Building and Contracting Questions

Question: What are the responsibilities of a general contractor or construction manager?

Answer: The duties will generally be defined in the building contract. Peter Asher Designs, as construction manager, takes on these responsibilities:

• Administering the application process for all county, city and special permits.
• Assisting in the application process for bank financing.
• Coordinating, scheduling, monitoring and inspecting the job as a whole.
• Specifying, ordering, monitoring, receiving, inspecting and storing materials and fixtures from suppliers.
• Working out specifications, techniques, agreements, and schedules with contractors and inspecting their work.
• Checking the records of individual contractors with the Construction Contractors Board.
• Keeping records needed for, and filing, IRS Information Returns at the end of the year.
• Obtaining certificates of current insurance from contractors.
• Obtaining suppliers' and contractors' warranties and helping you process warranty claims.
• Keeping track of your specifications, reminding you of decisions still to be made, and making changes requested.
• Tracking the costs of the job on a regular basis and comparing them to the original estimates.
• Liaison between you, the home owner, and all the other people involved with building your home:
  • Designer, builder, engineers, surveyors
  • Plumbers, excavators, carpenters, electricians, roofers, masons, painters, cabinet makers, glaziers, concrete and sheet metal workers
  • Installers of drywall, insulation, heating and air conditioning systems, fireplaces, flooring, and trim
  • Suppliers, lumber yards, showrooms, manufacturer's representatives and service personnel
  • Government agencies, inspectors, utility and fuel companies, bankers, and sometimes your friends and neighbors!

Question: Which job costs are paid by the general contractor or construction manager?

Answer: Again, this will vary between contractors. Peter Asher Designs, as construction manager, pays the soft costs of construction which do not relate to the labor, materials or fixtures becoming a part of the structure or site. Soft costs also do not include design, survey, engineering, utility, or permit fees. Following are the soft costs we cover:

• Administrative and service costs associated with running the job, such as temporary water hookup, water usage, temporary electrical hookup, electrical usage, heat, general waste removal, construction cleanup of site, and rental of sanitary unit.
• Carrying contractor's liability insurance. (Our insurance is for one million dollars.) Note: the homeowner will still need to insure the house during construction. Insurance companies generally consider materials and fixtures to be part of the real estate as soon as they become affixed.
• Maintaining our active license with the Construction Contractor's Board, including the required bond.

Question: How is the fee determined?

Answer:The fee (which may be referred to as the "margin", the "profit", the "construction management fee", or the "general contracting fee") is the payment for the general contracting or construction management services, as described in the contract, and is determined in a variety of ways.

If the contract is a "cost-plus" contract, then the management fee is calculated as a percentage of the builder's costs and then added to the total. For example, if the builder's costs are $300,000 and the fee is 20%, then the total cost of the job will be $360,000. A cost-plus contract has the advantage that you can see exactly how much of the projected cost is for exactly which items. You can then make decisions about the types and quality of fixtures and materials you want, based upon their comparative costs. Also, this method prevents a builder from acquiring more "margin," simply by reducing the quality of labor or materials without your knowledge or consent.

At Peter Asher Designs, we use the cost-plus method, but with the building contract based mostly on firm bids and quotes. We do a Cost Analysis to pin down the individual quoted prices and bids for each labor and material item. As much as possible, we acquire firm commitments from contractors and suppliers, so that the resulting costs are as close as possible to the original estimate. In this way, we work with the homeowners as a team.

Question: If you design my home, how will you be involved in the building phase of construction?

Answer: As designer-builders, we specialize in following through on a custom home project from start to finish. When the client uses another builder, we work with the chosen builder from the beginning to make sure we are all on the same "page" and the same team. We can provide additional services to insure the design is correctly built:

• Providing detailed construction specifications.
  
• Helping with material and fixture choices.
  
• Inspecting during the building process to make sure the structure is built as designed.

To prevent corner-cutting and erroneously-learned trade practices from compromising the integrity of the structural design, we produce separate, thoroughly-dimensioned floor plans, specifically for framing,

Whether we are building or inspecting the house, the excavation, foundation and framing phases are the most crucial. Peter prefers to meet with framers before they are hired, to make sure they will use framing techniques which are correct for the structural design, and to make sure they know the structure is to be built as designed. Much of the structural success of the remainder of the house depends on these first phases. While this early supervision and inspection is the most important, Peter can also inspect the job during the later phases.

We can also set up rigorous specifications for your builder before you go to contract. We like to do this by communicating in detail with him about his preferred building techniques and those of the sub-contractors he plans to hire.

In addition, we can help with your many, many choices regarding materials and fixtures. We provide checklists and research to help you make these selections, and then write up your choices in a format which is easy for the builder to use as a reference.

[Return to Top]

Question: If you build my home, how will you assure the quality of labor done by contractors?

Answer: In selecting contractors, our emphasis is on the quality of their work and their ability to understand and execute the particular tasks that will be required for your home.

As construction managers, we do not simply send contractors to the job. We work with them to set up their portion of the work. As the job progresses, we continue to inspect, to advise, and to assist them in solving problems. We also provide liaison between the various contractors, suppliers, inspectors and you, the homeowners.

Question: How can I compare "cost plus" builders who each have a different percentage, with different specs?

Answer: This method can be confusing, since it means different things to different builders, so you will need to clarify some things.

Secondly, which items are included in the costs? We have repeatedly seen various "administrative charges" included in a list of "costs," even though administration is an important part of management, and therefore logically covered by the management or general contracting fee.

Thirdly, how is the percentage figured? If the builder says he charges 20% of the final price of the house, that would be $60,000 on a $300,000 house. So, $60,000 would be the management fee, leaving $240,000 as costs. But if the builder charges 20% in addition to the wholesale costs of the house, that would work out to $48,000 on a house with the same costs as above, for a total price of only $288,000. Said another way, charging a fee of 20% of the final price of the house comes out the same as charging a 25% fee on top of the costs. So you must determine from the builder how he calculates the percentage, in order to compare his method with others.

And finally, you must compare the services of the different builders to find out what they are offering for that percentage. [Return to Top]