What do you call the person who builds your project? You may have heard them referred to as a “Builder” or a “Contractor,” and while both of these terms are accurate, these terms are not quite as simple as they look.

First of all, let’s break down what the term “Contractor” really means. In fact, a contractor is simply any individual or company that agrees to complete an amount of work for an agreed-upon payment. Technically, all of the people you pay to complete work on your project are contractors. However, in practical use, we tend to use different terminology to distinguish between the design and construction sides of the project team. Architects, engineers, and interior designers are typically referred to as “Consultants,” whereas builders, construction managers, and construction crews are called “Contractors.”

When you hire a builder to construct your project, you will generally sign a single contract with them to complete the whole project, making them your contractor. In typical practice, however, building your project actually involves numerous contractors, each of whom completes a small portion of the total work. It is actually very uncommon these days for the builder you hire to provide all of the labor for your project—or even to complete the work with their own employees. This is because the many tasks required to build a house are highly specialized and can more efficiently be completed by specialized crews. Instead, your contractor hires other specialty contractors to complete the various portions of the work he has agreed to provide to you.

Because the contractor you hire has an overall general contract with you to complete the whole project, they are called the “General Contractor.” Each of the other contractors your General Contractor hires to perform a subset of the work is called a “Subcontractor.” These are also colloquially referred to as the “Trades.”

These are  some of the Trades that are likely to be involved in your construction project:

• Excavation
• Concrete
• Framing
• Siding
• Roofing
• Plumbing
• Electrical
• Mechanical / HVAC
• Insulation
• Drywall
• Flooring / Carpet
• Tile
• Finish Carpentry
• Painting
• Landscaping

As you can see, that’s a lot of people to hire! But if these subcontractors are actually doing all the work of building your project, what is the purpose of hiring a General Contractor? The best way to think about the services that a General Contractor provides is to break them down into two categories.

1. The General Contractor is a Project Manager

First, a General Contractor functions as a project manager. They are responsible for scheduling the work of all the different trades: supervising the crews, making sure they show up when they say they will, ensuring that they have the necessary materials and supplies to do their work, and making sure they finish the work that the next trade will be relying on, all without stepping on each other’s toes. The contractor also needs to resolve problems and conflicts as they come up, order and return materials, schedule inspections, and make sure all the tradespeople are paid on time. Theoretically, the buck stops with them, and they are responsible for making sure the work gets done as agreed upon. Many General Contractors will even employ a field project manager, called a Superintendent or Foreman, who is tasked with day-to-day management and overseeing the crews at one or a few projects, to make sure each project gets the attention it needs.

2. The General Contractor is a Broker

In addition to their role as a project manager, the General Contractor provides potentially an even more valuable service: that of a Broker. Every General Contractor maintains working relationships with numerous subcontractors, and they can call on these relationships to put together the team needed to get your project done in a timely manner. Individual trades don’t tend to advertise to homeowners (and the ones who do are likely to charge a premium), so these network relationships are often the best way to find all of the trades your project needs. In addition, especially in a busy market, most subcontractors are already booked, and waiting for each trade to become available can draw out your project for months. A General Contractor’s relationships and frequent business with these trades lets them negotiate favorable timing that otherwise wouldn’t be available to you as a homeowner.

In exchange for these services, the General Contractor charges a markup over and above the cost of the individual trades. This markup often starts at 20% and can easily go up from there. In many cases, this markup is well worth it, for the amount of time and headache it saves trying to hire the individual trades yourself, not to mention the time savings to the overall project schedule. Also, the General Contractor is usually able to negotiate discounts with trades, and on materials, due to their standing relationships and the promise of repeat business, and these can partially offset the markup that the General Contractor charges.

So there you have it, now you know a little more about the person (that is, people!) building your project. The General Contractor you hire is much more than a skilled laborer, and you would be better off thinking of them as a businessperson who deals in relationships and agreements.

However, at the end of the day, the work you receive will only be as good as the subcontractors your General Contractor employs, so be sure to look for somebody who can effectively manage people, doesn’t cut corners, and takes responsibility for their work.