another way, one doesn't know who is getting a "kick-back" or adding up-charges to something that should be lower in price.
The other 6% is for Supervision. The superintendent assigned to a project will set schedules, arrange county inspections, deal with the subcontractors and oversee construction.
This fees may seem fair but is it really? You are still going to be involved heavily with the process. In reality, not all General Contractors are the same. Some offer a fair and reasonble fee to the overall project. Others may not. What they charge over and above actual costs will vary based on company size and experience. This is a key factor as the base factors with any project is still the same price, material costs don't change but the mark up does.
What the article is suggesting is another avenue to take that appears at the surface to save you money.
I have my own opinion on this but since you asked for an opinion, here it is.
I see that their base fee is at 12% of the estimated project cost, as their example. However, if you enter into a "Cost-Plus" contract with a General Contractor, he may charge 15% to 20% above actual cost. The invoices could be shown to you for proof and you would know what is what throughout. Good designs for those to bid, good spec sheet, good estimating will determine the bottom line to within 10%. Now the difference is that the GC will be doing everything from the very beginning to the very end. The firm you mentioned is not that involved directly as one would hope leaving you to take up where they leave off. How much time can you really invest in this and is it worth the 5% to 8% difference, as an example?
In addition, and not knowing all the specifics, what about the insurances that should be carried while this project is underway? I am assuming that you as the General will have to acquire Builders Risk as well as other requirements to ensure that your assets are protected and insured. These costs would add up over and above the percentages mentioned above. The hiring of a GC would incorporate all these costs in they figures.
In summary, the more you learn about these companies, it will help in assessing which way to go that is to your advantage.
Hope this helps!
What you read is a fact, in part. It is not a scheme but the truth is that you as the homeowner are still responsible for the overall construction, not them. True, you are saving money but the real question is, how much? In their article, they indicated 6% fee for Consulting of the construction estimate (company distributes the plans to its stable of subcontractors, obtains a building permit and prepares bank financing.) To put this another way, one doesn't know who is getting a "kick-back" or adding up-charges to something that should be lower in price.
The other 6% is for Supervision. The superintendent assigned to a project will set schedules, arrange county inspections, deal with the subcontractors and oversee construction.
This fees may seem fair but is it really? You are still going to be involved heavily with the process. In reality, not all General Contractors are the same. Some offer a fair and reasonble fee to the overall project. Others may not. What they charge over and above actual costs will vary based on company size and experience. This is a key factor as the base factors with any project is still the same price, material costs don't change but the mark up does.
What the article is suggesting is another avenue to take that appears at the surface to save you money.
I have my own opinion on this but since you asked for an opinion, here it is.
I see that their base fee is at 12% of the estimated project cost, as their example. However, if you enter into a "Cost-Plus" contract with a General Contractor, he may charge 15% to 20% above actual cost. The invoices could be shown to you for proof and you would know what is what throughout. Good designs for those to bid, good spec sheet, good estimating will determine the bottom line to within 10%. Now the difference is that the GC will be doing everything from the very beginning to the very end. The firm you mentioned is not that involved directly as one would hope leaving you to take up where they leave off. How much time can you really invest in this and is it worth the 5% to 8% difference, as an example?
In addition, and not knowing all the specifics, what about the insurances that should be carried while this project is underway? I am assuming that you as the General will have to acquire Builders Risk as well as other requirements to ensure that your assets are protected and insured. These costs would add up over and above the percentages mentioned above. The hiring of a GC would incorporate all these costs in they figures.
In summary, the more you learn about these companies, it will help in assessing which way to go that is to your advantage.
Hope this helps!
#3
03-24-05, 11:23 PM
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Hate to be barer of bad news
Those services can be ok but there is a problem they may save you 50% over hiring a general contractor but you will be doing 75% or more of the work of the contractor. Their fee is not proportional to their share of the work you and them will do. What you may want to do is hire a retired master carpenter that was union. Carpenters are well rounded and their knowledge crosses over many fields of construction. A retired carpenter may have ran many job sites during his careerand have a through knowledge of all phases of construction and the permit process. I hired a guy he was 67 seemed to be in good health he was just bored mostly used to working all his life I found his knowledge to be most helpful he had many skills as well as management and supervisor skills to make jobs go smooth. I hired him to come in on mondays and wednesdays just basically inspect for quality control and schedule work for week. I needed him for his brain not his back I got him for $30 an hour it was a great investment much cheaper than a contractor. He was my consultant that's where money can be saved. Look around for a carpenter with experience. I live in king george we might be neighbors. 
#4
03-30-05, 06:38 PM
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Dana 1000,
The use of a contractor although more costly has its value. The contractor's profit is payment for risk. If everyone were able to build and there were never problems then there would be no risk and no profit. The contractor is responsible for all scheduling and managing of a project as well as all liability associated with construction and construction defects. It is expensive but you are paying for the expertise and knowledge.
As a superintendent of a very large construction company I was primarily a babysitter and a problem solver. It is the ability of super's and the subs to overcome problems as they arose. It is very rare that a house can be built with absolutely no call backs or repairs. This is why homes come with warranties to have a grace period to live in a home and work out the problems that went undetected.
If you are not from the construction industry and have absolutely no knowledge I would shy away from acting as your own contractor. If you are handy as opposed to construction savy you may have the house framed and closed-in to sheetrock. allowing yourselves to do the finish such as paint, trim, and flooring. You would place the majority of the liability for plumbing, wiring, insulation, windows, doors etc... on the contractor while assuming the liability for the cosmetic finish of the home. To svae money you have to be willing to do the bulk of the "shopping" for finish products and creating a detailed specifications list of products to use.
I hope this helps you in your decisions. Penny wise and dollar foolish is a hard way to come in on time and on budget.
brian garrison
general contractor/professional building designer
The use of a contractor although more costly has its value. The contractor's profit is payment for risk. If everyone were able to build and there were never problems then there would be no risk and no profit. The contractor is responsible for all scheduling and managing of a project as well as all liability associated with construction and construction defects. It is expensive but you are paying for the expertise and knowledge.
As a superintendent of a very large construction company I was primarily a babysitter and a problem solver. It is the ability of super's and the subs to overcome problems as they arose. It is very rare that a house can be built with absolutely no call backs or repairs. This is why homes come with warranties to have a grace period to live in a home and work out the problems that went undetected.
If you are not from the construction industry and have absolutely no knowledge I would shy away from acting as your own contractor. If you are handy as opposed to construction savy you may have the house framed and closed-in to sheetrock. allowing yourselves to do the finish such as paint, trim, and flooring. You would place the majority of the liability for plumbing, wiring, insulation, windows, doors etc... on the contractor while assuming the liability for the cosmetic finish of the home. To svae money you have to be willing to do the bulk of the "shopping" for finish products and creating a detailed specifications list of products to use.
I hope this helps you in your decisions. Penny wise and dollar foolish is a hard way to come in on time and on budget.
brian garrison
general contractor/professional building designer
