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<\/figure>\n\n\n\nThe term \u2018contractor\u2019 is used in many different industries. You can have \u201ccontractors\u201d working for all sorts of companies, from the largest Fortune 500 firms on down to the smallest startup or mom-and-pop. Sometimes the term refers to an individual (the phrase \u201cindependent contractor\u201d is commonly used; while other times, a contractor might refer to an entire company that picks up work on a contract basis.<\/p>\n\n\n\n
However, in this article, we\u2019re going to provide you with the general contractor definition<\/strong> as it relates to the construction industry.<\/p>\n\n\n\n Here\u2019s the best general contractor definition for the construction industry:<\/p>\n\n\n\n The general contractor is sometimes known as the direct contractor,<\/strong> and this is very important when it comes to getting paid. We\u2019ll explain why by first explaining what is meant by using the terms \u201cdirect\u201d and \u201cprime.\u201d A DIRECT contractor<\/strong> is a party who contracts with and is hired directly by the owner of the property. Another name for this is the PRIME contractor<\/strong>. This is determined by who the agreement is with, and not<\/strong><\/em> the nature of the work, the name of the company in question, or any other factor.<\/p>\n\n\n\n To put it another way: if your construction company is working on a project or job, and you were hired directly by the property owner<\/strong>, then that makes you the direct or prime<\/em> contractor. <\/strong>The general contractor is always going to be a direct contractor. However, not all direct contractors necessarily see themselves as \u201cgeneral\u201d contractors.<\/p>\n\n\n\n To illustrate this point, let\u2019s take roofers as an example. Often when an existing roof needs to be repaired or replaced, a roofing company might be hired directly by the property owner to do the work. In this case, that roofer would be the direct (general) contractor. On the other hand, if the project is commercial, new construction and the roofer is hired by the general contractor that\u2019s overseeing the entire project, then the roofer would probably be a subcontractor in that case.<\/p>\n\n\n\n There are many, many examples of construction companies that serve as the general contractor on some projects and jobs (when they are hired directly by the owner), while they are subcontractors on other jobs (when they are hired by someone other than the owner). When it comes to getting paid, this distinction is very important<\/strong> as we\u2019ll discuss in the next section.<\/p>\n\n\n\n Getting paid on a construction project is one of these things where the details really matter, and one of these details that matters a great deal is the role<\/strong> that the party in question has on the project. \u201cGeneral contractor,\u201d \u201csubcontractor,\u201d \u201cmaterial supplier,\u201d and \u201cproperty owner\u201d are all examples of potential roles on a construction project (though there are many more, of course).<\/p>\n\n\n\n Figuring out your \u201crole\u201d seems like it would be very easy. However, we frequently hear from folks in the industry that they have trouble determining how to classify their role on certain projects. \u201cAm I supposed to be the GC on this job, or am I considered a subcontractor?\u201d Here at levelset<\/em>, we get questions like this one every single day.<\/p>\n\n\n\n Here are a few of the major project payment issues that are affected by a party\u2019s role<\/strong> on the project, and how these issues relate to general contractors.<\/p>\n\n\n\n General contractors don\u2019t always have a requirement to send a preliminary notice (in order to secure their lien rights) on their projects. In fact, GCs are more likely to be on the receiving end of a preliminary notice, since best practice is to send preliminary notice up the chain to all of the upper tier parties including the GC and the owners.<\/p>\n\n\n\n On public projects, the general contractor is typically responsible for providing the payment bond for the project. (The same payment bond is available for other project participants to file a bond claim against in the event of a payment issue.) Because the GC is the party that is providing the payment bond on a public project, they\u2019re not able to file a bond claim against the same bond. Think about it \u2014 you can\u2019t file a claim against the same bond that you provided! So, general contractors are at a little bit of a disadvantage if there\u2019s a payment issue on a public project.<\/p>\n\n\n\n On private projects, general contractors generally have lien rights, though lien filings are not as common from GCs as from other project participants since the GC will typically have a direct relationship to the project owner, and thus, will be in a better position to work out any payment issues before they escalate.<\/p>\n\n\n\nWhat is a General Contractor?<\/h2>\n\n\n\n
A general contractor is a party with the responsibility to oversee a construction project and who enters into the prime contract<\/em> with the property owner<\/strong>.<\/h4>\n\n\n\n
How the GC Definition Affects Getting Paid<\/h2>\n\n\n\n
Your Project Role is Determined by who Hired you to Work on the Project<\/h3>\n\n\n\n
Is Preliminary Notice Required from GCs?<\/h3>\n\n\n\n
Can a GC File a Lien or Bond Claim?<\/h3>\n\n\n\n
Exchanging Lien Waivers<\/h3>\n\n\n\n
GCs Have 3 Big Challenges when it Comes to Payments<\/h2>\n\n\n\n
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