General Contractor

A general contractor is the main contractor on a construction project. His responsibility is to ensure that the project is completed according to the client’s specifications, as well as in compliance with the law. Construction contractors often hire subcontractors in order to get the work done effectively and on time. Projects can include everything from the construction of a new office building or house, to adding on a room, or even building a deck – essentially, any type of construction job that requires a building permit. To explore this concept, consider the following general contractor definition.

Definition of General Contractor

Noun

  1. A person who is responsible for supervising the completion of a construction project, either doing the work himself, or by hiring and supervising subcontractors to help with the work.

Origin

1540-1550       Late Latin

What is a General Contractor

A general contractors is the lead contractor on a construction project, responsible for scheduling subcontractors, and ensuring they comply with all relevant laws and building codes. This is an important distinction, as a general contractor can be held accountable if something goes wrong on the project. General contractors on large projects typically work in an office, but report to the construction site regularly to ensure that the subcontractors are meeting the specifications of the job in a timely and efficient manner.

It essential for those interested in becoming general contractors to become licensed first. For example, construction contractors can be charged with a misdemeanor in many states for operating without a license. General contractors, however, can be charged with a felony if found to be operating without a license.

As an added bonus, licensed contractors and general contractors have better luck being hired for projects because they have demonstrated that they have received the training and experience necessary in order to get the job done correctly.

Examples of general contractor tasks that are standard for almost every construction project include:

  • Contract Negotiations – Negotiating the terms of the contract with the client, and collaborating with both the client and the architect on the plans for the project.
  • Bids and Estimates – Generating the estimates for costs associated with the labor, materials, equipment, and permits the project will require.
  • Budget and Schedule – Monitoring the project to make sure it is done on time, and that it stays within the allocated budget.
  • Laws and Regulations – Ensuring that regulations are followed, permits are obtained, and inspections are performed.
  • Management – Coordinating labor, materials, equipment, and subcontractors for the construction project.

General Contractor License Requirements

A general contractor license is necessary in order for a general contractor to provide worker’s compensation and liability insurance to his employees. A general contractor license also allows the general contractor to obtain and sign building permits. As a rule, a general contractor license essentially tells the client that the general contractor has all of the knowledge, training, and experience necessary in order to do the job properly. The NASCLA provides more information on what applicants need to know in order to obtain a contractor’s license.

Statutes specifying the requirements for obtaining a license to be a general contractor are in place to protect consumers from the hazards of hiring unlicensed contractors. The requirements for obtaining a contractor license vary by state, so those who are interested in becoming general contractors should research what is required of them before they apply. Generally, contractors are required to pass a written exam, show they he have at least the minimum amount of prior experience, and pay a fee.

A criminal background check is also a standard requirement, as is not having an outstanding grievance related to a contract. Further, most states require that contractors have an insurance policy before applying to become a general contractor.

Penalties for Contracting Without a License

While the requirements for obtaining a license vary by state, so too do the penalties for contracting without a license. For instance, those caught contracting without a license in California can be charged with a misdemeanor. If convicted, they can face up to six months in jail and/or a $5,000 fine, along with an administrative fine that can range from $200 to $15,000. If the contractor continues to operate without a license even after being convicted, the penalties become more severe. A second offense, for example, comes with a mandatory sentence of 90 days in jail, along with a fine of 20 percent of the contract price up to $5,000.

As another example, those caught operating without a license in Florida can be charged with a first-degree misdemeanor, with penalties consisting of up to a year in jail or 12 months’ probation, as well as a $1,000 fine. Second offenders may be charged with a third-degree felony, which carries a penalty of up to five years in prison or probation, and a $5,000 fine.

A different felony may be charged if a person is convicted of contracting without a license during a State of Emergency. This is because people are more vulnerable during such times. For example, in the weeks following a hurricane, homeowners may be desperate to have heating units repaired or replaced, roofs repaired or replaced, and other work necessary to survival.

In addition to these penalties for contracting without a license in Florida include being ordered to pay restitution to the alleged victim. Restitution is compensation for a job done poorly, or with faulty materials, that ultimately caused the victim to suffer damages. In some cases, restitution awards can be tens of thousands of dollars.

Managing a Contracting Business

Preparing accurate estimates and bids on various jobs, as well as tracking costs, payroll, and monies being paid to subcontractors make up the lion’s share of managing a contracting business. General contractors may advertise their services in the newspapers or newsfeeds, though most have professional websites to advertise their skills and experience.

Managing a contracting business is very detail-intensive, as prices for building materials change, weather and other conditions interfere with the completion of certain projects, and the general contractor must keep an eye on the other contractors, to be sure each step in the job is being done correctly. A general contractor’s schedule is unpredictable, as emergencies on the jobsite can slow down or halt production, which can cause unforeseeable issues with meeting deadlines.

Some contractors hire accounting firms, though others invest in a reliable accounting software package specifically developed for managing a contracting business.

General Contractor Salary

As of October 2016, a general contractors salary is, on national average, a little over $30 per hour. This comes out to between $40,000 and $45,000 per year, and the average rate of pay increases with time. Those who have been working in the industry for 20 years or more can expect to make, on average, about $80,000 per year.

There are numerous career paths that a general contractor can follow. He can go on to become a carpenter supervisor, an operations manager, a construction superintendent, or a construction manager. The highest position in this particular line of work is a project manager in the field of construction.

On the whole, those who work in construction report being completely satisfied with their jobs. Unsurprisingly, men dominate the construction industry, with 96 percent of employees being male. Most of the employees in this field are also entry-level at 35 percent. Late-career general contractors take the second spot with 24 percent.

General Contractor Example of Contracting Without a License

On October 17, 2016, the Nevada State Contractors Board reported that the Washoe District Court had found Austin Joseph Hayden guilty of contracting without a license. Hayden was charged with a gross misdemeanor for his crime, which came with a jail sentence of one year, which was suspended in lieu of the 14 days he had already served. However, Hayden was put on probation for three years, and was ordered to pay over $47,000 in restitution to his victims. Additionally, Hayden was ordered to reimburse the Contractors Board the costs associated with investigating his crime.

Complaints made by homeowners to the Board resulted in the Board conducting two independent investigations of contractors, one of which being Hayden. This was not the first time Hayden was suspected of operating without a license. Back in 2008, Hayden had been investigated by the Board after he submitted a bid to the Board’s undercover investigators for work consisting of landscaping and painting services.

NSCB Executive Officer Margi Grein reinforced the idea that contractors should be licensed, and that homeowners should be careful with the contractor(s) they choose to hire, stating:

“It is becoming ever more important for homeowners to give consideration to whom they are hiring; ensuring they are licensed by the Board affords homeowners our full investigative and remedial levels of protection.”

The NSCB reported that Hayden was prohibited from working in any construction-related field for the three years during which he was put on probation.

Related Legal Terms and Issues

  • Building Permit – An authorization that must be granted by the government before a construction project can begin.
  • Grievance – An official complaint made over an action that has allegedly wronged the complainant.
  • License – A permit that allows someone to do something, own or use something, or to run a business.

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