Save Money by Being Your Own General Contractor

My brother recently completed installing his master bathroom in his house. When I asked him what he learned in the process and what advice he would give to other homeowners who were considering tackling a similar project he immediately commented that one of the best ways to save money on such a job was to be your own general contractor. I wasn't quite sure what a general contractor did and he explained that the general contractor oversaw the overall project of home improvement, renovation or remodeling. An important part of the general contractor's job was to hire the necessary subcontractors, ensure the quality of the work, and keep everything moving along schedule.

In an earlier article I described some of the specific tips my brother gave about putting in a master bathroom. I talked about the importance of being flexible in the final color schemes and finishing, researching what kind of toilet to buy, doing your own tiling, etc. In this article I want to focus more on how exactly you can save money being your own general contractor, irregardless of the specific project. In a final article in this series I hope to give some more specific advice about how exactly one goes about being a successful general contractor for your own home improvement project.

First you need to understand how a general contractor makes his money.
When you hire a general contractor, as opposed to taking on this managerial job yourself, you are committing to paying him between 15 to 20% of the total cost of the project. That is, you can expect to add on 15 to 20% of your costs of materials and subcontractor labor to your final bill. Even if you do not lift a finger toward the home improvement project beyond simply managing and keeping the subcontractors on track, you will save this 15 to 20% fee. If you are doing a potentially expensive home improvement or home renovation project, this extra commission tends to add up very quickly.

Once you understand how a general contractor makes his money, you realize his priorities are different from your priorities in regards to the project.
Because the general contractor makes his money from the total cost of the project, if he wants to increase how much he makes on your job, he simply needs to gently steer you toward spending more money by purchasing more expensive trims or materials or appliances, installing more expensive specialty items, etc. It is NOT in his best interest to do a bare bones, frugal, highly efficient job, because if he does, he makes less money! That is not to say that all general contractors will act fraudulently or try to manipulate you into buying things that you don't really need or want, but by the very nature of their relationship with you, if they can get you to spend more money, they, not you benefit.

If you think that by hiring a general contractor you will be able to be completely hands-off, you are being naïve.
I would expect that many people hire a general contractor, in part, because they don't want to hassle with the work of managing the subcontractors or completely understanding the project. They want to hand off the project to their general contractor and let him deal with it. But the reality is if there is any sort of problem or something goes wrong in the construction/renovation process, my brother said that 9 times out of 10 the homeowner is going to have to deal with it anyway. The general contractor most likely will not take care of it for you. So if you expect a "turn-key" sort of relationship with your general contractor - you tell him what you want, then wait patiently for a few weeks for the promised product to be revealed -- you are being naïve. You are better off simply buckling down, getting some books to make sure you have a good understanding of what needs to be done with your home improvement project, hire the subcontractors and managing it yourself.

In my next article I hope to give some tips on how to be your own general contractor, now that I've given some good reasons why you should consider being your own general contractor for your home improvement or renovation project.

Source
Personal interview.