Who Is Your General Contractor, Really?

William Reid (: 00:00

All right, welcome back everybody. If you've been following along with the recent episodes, we just finished a two episode series on the main paths you have for hiring your construction team. Episode 42 was the guided path, a design build business model. And episode 43 was the self guided path, which is the more traditional model where you coordinate your architect and your general contractor separately.

If you haven't caught those yet, absolutely go back and give them a listen. They're going to be very helpful context for everything we're going to be building forward. But here's what I realized we needed to do before we go any further, before you decide how to hire your team, you really need to understand who you're hiring and the most central professional in your entire construction project.

person who's responsible for turning your plans into an actual physical home is your general contractor, your GC, your builder. So today I want to pull back the curtain on who these people are, what they actually do on a day to day basis. And this is the part I think is going to get really stick with you. Why the type of general contractor matters as much as the general contractor themselves. So by the end of this episode,

going to know what to look for, what to ask, and how to evaluate a contractor before ever signing anything. Let's get into it.

So let's start at the very beginning. You've heard the word contractor your whole life. Maybe a friend said, Hey, my contractor is coming over to look at the kitchen or you watch someone on HGTV, hand a clipboard to a guy in a tool belt. But what does contractor actually mean? Because it's not one thing. It's, it's kind of a world. here's how I want you to think about it. The word contractor is an umbrella term.

And under that umbrella, there are exactly two types of people. Two, in understanding the difference between them is step one in becoming an awakened homeowner. Type one is the general contractor and type two is the subcontractor. That's it. Two categories, two very different roles. Both types are licensed professionals. Both are skilled. Both need to carry insurance,

but their roles are completely different. Now, when your friend says, my contractor is coming over, they're almost certainly meaning their general contractor. But here's the thing that most homeowners never realize. The general contractor's job is partly to assemble a whole team of other contractors, the subcontractors to actually do the specialized work. So the team that shows up to build your house, they're all contractors.

but only one of them is your GC. A general contractor, your GC, your builder is the person or company that holds the state license and takes on legal accountability for your entire project. They orchestrate everything. And I want you to catch that word orchestrate. Your GC is the conductor of the orchestra.

Now, GCs come in all shapes and sizes. You can have a solo contractor who does everything themselves, all the way up to a large company with multiple employees, project managers, and even in-house design team.

But most common home and remodel GCs, the ones you're most likely to work with are small to mid-sized businesses.

They typically handle the carpentry with their own employees, such as the framing of your home structure, the windows and the doors and the finished carpentry. And then they bring in the subcontractors for the specialized trades like plumbing and electrical, mechanical, roofing and tile and many more. Here's a line I want you to write down. A GC who claims to do absolutely everything themselves is actually kind of a yellow flag.

You know the old cliche, jack of all trades, master of none? That applies here. And the best builders know what they're great at, and they build a team of specialists around them to fill in the rest. So that's the lay of the land. Two GCs, two types, GC and sub. Your GC is your licensed accountable orchestrator. Now let's talk about what they actually do.

All right, welcome back everybody. If you've been following along with the recent episodes, we just finished a two episode series on the main paths you have for hiring your construction team. Episode 42 was the guided path, a design build business model. And episode 43 was the self guided path, which is the more traditional model where you coordinate your architect and your general contractor separately.

If you haven't caught those yet, absolutely go back and give them a listen. They're going to be very helpful context for everything we're going to be building forward. But here's what I realized we needed to do before we go any further, before you decide how to hire your team, you really need to understand who you're hiring and the most central professional in your entire construction project.

person who's responsible for turning your plans into an actual physical home is your general contractor, your GC, your builder. So today I want to pull back the curtain on who these people are, what they actually do on a day to day basis. And this is the part I think is going to get really stick with you. Why the type of general contractor matters as much as the general contractor themselves. So by the end of this episode,

going to know what to look for, what to ask, and how to evaluate a contractor before ever signing anything. Let's get into it.

So let's start at the very beginning. You've heard the word contractor your whole life. Maybe a friend said, Hey, my contractor is coming over to look at the kitchen or you watch someone on HGTV, hand a clipboard to a guy in a tool belt. But what does contractor actually mean? Because it's not one thing. It's, it's kind of a world. here's how I want you to think about it. The word contractor is an umbrella term.

And under that umbrella, there are exactly two types of people. Two, in understanding the difference between them is step one in becoming an awakened homeowner. Type one is the general contractor and type two is the subcontractor. That's it. Two categories, two very different roles. Both types are licensed professionals. Both are skilled. Both need to carry insurance,

but their roles are completely different. Now, when your friend says, my contractor is coming over, they're almost certainly meaning their general contractor. But here's the thing that most homeowners never realize. The general contractor's job is partly to assemble a whole team of other contractors, the subcontractors to actually do the specialized work. So the team that shows up to build your house, they're all contractors.

but only one of them is your GC. A general contractor, your GC, your builder is the person or company that holds the state license and takes on legal accountability for your entire project. They orchestrate everything. And I want you to catch that word orchestrate. Your GC is the conductor of the orchestra.

Now, GCs come in all shapes and sizes. You can have a solo contractor who does everything themselves, all the way up to a large company with multiple employees, project managers, and even in-house design team.

But most common home and remodel GCs, the ones you're most likely to work with are small to mid-sized businesses.

They typically handle the carpentry with their own employees, such as the framing of your home structure, the windows and the doors and the finished carpentry. And then they bring in the subcontractors for the specialized trades like plumbing and electrical, mechanical, roofing and tile and many more. Here's a line I want you to write down. A GC who claims to do absolutely everything themselves is actually kind of a yellow flag.

You know the old cliche, jack of all trades, master of none? That applies here. And the best builders know what they're great at, and they build a team of specialists around them to fill in the rest. So that's the lay of the land. Two GCs, two types, GC and sub. Your GC is your licensed accountable orchestrator. Now let's talk about what they actually do.

William Reid (: 08:25

Okay, so now we know what a GC is in general terms, but I want to take a few minutes to really help you appreciate what's happening behind the scenes. Because when you understand the depth of what a quality GC brings to a project, two things happen. First, you'll never look at their fee the same way again.

And second, you'll know exactly what to look for when you're evaluating candidates.

And this is really crucial for all of you homeowners out there that are planning a project, considering being your own general contractor, thinking that you're going to avoid the general contractor fee, or sometimes people I hear calling them builder fee. These men and women of the construction industry earn every single penny of that. And without having somebody by your side

to orchestrate a project like this unless you have a lot of experience. This is one of the very early mistakes that a homeowner can make is trying to tackle a project on their own, maybe even acting as their own general contractor without the proper education and the experience. So let's start with something that I call the mental build. Here's something that genuinely blows most homeowners minds when I tell them before your GC gives you a price.

before a single shovel hits the ground, they build your entire project in their head. And I mean that literally. A skilled, experienced GC takes your plans and specifications, sits down with them, and walks through every single phase of construction mentally. They're asking, what materials do we need? Which trades are involved? Where are the potential problem areas? What am I not seeing that could bite us later?

And from that mental build, they assemble a materials list, identify the subcontractors they need, flag design issues before they become expensive construction issues, and translate all of that into a price. This visualization experience is genuinely remarkable. And it's also why your plans matter so much. And this is also another reason why it's so crucial.

to bring in a general contractor or home builder in during the design process, during the early schematic design process, for example, when everything has been conceptualized, especially in large scale remodels and renovations, a general contractor can see things that nobody else can, especially if they're standing in your home and you're visualizing this expanded home with higher ceilings and removing walls.

they can identify areas that should be addressed during the design process on the plans and specifications. So a GC can only price what they can see in the plans, but they can also participate in the development of the plans if you get it what I'm saying here. So if they don't, vague plans lead to vague prices, which lead to budget surprises mid construction.

The more thorough and accurate your plans are, the more accountable your contractor becomes and the more reliable your project costs will be. We've talked about this many times in previous episodes on the design process, but I want to underline it here because it directly connects to your GC. Now, once your GC has done that mental build, they've got to assemble the actual team that's going to execute the project. And that's where subcontractors come in.

Your GC's team is made up of specialized tradespeople

each focus on one specific aspect of construction, excavation, concrete, framing, roofing, plumbing, electrical, mechanical, that's your HVAC system, insulation, drywall, tile, flooring, painting, landscaping. On a custom build, you might have anywhere from 12 to 22 different subcontractor trades involved.

This means that you need somebody that is well versed in all of those trades. They're not necessarily a master of all those trades, but they know how to lead a team. They know when to bring them in and they know when to ask the right questions. So your GC contracts with every single one of these subcontractors, they coordinate the schedule so the plumber doesn't show up the same day.

You know, as the electrician, when they're both trying to get into that same wall cavity.

know, they manage the quality of each subs work and they're responsible for everything. And a GC's the smart ones anyway, when they're reviewing the plans and specifications, they do their own plan check and they assemble a list of questions based on each of the trades and get a lot of that answered before the project is priced and for sure before the project is actually under construction.

A GC who has strong, long-standing relationships with excellent subcontractors, that is worth its weight in gold. Those relationships are built over years. You can't fake them. And a GC who has a great team of subs is going to deliver a better project than a GC who's constantly scrambling for whoever's available. And here's one more thing I want to touch on before we get to the story. Acting as a general contractor comes with significant liabilities.

project quality, cost accuracy, budget management, site safety, all of that sits on your GC shoulders. Contractors who struggle with estimating or reading plans sometimes manage that risk by shifting it back to the homeowner.

through how they structure their contracts.

I'm going to be doing a full episode on contracting methods down the road, cost plus versus fixed price. But for now, just know the better your plans and specs are, the more your contractor is held accountable. think I've probably said that a thousand times so far with all the episodes, the more complete the information they're working from, the more reliable their price becomes.

You as your homeowner have more influence over this than you

right. Now you now hopefully you have you've got what a GC does. now let me just tell you a story that's going to make all of this very, very

William Reid (: 14:53

All here we go story time. And I want you to really picture this because I think it's one of the best illustrations of something I see play out over and over again in real life, not just in theory. And it comes directly from my book. And if you want to, if you want the full version with all the detail, you can grab a copy, but let me give you the essence of it right now. Imagine you're about to interview two contractors for your project.

You're going to shake both of their hands and what you see and what you feel is going to tell you a lot, but not everything. First contractor walks up. His name's Fred. You shake his hand. It's rough as a granite boulder. His truck is in the background and there's a barking dog pasting in the bed alongside a stack of lumber piled high on the racks. Fred is in his fifties. He's hands on and he has been building homes for 30 years. His dad was a builder.

Fred remembers digging ditches during the summer when he was 10 years old. Dad was hard to work for, but he taught Fred how to build a home from the ground up. Fred now has a few loyal employees, guys who have been with him a long time, and a group of subcontractors he's worked with for years. And Fred is incredibly strong when it comes to the structure of a building, foundations, framing.

Fred knows this stuff cold. he's proud of how fast it can get done at a solid level of quality. You think, hey, Fred is my guy. He's down to earth. He's got that been there, done that energy. But there's the other side of Fred. All of that field strength sometimes comes at the expense of other things. Project management sophistication.

Awareness of new materials and building science. Maybe technology even. Scheduling software. Fred might have a yellow legal pad and that's fine for certain projects, but for others it might matter a lot. Now, second contractor walks up. His name is Ace, we'll call him. Ace might be a bit younger than Fred. He's wearing a button down shirt, clean truck, no dog, no lumber in the bed.

Actually, Ace didn't spend much time in the ditches as Fred did. Instead, he worked for larger builders and got deep experience in construction management, scheduling, systems, and hiring. Ace keeps up with the advances in building materials and methods. He leverages technology to run his projects. You can just feel a different kind of professionalism coming off of him. Contractors like Ace

have a hierarchy of a team members in both construction and design who provide quality, consistent service. And here's something that might surprise you. On occasion, guys like Fred may end up actually working for ACE because they just want to build. They don't want to deal with the paperwork, the scheduling software, the client calls. They want to be on a job site.

guy. And that's actually a beautiful partnership. So who do you choose, Fred or Ace? The answer is you need both. The reality is that the best outcome is when you find a GC who's a blend of both worlds or a GC like Ace who has people like Fred doing the field work.

Here's how to think about it practically. If you've got a master bathroom model or a straightforward addition, Fred might be a perfect fit. His experience is directly relevant. His subs are solid and his directness. It's actually kind of an asset, but if you're building a 5,000 square foot custom home or a complex addition and a lot of moving parts, then perhaps you need ACE. You need the management, the systems, the communication with Fred's guys doing the framing.

So the takeaway here is this, the type of GC you need is project specific. And part of your job as the homeowner, as the general manager of the project is to figure out which type gives you access to the combination of skills that your project demands. And some red flags to watch for while you're here.

Be cautious of any GC who claims to do literally everything themselves with no subcontractors, who can't give you references from comparable projects, or who resists putting specific costs and timelines in writing. Those aren't just yellow flags, they're red ones. Now, whether it's Fred or Ace or a combination of both, there's one piece of paper that separates a real contractor from someone just playing the part.

And it's the one step most homeowners skip.

William Reid (: 19:21

All right. This part might save you from a genuinely terrible situation. So stick with me here. Every contractor, GC or sub is legally required to hold a license from the state where your project is located. This isn't a technicality. This is a foundational verification step. And shockingly, it's one that a huge percentage of homeowners never take. So what does a contractor license actually tell you?

First, it tells you the person has met your state's requirements to legally operate. That's the baseline. The license is issued to one individual within the company and that person is the legal accountable party. Second, the license number itself tells you something. License numbers are typically issued sequentially. So the lower the number, the longer that contractor has held a license. And generally, the longer they've been in business.

At a glance, a low license number can convey experience and longevity. But now that doesn't mean someone with a higher number is inexperienced. If a trades person worked for a GC for 20 years, for example, and just went out on their own, they'd have a new license number,

but 20 years of experience behind them. So always ask that story behind the number. So here's what you want to verify. Is the license active? Is it actually assigned to the company you're working with? Not just some person who used to work there. And has there been any disciplinary action? How do you find out? Google your state contractor's license board. Almost every state has an online lookup tool.

It takes two minutes. Just do it every single time you start talking with a potential general contractor for your project. But here's the part that might wake you up if we're even considering skipping this step. It really is amazing, truly amazing how many homeowners hire unlicensed contractors. Sometimes they don't know. Sometimes they think, this person seems trustworthy. I don't need to check him.

Sometimes they're chasing a lower price, but here's what most of them don't know. Hiring an unlicensed contractor. It's illegal for the contractor.

here's what most of them don't know. Hiring an unlicensed contractor is illegal for the contractor. But here's the kicker. It can also expose you to significant personal liability. If an unlicensed worker is injured on your property, you may have zero insurance protection. That risk doesn't stay with the contractor. It comes right back to you. And unlicensed contractors often can't

whole building permits. Work done without permits can cause serious problems down the road when you try to sell your home. There's also a scam you should know about.

unscrupulous individuals will claim to have a

they'll use someone else's license number for their business. Always verify that that license is in the same

name of the company or person that you're actually hiring.

So two minutes, one Google search, your state contractors board, do it every time, no exceptions. All right, so let's try to bring this one home because we'll have multiple episodes after this diving deeper into what general contractors are, how they contract, how they price their project. But here's what we covered today. We pull back the curtain on the world of contractors.

You now know the two types, general contractors and subcontractors. You know what your GC actually does behind the scenes, the mental build, the team assembly, the liability they carry. And you met Fred Nace, two very different types of builders. And now you understand why matching the right type of contractor to the right type of project might be one of the most important decisions you make on this journey. If you want to go deeper on all of this,

this contractor world, how they make their money, the contracting methods that protect you, what attributes separate a grade GC from an average one. All of that is in the book, options for hiring your team. The link is in the show notes. This is the guide and I wish every homeowner had before they started their project.

Hey, if this episode was helpful, share it forward it to a friend or a family member who's about to hire a contractor. Leave a review. If you're getting value out of the show, that genuinely helps more homeowners find us. You can also find us on Instagram and YouTube and Facebook at the awakened homeowner. Next time we're going to go deeper.

What are the attributes that separate a truly great JC from the rest? What do you look for beyond the handshake? That's coming next.

This is Bill Reid reminding you, you don't know what you don't know. And I know, but now you know a little more and remember our mission, enlighten, empower, and protect. Let's make it happen.