Cost Differences
General Contractor Costs: As mentioned before, a contractor is hired by a property
owner who in turn, hires a subcontractor. As a result, the contractor enters into an
agreement with the owner detailing the price for each phase of the construction project.
The contract cost includes direct costs such as field supervision charges and markup
imposed by the contractors for both profit and overhead expenses. The actual price is
determined by the location and type of facility under construction. Whether it is a
commercial, residential, or industrial building, there are certain fragments that vary
based on the environment and which have an impact on the cost of the project. General
contractors typically receive payment by collecting lien waivers from all suppliers and
subcontractors who have worked on the project. The owner may decide to sign a lump
sum contract where they assign the general contractor all the risk of the project. In this
case, the contractor may ask for a higher markup to accommodate unforeseen
contingencies. The other option is to sign a unit price contract or a cost-plus fixed
percentage contract.