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January 1, 2001

Why You Should Hire A General Contractor

[What is a General Contractor] [Hiring Friend or Family]
[The Customer as General Contractor]
[Subcontractors] [Permits and Liability]
[Community Structures's Construction Company]
[Selecting a General Contractor]

We at Community Structures would like to offer some suggestions about why you should hire a licensed General Contractor and why that General Contractor should have experience with modular homes. Since we are a full service construction company with extensive modular home experience, we believe you will be best served by selecting us as your General Contractor. We want you to get the best home you can from us, and we can only ensure this if we complete your home. Selecting us as your General Contractor will also protect you, since it will ensure that one company - Community Structures and no one else - is fully responsible for your entire project.

If you decide not to select us, however, we strongly suggest that you work with another licensed General Contractor with extensive modular home experience.

What Is A General Contractor

An experienced licensed General Contractor is someone who knows the building codes well. Because of his extensive experience, he can coordinate all aspects of a project and supervise other subcontractors. His experience also enables him to handle more than one project at the same time.

To realize how difficult and time consuming a task this is, consider a few of the tasks involved:

• Getting the appropriate permits
• Clearing and excavating the land
• Installing a septic system and drilling a well or connecting to public water and sewer
• Installing the foundation and driveway
• Completing the plumbing and electrical hookups
• Installing the heating system
• Performing the interior and exterior button-up carpentry on the house
• Building a fireplace, deck, and garage
• Grading and landscaping the property

For each of these tasks the General Contractor is responsible for the following:

• Obtaining competitive bids
• Telling the subcontractors when to come
• Telling the subcontractors how much to do on each visit
• Making sure that the work, which must be completed by one contractor before another is able to do his work, is actually completed
• Overseeing the quality of the subcontractors' work
• Making sure that any warranty problems that occur after the job is done and after each subcontractor is paid are taken care of with no cost or problem to you, the Customer.

An advantage of using a General Contractor is that he will be able to call upon a number of subcontractors to obtain competitive bids for these tasks. He will also be better able to get them to perform in a timely fashion, which is no small task in the building trades. The reason he can command a fair price and a timely response from his subcontractors is that they depend on the work he provides them. Another significant advantage to using an experienced General Contractor is that he is likely to know which subcontractors to avoid because they have a history of poor workmanship, unreliability, and unethical pricing tendencies, such as taking advantage of Customers with "bait-and-switching" and "low balling" tactics. A General Contractor also is likely to have the necessary insurance to protect against something going wrong, such as someone getting seriously hurt on the job. This is important, since it limits your liability.

Hiring Friend or Family As General Contractor

Some Customers have a friend, acquaintance, or member of their family who is a General Contractor and who has experience with modular homes. If you are in this situation, we encourage you to take advantage of the opportunity. We believe it is always better to work with someone you know and trust, as long as that person is an experienced General Contractor with modular home experience.

Hiring Friend or Family As Subcontractor

Other Customers happen to have an acquaintance, friend, or member of their family who has skills in one or two of the building trades, such as plumbing or carpentry. If you are in this situation, we still strongly encourage you to work with a General Contractor. If you follow this advice and the General Contractor does not know your subcontractor, you must ask the General Contractor if he is willing to use your subcontractor. If your subcontractor is licensed and has experience with modular homes, the General Contractor will often be willing to work with him. However, some General Contractors will balk at this for the very good reason that they cannot be sure of the timeliness of the subcontractor's response nor the quality of the subcontractor's work. If the subcontractor is ten days late on completing his task or if he has little experience with modular homes, all of the General Contractor's other subcontractors can be significantly delayed. Worse yet, the entire project might not measure up to the General Contractors standards for quality. This is important to the General Contractor, since if he hires the subcontractor, he is responsible for his workmanship.

As a last comment about hiring an acquaintance, friend, or family member, it is worth noting three typical experiences often mentioned by Customers. The first experience is quite surprising: the Customer's subcontractor often charged more than the General Contractor's subcontractor would have charged. Sometimes this was because he didn't have enough experience with modular homes to know how much work was really involved. As most contractors do when they are unsure of their responsibilities, the Customer's subcontractor "protected" himself against being underpaid by charging a higher price than he would have charged if he had known how much work was involved. Other Customers reported that their subcontractor charged more because his inexperience with modular homes caused him to be less proficient with the work, which caused him to take many hours or days longer than a subcontractor with modular experience would have taken.

The second experience mentioned by many of our Customers is that the Customer's subcontractor did not complete the work until many weeks after the other subcontractors had competed their work. The most usual reason for this was that the subcontractor thought he was doing the Customer a favor by taking the job. He therefore thought the Customer would understand why he needed to finish his "real" job before attending to the Customer's modular home. Many Customers reported that their subcontractor told them that he figured the Customer would understand the significant delay, since "after all, they were friends (or family)".

The third commonly mentioned experience is that the Customer's contractor did not do all the work that was required. The primary reason was that the subcontractor had little previous experience with modular homes and therefore did not know all that needed to be done. Consequently, once the subcontractor discovered that he had more to do than he first thought, he only completed some of the work. However, he did volunteer to complete the remainder of the job, if he were given more money. This was not surprising since he felt that his original quote was based on a misrepresentation by the Customer of what he was required to do to complete the job. This third experience was mentioned by almost all of our Customers who hired someone without modular experience, whether or not they were a friend, family relation, or stranger.

The Customer Serving As General Contractor:
Coming In On Budget

In the past, a few of our Customers have taken on the task of contracting the entire project on their own. They assumed the role of General Contractor and took responsibility for all of the General Contractors' tasks: they obtained competitive quotes from different subcontractors, scheduled all of the subcontractors' work, and inspected the quality of the subcontractors' work. The reason they did this was because they knew that a General Contractor usually adds 10 - 15% to the cost of the subcontractors bill as a fee for his efforts. These Customers believed that if they did the general contracting themselves, they would save the 10 - 15%.

Although we recognize that it is the Customer's prerogative to do this, we believe that few Customers realize just how difficult, time consuming, and stressful it is to carry out this responsibility well. The General Contractor definitely earns his money. Not surprisingly, most of the problems that occur when the Customer serves as the General Contractor have to do with the fact that the Customer has little or no previous experience with contracting in the building trades and even less experience with contracting for modular construction. The inexperience causes him to forget to contract for a number of tasks that need to get done and to be unaware of a number of tasks that require the cooperation and coordination of different subcontractors. Consequently, the Customer unintentionally fails to plan for these interrelated tasks, which results in the subcontractors coming in the wrong sequence and at the wrong time. Since this costs the subcontractors additional time and money, they pass the cost overrun on to the Customer.

To summarize: when considering whether to serve as General Contractor consider the following difficulties:

• Finding the time to supervise the project
  • Lots of paperwork.
  • Lots of on-site meetings to begin and end the day.
  • Lots of trips for materials.
  • Dozens and dozens of phone calls.
    
    
• Scheduling subcontractors and materials to arrive at the right times and in the right order. Knowing the sequence of events is one thing, executing is another.
  
  
• Trade knowledge
  • Evaluating when work has been done according to accepted industry standards.
  • Making good decisions, sometimes with no time to research or reflect.

If you do not handle these difficulties well, you can ruin your budget. Forgotten paperwork, missed meetings, delayed material deliveries, unreturned phone calls, subcontractor last minute cancellations, wrong decisions--these things can lead to the dreaded "Cost Overruns".

We believe that if you attempt to act as the General Contractor you will save little money. In fact, from observing our previous Customers' experience we believe there's a large chance you will spend more than you would have spent if you had hired a General Contractor. The exception to this rule is if you do the work yourself, and of course do not pay yourself, or if you get someone else to do the work for no charge. But if you must hire subcontractors and pay them, you will probably be unable to get the work done for less than the General Contractor could have gotten it done for. However, you will spend many stressful hours on the phone and at your site.

Why Subcontractors Give The General Contractor
A Good Price And Better Service

The reason is quite simple. The subcontractor views a Customer's request for his services as a one-time opportunity. Consequently, he will not give you the same low price he gives the subcontractor. The subcontractor will probably also figure, and quite correctly, that your inexperience will cause him delays and additional expenses. The subcontractor's characteristic response will be to add at least 10 - 15% to your bill. It is of course not a coincidence that the additional 10 - 15% is the amount the subcontractor would have saved the General Contractor. The subcontractor views the situation as one in which there is no true General Contractor, which means he views it as one in which he has far greater responsibility and risk. Therefore he views it as a situation in which he should be compensated as if he were the General Contractor.

For similar reasons, the typical subcontractor will not give you as good service as he would a General Contractor he has worked with before and will likely work with again. For example, if you call the subcontractor for a favor--say to come a few days earlier than previously agreed because something unanticipated has occurred, or to return after the subcontractor thought he was done to do a task that you forgot to hire him for, the subcontractor is less likely to oblige than if he is working for a General Contractor who he expects will offer future business. Perhaps even more importantly, all of this can also be said for warranty work--the subcontractor is most likely to give good warranty service to a General Contractor who has hired him in the past and will likely do so in the future.

The Customer Serving As General Contractor -
The Permit Process and Liability

There are several steps that must be completed prior to beginning construction of a new home. Each state has somewhat different requirements, and some towns within the same state may enforce different regulations from their neighbors. Many of these steps include fees and other associated costs. For example, an approved septic design, an engineered site-plan, and a "building permit" are usually required before a new home can be built. A list of approval and permit tasks can usually be obtained from the town's building inspection department. In addition, see our other handout, "Construction Tasks Completed By Community Structures".

When you are ready to begin building, you must find someone to obtain all of the required approvals or complete the work yourself. As already indicated, we recommend that you hire a licensed General Contractor with modular construction experience to obtain the permits. (Note: Zoning and Planning Board approvals, when required, must be obtained before filing for a building permit. As such, most General Contractors prefer that you obtain these approvals.)

Our reason for recommending that you hire a licensed General Contractor to obtain the permits is that it takes more time and considerably more expertise than you might realize. It is seldom as easy as obtaining a few signatures, and it is becoming more difficult each year. For example, the applicant must comply with the regulations, by-laws, and rules of, among others, the Planning Board, the Zoning Board, the Conservation Commission, the Board of Health, the Sewer Department, the Water Department, the Department of Public Works, and the Fire Marshall--and sometimes more.

Filing an application and carrying out the steps required to meet these codes and regulations can take considerable time. Here are a few of the more typical reasons:

• The information demanded by the various officials and review boards may require the assistance of a professional consultant.
• The review process may be delayed by a backlog of applicants, since the officials and review boards responsible for overseeing the regulations are often undermanned and overworked.
• The officials and review boards may require more information than the applicant is initially able to provide; and/or they may require significant revisions to the applicant's initial proposal. In either case, additional meetings will be required, which may take several weeks to conclude.
• Final approval may call for a public hearing, which can require 30 days of public notifications to reach all affected parties.

Since many factors can contribute to a significant delay between application and approval, we recommend that you and/or your General Contractor begin the permit process as soon as possible.

As the previous paragraph suggests, filing an application and carrying out the steps required to obtain the permits also takes considerable knowledge. The person who applies for the permit must be thoroughly familiar with the state and local building codes, as well as with other applicable codes, by-laws, rules, and regulations, all of which change periodically. Because our modular homes are approved by a third-party inspection agency, as well as by the state building inspector, many of the codes and regulations have already been complied with by the manufacturer. However, there are still many other codes and regulations that apply to the site work and the completion of the home once it is set on the foundation, and compliance with many of these requires expert knowledge.

Community Structures would like you to realize that the person who obtains the permits assumes a significant degree of liability. If you obtain the permits and mistakes are made, you are liable for the consequences, just as you are responsible for your mistakes if you act as your own physician, dentist, or lawyer. Please recognize that this is not just our opinion. Here is an what is written on one Massachusetts County's building permit application:

"Many Home Owners who use the "Home Owner's Exemption" are unaware that they are assuming the responsibilities of a supervisor. This lack of awareness often results in serious problems, particularly when the Home Owner hires unlicensed persons. In these cases, procedures cannot be taken against the unlicensed person, as they would with a licensed supervisor. The Home Owner, acting as supervisor, is ultimately responsible for the project."

At the bottom of the application form are two more statements, which the Home Owner must endorse with this signature.

"The Home Owner assumes responsibility for compliance with the State Building Code and other applicable codes, by-laws, rules, and regulations... The Home Owner certifies that he understands the Building Department's minimum inspection procedures and requirements and that he will comply with said procedures and requirements."

In fact, the state of Massachusetts has become so concerned about inexperienced Home Owners building modular homes without the services of a licensed contractor that it has prohibited this. The reason the state now requires that Home Owners hire a licensed contractor to oversee the construction of a modular home is that it believes too many Home Owners underestimate what is required to complete the home. The state wants to protect you from modular builders who would mislead you into thinking you only need to "add a little water and stir". The state will ensure that you comply with this regulation by requiring that a licensed General Contractor obtain the building permit, which obligates him to supervise the work.

Although it is considerably easier to build a modular home than a "stick" home from scratch, you still need the assistance of an experienced general contractor. Fortunately, you have no more need to act as your own General Contractor than you do to act as your own physician, dentist, or lawyer.

Community Structures's Construction Company

In addition to building modular homes, we are a full service turnkey construction company with a wealth of modular home experience. Most importantly, we are already familiar with Community Structures's Responsibility Lists. For these, and many other reasons, most Customers select us as their General Contractor. However, if you do not select us, we strongly suggest that you select someone who has experience with modular homes. We also recommend that you use the procedure outlined below before making your final decision.

Selecting A General Contractor

Before you can begin to build, you must obtain "bids" (signed written quotes detailing all work to be completed and the price for this work) for all contracting tasks. For a comprehensive list of these tasks see "Construction Tasks Completed By Community Structures".

You should meet with the contending General Contractors as soon as possible, since many weeks can elapse between your request for the bids and the Contractors' beginning their work. Here are three reasons:

• It usually takes a General Contractor a few weeks to obtain bids from all of his Subcontractors.
• After the bids are obtained, and a General Contractor is selected, you and the General Contractor must negotiate a contract.
• After the contract is completed, the General Contractor must give his subcontractors a few weeks' notice before they will be able to begin their work.

If you unnecessarily delay beginning the bid process, you may not be able to receive your home when hoped for.

After reviewing the bids, you must select a General Contractor and obtain signed written contracts for all contracting tasks. If you decide to function as your own General Contractor, you will need to select a subcontractor for each contracting task.

We strongly recommend that you use due diligence when selecting a General Contractor. Read closely Community Structures's "What You Should Know When Comparing Builders" for suggestions on how to avoid "Low Balling" and "Bait and Switching" tactics. In addition, most experts recommend the following procedures when selecting contractors. If you decide to function as your own General Contractor, you will need to check out each subcontractor with this procedure:

• Check with the state and/or local building inspector to verify that the Contractor is licensed and in good standing.
• Ask the Contractor for references from his commercial bank. If he is in good standing, he will happily comply.
• Check with the Better Business Bureau and local consumer affairs office to see that complaints filed against the Contractor were handled satisfactorily for the Customer
• Contact the state attorney general's office to find out if it has a civil suit pending against the Contractor
• Check each Contractor's references: ask each reference the questions that matter most to you, such as:
  
  
  • Did the Contractor hold to his prices? Were there any overcharges?
    Were there extra charges because the Contractor's allowances (the monies he budgeted for each item, such as kitchen cabinets) were too low to get the reference what he wanted and thought he was getting?
  • How did the Contractor respond when he was asked to make changes? Were the changes documented and fairly charged?
  • How good was the Contractor's choice of building specifications, e.g., stairs, decks? Did the Contractor change the spec from what was agreed to or expected?
  • How good was the Contractor's workmanship? Did he completely take care of all of the little details?
  • Did the Contractor meet his deadlines?
  • Were there any surprises of any sort?
  • How was the workmanship of the Contractor's subcontractors? Were they on time? Did they follow-up on problems? Did they work in a safe and efficient manner? Did the Contractor supervise his subcontractors sufficiently?
  • Did the Contractor have any payment problems with suppliers or subcontractors?
  • How well did the Contractor clean-up the house and get rid of all of the trash when he was done?
  • How well has the Contractor honored his warranty?
  • How well did the Contractor manage stress (stress is inherent to the job)?
  • How well did the Contractor handle disagreements (disagreements sometimes happen)?
  • How available was the Contractor during the days? During the evenings?
    
    
• Take note of the Contractor's personality--you two will be under the same roof for a long time. Choose your Contractor as carefully as you would a business partner--for the next few months that will be his role in your life.
• Check out some of the Contractor's work.
• Ensure that the General Contractor and/or Subcontractors carry sufficient liability insurance. (If the General Contractor and/or one of the Subcontractors are not fully insured and someone gets injured on your property, you could be liable.) Community Structures strongly recommends that you obtain an Insurance Binder mailed directly from the insurance company of each contractor you sign a contract with, since this is the only way to ensure that each contractor has a current policy. If you hire a General Contractor, and the General Contractor hires all of the Subcontractors, you need only obtain a certificate of insurance from the General Contractor.
• Be sure to give each Contractor the same information and specifications to bid on. If after meeting with a Contractor you decide to change the spec, inform all other Contractors so they may adjust their bids. This is the only way to be sure of getting accurate, competitive bids.
• Make sure that each contractor is bidding on the same design, with the same grade and type of materials, as well as providing the same degree of craftsmanship and Customer Service.
• Get everything in writing, even estimates.
• Beware of hiring the lowest bidder. Then the Contractor gets himself in trouble and so do you. Again we emphasize, read closely Community Structures's "What You Should Know When Comparing Builders" .

Community Structures strongly recommends that you obtain legal assistance to review the contracts before signing them. You should sign a contract (and if required give a deposit) with the General Contractor as soon as possible after an agreement has been reached so that each of the subcontractors will reserve a slot for you in their upcoming schedule. If you decide to function as your own General Contractor, you will need to sign a contract with each subcontractor you have selected.

All contracts should specify at least the following:

• All work to be done, described in detail (for more information, see the following Home Store forms, which will be given to you when you order a home: the General Contractor's Responsibilities, the Carpenter's Responsibilities, the Electrician's Responsibilities, and the Plumber's & Heating Contractor's Responsibilities)
• The quality of all materials (see the same forms listed above)
• The cost of all materials and labor
• The start and completion dates
• The payment schedule
• A rider stating that all changes, whether or not they increase the cost, must be submitted and approved in writing
• The length and coverage of the warranty period for both materials and workmanship

If you hire a General Contractor, you should give him a copy of Community Structures's four Responsibility Lists mentioned above. These forms, which will be given to you when you order a home from Community Structures, will help inform the General Contractor of his complete responsibilities. If you decide to function as your own General Contractor, you will need to give each subcontractor a copy of the relevant Responsibility Lists. Of course, if you select Community Structures, you will be selecting someone already familiar with Community Structures's Responsibility Lists, since we wrote them.