What Is a Contractor? All You Need To Know About What Contractors Can Do

For homeowners looking to renovate their space, they’ll often seek out the expertise of a contractor—but what is a contractor, exactly?
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What is a Contractor

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A: In the construction business, a contractor is a person or organization who is hired by a client to complete an element or elements of a building project. There are several types of contractors with various roles and responsibilities, so the type of contractor hired will depend on the nature of the job. Typically speaking, however, the term “contractor” will refer to either a general contractor or a subcontractor.

Looking to hire a professional contractor for an upcoming home improvement project? Learn all about what a contractor is, the different types of contractors, and how they contribute to the home renovation process.

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A general contractor is a person who supervises and coordinates the aspects of a construction project.

What is a Contractor Supervisor

A general contractor (or GC) is hired by a client to take a set of plans and ensure the building project is completed on a timeline. They coordinate and supervise workers and their tasks, order materials, and handle the paperwork and billing processes. The GC makes a profit by marking up labor and materials costs by a percentage (usually between 10 to 30 percent). This contract stipulation is also known as a cost-plus contract.

Some handy homeowners may consider being their own general contractor. While this can be an effective means of saving money and ensuring that the project meets expectations, it’s also crucial for homeowners to consider whether they have the time, money, management skills, and home renovation expertise to take on this task. Acting as one’s own GC also requires a person to have their own builder’s risk or file policy (at minimum, during the building phase) in the event that something goes wrong.

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There are different types of contractors including construction managers, design-build contractors, and prime contractors.

While most contractors fall under the category of general contractor, there are several different types of contractors, including construction managers, design-build contractors, and prime contractors.

A construction manager is typically hired to help during the design process, helping the team develop the project and even initiate the construction phase. Conversely, a design-build contractor stays with a project from start to finish. They are in charge of both designing the project and managing its development, and in some cases may even help with the physical construction or maintenance.

A prime contractor is a broad category that refers to the relationship between a contractor and their clients. Prime contractors and their clients develop long-term commitments that may include future or ongoing projects. This is often seen in large-scale clients, such as organizations that frequently need construction work.

What is a Contractor Hire Subcontractors

Contractors will hire subcontractors, who offer specific skill sets.

While some general contractors will tackle parts of the building process, they will generally hire subcontractors to complete specific parts of the project. GCs often have long-standing relationships with subcontractors who possess specific skill sets, allowing them access to specialized expertise for even the most niche of project requirements.

Subcontractors tend to focus their work in a single area such as plumbing, electrical work, HVAC, and tiling or flooring. These subcontractors may be self-employed or they may work under a subcontracting business. Homeowners will likely have little to no interaction with subcontractors, as they are hired, managed, and paid per project by the general contractor.

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Contractors ensure quality and compliance on home renovation work.

A contractor will ensure quality and compliance through all stages of the home renovation process—perhaps the most important aspect of the job. If anything goes wrong or does not meet requirements, it is the contractor’s job to correct the problem and cover any associated costs.

When a general contractor obtains building permits, they are filing under their business name. This holds them accountable for following any required building codes, as well as paying any fines if these codes are not followed. In addition to maintaining legal compliance, a GC will also ensure that the conditions for product or material warranties are met. For example, it is common for roofs and windows to have warranties that are only valid if the work is performed by a qualified and certified professional.

What is a Contractor Liability Insurance

Contractors should carry liability insurance to protect homeowners from damage and on-site injuries.

In the event that something goes wrong in the building process, such as property damage or on-site injuries, the contractor should carry liability insurance. In many states, contractors are legally required to purchase this insurance in order to obtain a business license.

A contractor typically will carry general liability insurance, also known as commercial general liability (CGL) insurance, to cover third-party property damage and customer injury. A general contractor may also carry a separate worker’s compensation policy, which relieves homeowners from liability for any injuries sustained to employees on the job site.

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Look into hiring a general contractor when you will need multiple subcontractors, are dealing with municipal building codes, or a project will take an extended period of time.

Before tackling a home improvement project, it’s worth considering what type of professional is best for the job. In some cases, especially with large-scale or complex projects, a general contractor is necessary. Other times, a specific subcontractor or even a skilled general handyman can tackle the task.

If the intended project requires multiple subcontractors, will take an extended period of time, or requires dealing with municipal building codes, look into hiring a general contractor. The GC has the time, resources and skill set necessary to successfully manage all aspects of the renovation from start to finish. Conversely, if the project only requires one or two subcontractors, will only take a short time, or does not have municipal building code requirements, a client may be able to oversee (or even complete) the project themselves.

Generally speaking, it is advised for homeowners to only tackle renovation projects they can do skillfully and confidently. Otherwise, it’s best to hire a professional for their insight and expertise.