One of the most important skills for any do-it-yourselfer is to know when not to. If you have a big project in mind, like erecting a new building or modifying an existing one or a project that involves skills and tools outside of your knowledge, turning to professionals is a good choice.
There are numerous books and websites that tell you how easy it is to save thousands of Naira by being your own contractor. Most exaggerate the savings and minimize the time commitment required, the difficulties, and the risks. There are owner-builder success stories and owner-builder nightmares. Before going too far down this path, take a hard look at what is required to succeed at this and a clear-eyed view of the potential savings. Then decide if it’s worth it.
While some of a contractor’s work is done on the job site, most of the work is planning ahead of time so that things will go well on the job site. This includes reviewing plans to look for potential problems and the best way to get the job done; estimating the costs of materials and labor; locking in material quotes; obtaining permits and approvals; hiring, scheduling, and managing employees and subcontractors; scheduling inspections; ordering materials and scheduling deliveries; and tracking accounts payable and receivable to keep the whole thing afloat.
The GC is the boss and, as in most companies, he is the guy who gets called when things go awry.. The better the planning, the fewer the problems and surprises. However, your lack of experience in construction means you can expect more than the average share of surprises and problems.
Many books and gist claim that you can easily save 25% of the cost of a new home by contracting it yourself. This is based on the notion that 25% of the cost of a development goes to the contractor’s overhead and profit.
In theory, you can reduce the cost of construction by the amount you would pay the general contractor in overhead and profit let’s say 15% for the typical custom builder. In very round numbers, about half that money goes to the contractor’s overhead: bookkeeping, accounting, insurance, office expenses, trucks and tools, marketing, and other costs of doing business. The rest is profit.
If you contract the job yourself, some of the overhead costs will become your own, but less than for a professional contractor, so your potential savings may still look pretty good. The prices you pay for subcontractors and materials, however, will likely be higher in many cases, as you don’t have the bargaining power of a full-time contractor. Also, you are likely to incur added expense due to inexperience. Nearly every job is a learning experience – and you will learn a ton on this first job that you could put to good use later if you are crazy enough to want do to this again.
Also, when economic times are tough, margins tend to slip, meaning that in a slow market, you can get a better deal hiring a contractor and will save less by doing the work yourself.
Bear in mind also that a 15% to 20% gross profit is the goal of many contractors, but it is not often achieved. Cost control is one of the biggest single challenge faced by all contractors, which is why so many jobs come in over budget and why almost none come in under.
Your own success at cost control – and how much you value your own time will ultimately determine how much you can save by doing the work yourself.
So your real savings may be closer to 10% compared with what you would spend on a contractor. For those savings, you are committing a lot of time and taking on a lot of risk. If you do have much construction experience or free time, you will need to hire a foreman or construction manager to oversee the work, reducing your savings. On the other hand, if you are handy with a hammer and plan to both oversee the job and do some of the work yourself, your savings will naturally be higher. If you design the project yourself, you’ll reap additional savings.
In the end, it’s up to you to decide if your job warrants a general contractor or if you can handle the project yourself. But a general contractor could take some of the worry and stress out of the job for you, so when it’s done, you can sit back and enjoy the work.