Hello Construction Expert
Without having seen the contracts, I’d bet that your assumption is quite naive. Nobody – not even an engineering office – gives anything away for free ...
I never said that the engineering office has anything to give away. Both the engineering office, a general contractor (GC), and a developer must calculate the cost of the house before contract drafting in order to set a fixed price. There will certainly be a small safety margin included in case prices increase within the fixed-price guarantee. Under completely identical conditions (scope of work description, purchasing conditions, profit margin), the same price will result for both the GC and the engineering office. I am excluding the developer here for tax reasons.
Then the question is surely allowed – since both models – according to your statements – are interchangeable 1:1 – why doesn’t the engineering office act directly as a GC? And where do you see the advantage in the "engineering model"?
I wouldn’t say 100% interchangeable either. The engineering office has the advantage over the GC that it is primarily initially excluded from warranties, since contracts are signed directly with the subcontractors. With a normal GC, I address defects to the GC, who in turn goes to his subs (provided he doesn’t do everything himself). So, for the engineering office, this means initially less administrative effort and risk afterwards.
Now you’re probably wondering, what do I as a homebuilder get out of this? Conversely, I ask, what advantage is there if I build with an architect who awards contracts the same way?
The big problem with the GC is that they disproportionately earn from the GC surcharge on subsequent changes that are not included in the standard scope of work description or in the original offer.
The engineering office wanted a fixed fee. Since contracts are signed directly with the tradesmen, additional services are billed without a GC surcharge. So I can add extra services to those included in the fixed price more cheaply afterwards. Many homebuilders, not without reason, take some trades out of the GC’s offer and prefer to award them directly.
I don’t agree with the second advantage given by the engineering office. Allegedly, an additional construction supervisor is rather superfluous due to contract awarding like with an architect. For us, however, an external construction supervisor was mandatory.
I cannot decide now whether the advantage of the engineering office regarding warranty outweighs the disadvantage of not earning the GC surcharge financially, or whether the profit/fee already has to be calculated higher in the basic calculation.
In a forum, I once followed a lively discussion for and against building with an architect. The only problem with the architect is that they do not offer a fixed price, so I do not know upfront how much the house will cost in the end, even though it is often not (much) more expensive than a house from a GC. The architect can name a figure that they estimate, but they do not have to stick to it. In the end, the question remained open as to why the architect cannot calculate in such a way that they can also offer a fixed price? I think the engineering office tries to strike a balance between direct awarding of services as with architects and the fixed price of general contractors. Since it has been on the market for a long time, it seems to work so far.
Kind regards
Musketier
PS: And once again the note: I am not a representative of this company. Since their initially so prominently emphasized open pricing was no longer so open and the offer price was far above our expectations, we did not get beyond the second meeting.
