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Discussion Starter · #1 ·
Hi all
In constructing a new house, I believe that using a general contractor is far cheaper in the end then the home owner being their own contractor. I believe both hard costs and soft costs should be more manageable. I was wondering if anyone knows for sure what I have been thinking for a long while! I'm thinking of all the aspects of a new build, from plans, timelines, to cost controls, to sub contractor expenses....everything.

In my opinion, home owners building their own house concentrate on hard costs, but don't realize the soft costs such as timelines, stress and other factors when acting as their own GC.

Does anyone know of any published stats or data that can support this? What about past experiences? Any thoughts on this?
 

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Capra Aegagrus
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I think it'd be pretty tough to come up with hard numbers proving that one is definitely better than the other.

While the DIY GC would seldom be as efficient as the experienced pro, he will save on actual cash outlay for those "soft" costs, and wouldn't be as driven to get the job done on a specific contract-defined timeline. A reasonably competent and knowledgeable HO with the time and energy to run the project himself could well save a significant amount by running the job himself.
 

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I never seen any data floating around, but I will tell that in reality of it all, and in many years being in business, I came across quiet a few HO who took upon themselves to act as a GC, not excluding a few contractors from different trades who tried to do the same and some ran out of money before the project was finished, some took forever to complete and lost time and money.
 

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Discussion Starter · #4 ·
I never seen any data floating around, but I will tell that in reality of it all, and in many years being in business, I came across quiet a few HO who took upon themselves to act as a GC, not excluding a few contractors from different trades who tried to do the same and some ran out of money before the project was finished, some took forever to complete and lost time and money.
This is what I am thinking. As a home owner, I am sure you can cut costs fairly easily by shopping for sales, coupon clipping and so on, but what about the soft costs such as the time it takes out of your "day" job, the stress it plays on you and your family and so on?
 

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Kowboy
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One thing a homeowner can't get is leverage over subs. When a guy who gives you 100K worth of work a year calls, the 5K job looks much less important.
 

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I'm a Mac
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If you look at all aspects, hiring a GC can save money compared to a DIY HO. I have done work for many of both, problem with DIY HO, he expects us to advise him and tell him how it needs to be done, rather then an experienced GC who just calls and says here is the schedule...get it done.

DIY HO is not going to get the price breaks, not going to get the urgency schedule, his timeline will be way off...and if he is using construction financing...that adds up really fast eliminating what he thinks he is going to save by not hiring a GC

Much like an engineer, might look like it is costing more money, but usually ends up saving money in the end.
 

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I don't think you are going to find any statistics on this.
 

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Not going to happen- realistically, there are too many other factors even besides the one mentioned. Busy season, market boom, makes sub's unavailable- sub's will squeeze time only as a favor, and thats if you did them right in the other season, and they like you, yada yada- Otherwise, a regular home owner is hard to get a sub out of his normal routine- scheduling, etc etc.

There's other annoyances- especially on remodeling- building access, material deliveries, etc. etc. Does a HO know the difference between supplies? where to stack everything so that its efficient for the trades? a good GC sets all this up- a conductor of an orchestra of specialized trades. Why setup your drywall guy when the electrical isnt finished or inspected?

Plus, we all know that a lot of things are "favors"- calling one in to finish so that the other guy can come later. You know what I mean.
 

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main thing I have found is financing. If the build is on 'construction loan" , then there are %.s. deadlines and penalties . This screws up some of owner/builders , I have seen some do bettter then "Builders' on this finance option but its rare.

I did alot of work for a guy who would build on a line of credit , we'd finish then he'd mortgage and pay off the line. This seemed the better way, and I'm working on my line now.
 

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About a third of the new homes I wire are directly for the HO. I have been fortunate in that they had done their homework and had a good idea how to proceed. All of these that I have done I had been recommended to the HO, and many ask for my recommendations for other tradesmen.

It makes for a fairly smooth job as long as the trades know each other and work often together.

This being said, I do not think the majority of people can come out as far ahead doing the GC themselves as they think they will, especially when they factor in their time.
 

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Remember, there is no tax paid on the money they save.

I think this would be better to do as case studies than statistics. Some people will be GC through sheathing, then do the rest themselves.

OTOH, things like rocking the ceiling on a open 2 story entry or a high garage ceiling isn't that much fun for a DIYer.

Then there is the tool issue. I know one that buys all new tools, and sells them when the house is done.

Too many variables - pier on beam foundation, block foundation, poured foundation,....

How many DIYers do their own site prep?
 

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Thom
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The level of competency and knowledge of the DIYer that makes all the difference. Some know what they don't know, others don't.

What is actually save-able?
1. The GC's income that is a function of his time. This must be measured against the potential earnings the client could have had if he had used his time in his own area of expertise. Generally it will take a DIY'er much longer, leveling the disparate income levels.

2. The GC's profit, much of which is attributable to the GC's knowledge and ability. The GC is, in part, an insurer, insuring things get done efficiently and properly. This requires specialized knowledge.

3. Some of the GC's overhead. This is a mixed bag. That overhead provides real value that may not be visible or even knowable.

3. Tradesmen's time, to the extent the DIYer actually does tradesmen work. Sometimes the DIYer does quality work, sometimes not, but it always takes him longer resulting in lower hourly pay for work done.

What costs more?
1. Lack of knowledge of professional and competent subs.

2. Lack of job scheduling and management skills resulting in wasted time, materials, and effort.

3. Lack of negotiating leverage with suppliers and subs.

4. Lack of specialized knowledge of competencies, qualities, conflicts, and trade-offs.

Some do fine, save money, most lose money and are left with an inferior product. Looking for an average is as meaningful as looking for an average hair color.
 

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Just to share an experience working with a HO acting as his own GC on a new home build. Many moons ago,I worked with a guy who besides being the absolute nicest customer ever,he was by far the most organized.

What Howard lacked in direct construction knowledge,he more than made up for with his organizational skills. Being extremely fair,pleasant,accommodating and hospitable,all subs were willing to share their expertise freely with him and give him honest sincere feed back.

Howard quickly gained the reputation of paying his bill the very minute work was completed,(excavator had his check in hand before crawler loader was on deck of lowboy). He was willing to meet a sub the day of anticipated completion and hand you a check for services rendered. The news of his accommodating demeanor quickly spread like wildfire. He had absolutely no problem securing the best subs in the area,they were the ones to beat a path to his door,not the other way around.


He got the home built in record time,to a standard of quality that was hard to match. Many guys (myself included) encouraged him to hang out his shingle,he never did.


On move in day,many subs showed up to help him in the process,more than willing to show him the respect he showed others through the process;honor begets honor.


A month or so after moving in,he sent out invitations for a party for those that participated in the build (subs and their help). Many of the guys showed up of their own volition with house warming gifts.


Bottom line,yes a HO can be the catalyst for a win win situation acting as their own GC. Matter of fact,Howard could have taught a thing or two to those "seasoned" GC,s . It is impossible to not love working for a very pleasant man who always insists on paying his bills on time.
 
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