Technological improvement has affected every possible domain, and construction is no stranger to this. Technology transforms simple homes into oversized gadgets, from smart lights to solar panel roofs. But who makes it possible? One of the answers that we will focus on is contractors.
A contractor is someone who is employed to perform work or provide services under a contract. The most well-known type of contractor is a general contractor. At the moment, there are over 36,000 general contractors employed in the U.S. Even if a general contractor is the most requested type; this category falls into a hierarchy that is important to acknowledge when hiring a contractor.
Most large projects are divided into several smaller projects, each with its own construction agreement and parameters. Each project component needs a unique skill set and a diverse range of trade specialties and participants to complete the tasks at hand. Because there are so many moving pieces, coordination and communication are crucial.
To better understand the hierarchy and types of contractors, besides the general contractor, we prepared an informative description of each one and their roles.
Construction jobs at the worksite are typically overseen by general contractors, who generally are small company owners. General contractors operate in a similar manner to managers in most firms, but on a contract basis. They collaborate with customers to negotiate contracts, assess project cash flow, and organize the work. General contractors are the category with the most well-defined characteristics, and you can read more about HHC to inform yourself better.
They interact with those who pay for the project and those who do the actual work and analyze their clients’ demands and organize the work of subcontractors and staff working on some aspects of the project.
An excellent general contractor’s network of dependable subcontractors is one of their most significant assets. Many contractors used to handle every facet of a project in-house, for the most part, but as the construction industry has developed, things have changed.
Back then, a single contractor might have handled a wide range of tasks and managed the entire project from start to finish. Now contractors are more likely to engage others to do specialized work for them. This is when our subcontractors enter the picture.
Types of Contractors
As mentioned above, a general contractor is not the only type, and it belongs to a hierarchy. This means that the term ‘contractor’ is more of an umbrella term for subcategories that have their differences. Let’s check out some other types of contractors and see their attributes.
Prime Contractor and General Contractor
Once we have established the definition of a general contractor, it is worth mentioning that it is also divided into two branches: general contractor and prime contractor. Even if the terms are often interchangeable, they have small details to differentiate them.
A primary contractor has a contract with the property owner directly. Because the owner frequently employs the general contractor, they are sometimes referred to as a “primary” or “direct” contractor.
The phrase “primary contractor” refers to a contractor who does business directly with the government. Prime contractors, like general contractors, project manage licensed subcontractors and ensure that the work is done according to the contract’s specifications. They may also hire their own workers.
A subcontractor is someone employed by someone other than the owner to offer labor or services on a building project. They contribute to the entire project by performing a piece of the work. As a result, they frequently assist in reducing project risks by bringing experience that the general contractor may lack.
Subcontractors aren’t characterized by the size of their company. A person who deals with plumbing installments or a multinational organization that handles commercial or industrial electrical work uses both subcontracts.
When it comes to protecting their crew, contractors and subcontractors are both required to have their own liability insurance. They administer their own health insurance and other benefits if they have staff.
In the end, a subcontractor is defined by the fact that they sign a subcontractor agreement. A subcontractor agreement divides the scope of work in the original contract and transfers some of it from the prime contractor to a subcontractor.
An independent contractor is described as a company that an entity hires to accomplish a specific task or duties. Independent contractors are often hired to execute work that isn’t part of the owner’s regular trade or company, and these jobs are contract-specific. The independent contractor and staff complete all of the contract’s requirements. Independent contractors are not often thought of as the principal’s employees.
Independent contractors are self-employed individuals who provide services under the payer’s direct control. They are direct-to-client subcontractors, whereas general contractors employ subcontractors.