11 Oct Being Your Own Contractor: Pros and Cons
The presumed ease and savings aren’t guaranteed
You’ve heard that you will save thousands of dollars by being your own contractor in a building project. The unfortunate reality is those claims stretch the truth a bit. Buildingadvisor.com has revealed the reality of it all in great detail. They admit that there are success stories – and just as many nightmares. They explain why it is absolutely necessary to have a complete understanding of what is needed to succeed in such an endeavor and help you recognize the reality of the “savings” you’ll incur. It’s all to help you make the ultimate decision – is it worth it?
The idea that being your own contractor is wildly profitable is exaggerated. The belief that ‘anyone can do it’ is an even greater overstatement. It’s usually the result of years of experience that is responsible when a job goes smoothly. A wealth of knowledge keeps the costs down and provides higher quality work. A contractor understands their responsibility and works hard to satisfy all expectations – they are motivated to prevent any potential “callbacks”.
Professionals in the field have a network that allows them to avoid additional costs through relationships with suppliers and subs (sub-contractors). They have an established rapport with their crew that ensures that they’re all on the same page. The idea of doing it all yourself cold, getting a set of plans and hiring a bunch of subs and expecting the job to go well is naïve at best. But you may have some experience and good communication skills that you can take advantage of. If you can effectively manage and plan a building project and are lucky enough to avoid any pitfalls, you would be counting your savings, of course. On the highest end you could look at just under 20% (though 15% is more realistic). Obviously that’s big money on a $200,000 job, but on a much smaller project, not so much.
The majority of a contractors work is in the planning, more so than even time spent on the job site. This includes a great deal of troubleshooting. Also, estimating costs, locking in quotes, obtaining permits, hiring, scheduling, managing – the responsibilities of a contractor are vast. He is the one called and held responsible when something goes wrong. If someone takes it all on with a lack of experience, they’re likely to run into problems. They’re not always issues that are typically expected – anything can happen out there and usually does, from the inconsequential to the serious. When mistakes occur that need to be fixed, the costs go up.
If you undertake the responsibility yourself, try to hire people whose background fills the gaps of your own knowledge/experience. Pay them what they’re worth and it should be a rewarding collaboration. If everything goes right, you could save the aforementioned 15 – 20% over hiring someone else to do it. Also, having full control may further allow you to get exactly what you want and expect. If you are inexperienced, you can easily compensate for the lack of know-how by hiring subcontractors that are also good and proven. Plus, you can’t underestimate the satisfaction and pride of knowing that you successfully oversaw the whole thing.
On the other hand, the outcome isn’t always ideal. The savings can be less than expected due to unforeseen circumstances. To begin with, just getting the loan is more difficult going it on your own. You may not be prepared for the amount of time and energy you’ll need to invest, nor the stress incurred. A lack of experience will also lead to problems that can cause the overall quality to be adversely affected. Don’t take it on without the understanding and acceptance of the fact that you will absorb all risk for going over budget and causing any construction flaws.
If you’ve established yourself successfully in business there’s a good chance that prosperity will translate positively to this situation. Give yourself plenty of time to prepare by getting permits, estimates, scheduling, contracts, and insurance sorted and taken care of early. The planning stages are the most important. You’ll need to refine the plans and specs, select the materials, create a budget, etc… if you’ve done these things previously you’ll know better what to expect.
You may just opt to hire a construction manager to supervise the subs. He can handle as much as you want to delegate, really, but the more you do yourself, the less you’ll have to pay others. Lastly, if at all possible, try managing some smaller projects before taking on a big one. Maybe you can remodel your home. The experience is invaluable and excellent primer for the more ambitious jobs.
There is a vast array of other methods of saving on your building project, we recommend checking out the full essay by buildingadvisor.com here for all of the info that can potentially make your construction endeavor an economic success!