Editor’s Note: Never have so many of you responded to one of our Problem Solved questions. To allow your voices to be heard on the subject of self-performing general contractors—and some of those voices are the GCs themselves, we offer this expanded edition of our regular column. It still wasn’t enough to publish all the responses, so more can be found on our website, www.awci.org/cd.
It should be noted that two anonymous responders who are not listed here both said no, they are not seeing GCs self-performing the wall and ceiling work. Yet both responders also added a subtle caveat: “not yet,” which implies that perhaps they are expecting to see this trend in their area at some point in the future.
Some comments got rather personal, so we have removed all name identifiers and kept only the cities/states that were provided in an effort to protect the innocent. Those without an identifier were submitted anonymously. This approach allows us to gather candid responses that we can report to our audience. When our online administrators go behind the scenes and look at the background provided for each response, however, we can safely report that this trend of self-performing GC appears to be present throughout the United States.
More and more GCs are self-performing wall and ceiling work, cutting the subcontractors out of the equation. What has your experience been?
Not seeing any GCs who are stupid enough to do their own ceiling work—they’re leaving that up to us.
—Long Beach, CA
There are a few small/mid-size GCs that self perform wall and ceiling work in our market, mostly in hospitals. I just found out one of our large customers started hiring carpenters directly for cleanups and small stuff. They actually sent their cleanup guy in over the weekend to do some extras I priced!!!! We will be having the warranty (or lack of) conversation with them, which I’m sure they didn’t contemplate. I’m not worried, because when they realize they are going to have to keep them busy and actively manage/get paid for their time, they are not going to try to expand it, just keep a guy or two around for cleanups. They can’t even manage their laborers!
—New York, NY
Yes, this is happening more and more. Large general contractors such as Andersen and Fortis are self-performing this work. We continue to lose market share on all fronts.
This is becoming a bigger problem with today’s economy. I feel sorry for the customers because all they are getting is a shadow of the real deal. GCs think that they can watch what we do and then perfectly replicate our work because they are, after all, the big dogs. Bottom line: If you want the job done right then hire the right professional for the appropriate task. I won’t do their electrical or plumbing work so they need to keep away from my wall and ceiling work. ’nough said!
— Forest, VA
Today and for some years, the role transformed from GC (general contractor) to CM (construction manager) and their role has been simply go-between between the owner and architect and the trades. Oh, and managing the money—or not.
Under this new regime, the trades, when presenting submittals and shop drawings, exclude the work they don’t intend to do, sometimes noting “by others” on their shops. The notion of starting a business named “By Others” is a standing joke in the business.
So for GCs/CMs to be starting to do some of the scopes themselves is not a new development. Plus, if they do so, they can diminish the cost of the work by the value of the overhead and profit that the subcontractor would charge above the labor and material costs. Moreover, with the diminished skill and care we’re seeing from many subcontractors and workers, it is not surprising to see GCs/CMs tackling work scopes themselves in order to have better control over quality and scheduling durations. The bane of quality workmanship and devotion to the project has been the advent of pieceworkers for whom blowing out the work to maximize their earnings is paramount. Quality and safety and relationship among the trades have taken a backseat.
It is sad to say that a large part of the work we perform is to finish, fix or tear off and replace work done by others that is failing or leaking or not compliant with the specifications or code. It is work, and we are grateful to have work to do, but it is also a shame to see the diminished quality of work we encounter.
When a handful of our GCs get slow, they tend to self-perform some of our work. As a subcontractor that feeds off them all of the other times, we tend not to make a big fuss. All we ask is for them to be honest up front and tell us before we take the time to give them a bid. Also, as a painting contractor, we push the argument that the taping should go with us so there are no finish problems down the road.
—Des Moines, IA
Just had it happen to me. GC took the metal framing on. Separate spec section than drywall. Normally the drywaller would have done both. From now on I’ll split the bid.
Self-performing GCs have always been around. The smaller ones sometimes are just trying to keep their crews busy. Others feel they can save money by doing it in-house. The ones that think they are saving money probably are not. Specialty contractors and their crews are more efficient and, almost without exception, do a better quality job. It’s their everyday job, not just part time.
There are a few contractors that we have competitor.
Absolutely. It may be going back to the old days [when the] GC did all the major scope in-house and subbed specialty work out. The one problem is as a sub, if you’re relying on the GC to install work (framing, masonry, etc.) and it is not acceptable for your installation, be ready for a battle (losing).
Not generally. They are looking for lower numbers and play one against the other though. Nothing new.
Yes. They use you for bidding then do your work.
Certainly not happening anywhere I know of, although sometimes I swear it would be easier if the volume of work would allow us to have our own crew.
Between illegals, GCs doing their own, cut-throat prices, my competitors cheating: Life is almost perfect?
If you can’t work with GCs, it is best to avoid them. Running into them would be a last resort.
—Canyon Country, CA
Yes, this is true. The larger GCs take away some of the larger jobs. After a year or two most will come back to subbing the work out.
Years ago you would see this very seldom; 2012 we seem to be seeing this all too often. The other thing that is happening is the GC saying, “Hey guys: I’ll buy the material and pay you by the hour to install.” Either way is not right.
Indeed this is becoming the trend, and to add injury to insult, many of these same GCs will shamelessly continue to solicit bids all the while knowing they have no intention of subbing the work out.
Fortunately, I have also seen a few GCs come back after having gone down the self-performing road, realizing “it’s not all that it’s cracked up to be,” having jobs go on longer than anticipated, going over budget and over schedule with no one to blame but themselves. I believe that it is extremely difficult to be successful in the drywall and ceiling industry today if you are a mid-level contractor—but not impossible. There will always be GCs out there that have little or no respect for what we do but, for every one of them I believe there is also a GC who does value our skill and knowledge and understands that part of their success ultimately depends on having a good team behind them.
Press on, it’s worth it.
We have not noticed that recently. Two and three years ago it was a problem because everyone was struggling for work. In most cases we say “good luck” to them. They will be calling us to fix it later.
It is a recipe for disaster. You cannot supervise work with a hammer in your hand, much less supervise yourself—or worse, supervise something you do not possess knowledge of and training in. It is the old saying, “Stupid is as stupid does.” The next call is to their lawyer saying they have been served with a lawsuit.
If it involves a small amount of work, the GCs are doing it themselves. There are a few that are doing complete ceilings and hiring acoustical men that are not presently working.
What we are seeing is that low-ball subcontractors who can’t pay their bills get themselves in trouble and are partnering with the GC to finish the project, usually joint check. Then, since the GC needs these low-ball numbers to get work, they continue to joint check them into other jobs. Now that the consumer is concerned and wants everybody bonded, the GC is taking the work and subletting or hiring the low-ball sub directly to perform the work. We are even seeing this in the CM arena, which sure does not feel like competitive bidding to me.
I have noticed that the smaller GCs are self performing. I also noticed that their quality is not as great as a specific subcontractor such as us, Extreme Drywall! We are top notch and know our industry better than the GCs.
Yes: three hospitals for DPR in the bay area. The subs wanted to use specialty contractors and DPR would not let them.
In past years there were a number of larger GCs in our market that self-performed wall and ceiling work. Over time, all of them closed down their drywall divisions. In recent years, however, we’ve experienced a few smaller general contractors who perform their own metal stud framing, drywall, finish and paint—basically a reverse trend.
The question has to be asked: Why are they doing it? Is it because we are charging outrageous rates? No, not in the world I am in.
We—and I mean this as an industry—need to smarten up. One of our biggest assets and downfalls is subcontractors. We contract out to stabilize costs, or so we think. In fact, what we are doing is giving the foreman’s wages to the subcontractor and letting him go at it, a bit of a free-for-all on the job site. What happens when we do not have the work to keep them busy? You guessed it: They have to work because there is nothing for them to fall back on. They compete against us.
How many electricians are subcontract? None in my part of the world. How many ventilation subcontractors are there? None in my part of the world. They don’t subcontract, they hire hourly men and when they are not busy they are on UI. So what are the chances of a general contractor hiring electrician men to work for him? Can anyone honestly say they have seen this happen?
The reason GCs are hiring direct is because it is easy for them, and we made it that way. We trained our subcontractors to get it done no matter what. Do you think that a guy who is working for you and who is getting holiday pay, travel time and a pension is going to work for someone else? Not likely!
General contractors are no different from you and me. We want a good job. We want to be treated with respect. We want a fair price. And when something goes wrong, we want to talk to someone who can fix the problem now, not talk to a subcontractor who is looking at you like a deer in the headlights.
The general contractors are hiring men direct because we are doing a real bad job as an industry. I am sorry to say it.
Similar. However, I have noticed it’s been peculiarly the younger PMs doing so. And they are getting crews of people we have trained, using them for a while and then tossing the guys aside (the ol’ “use and lose” attitude really getting carried away).
Frankly, it forebodes nothing good. It takes time to train a craftsperson, and this type of disposable attitude will only accelerate the lack of those entering the sub trades. [It’s] the quick buck versus looking down the road at building for a better future for more than just oneself. Another casualty of tough times.
This is real prevalent with the 8A contractors especially. This practice is not right at all. If this is allowed, why is there a license for these trades? Is this the new norm for our industry? We need protection from this kind of abuse.
First the suppliers should stop whoring their products to the general contractor. We are their life blood, not the general. I have had direct experience with suppliers selling to GCs for the same or even lower prices than they give licensed C9 contractors. This starts the negative effect rolling.
Problem not solved, getting worse.
GCs are not the self-performers, they are hiring drywall hangers and tapers to do the job on the side for them. Since they cannot keep the hangers or finishers busy all the time, they pay them cash under the table , so don’t have payroll, or workers comp for them. It happened to me, before even I was done with my work, GC came on the job, got my guys phone number and offered them to do extra work after hours at the same job. What happened? I caught them on the job side, and they lost their jobs with my company. That was a wrong thing to do at first time by GC, and stupid to do from my guys. And this is widespread specially at Northern California, Bay Area.
Yes, we have found that. Obviously that requires a careful look as to who we might bid on a particular project.
We have never had this problem because we are plasterers. Anyone can drywall and tape. Plastering is outside of the do-it-yourself trades.
Yes, this is an ongoing problem mostly created by material suppliers even though there are many other aspects that may be affecting it. As the market shrinks so does “working capital,” thus the capability of material suppliers to extend credit. Today we have fewer suppliers with much tighter budgets who are even requesting cash in advance or deposits on orders. This means GCs have to—more and more—advance payments, help with LCs and sometimes even have to pay payroll for the subcontractors. The result has been that GCs have decided to open divisions to take care of these needs while cutting OP margins for the sub trades.
On the other hand, more subcontractors are doing the opposite while venturing into GC work.
—San Juan, PR
Yes this has occurred on a least four commercial projects and is occurring in some residential.
Yes, there are a few here in Oklahoma City. … They ask you to bid a project and then do it in-house with [their] crew for labor only. They supplied the materials and cut the contactors out.
This has been a problem in our area for the last 10 years and getting worse. If we don’t stick together on this issue there will be no need for this magazine or AWCI.
The union GCs justify this by saying, “We need the work” or “It is classified as carpenters.” Really? Who doesn’t need the work? Nothing like stepping on the throats of all the wall and ceiling contractors that have helped build your companies to what they are today.
They will never attempt to self perform on a competitive bid, only on work they have negotiated on a cost/plus basis. Sweet deal for the GC, don’t you think?
The growth rate of our local GCs has been staggering over the last 10 years, and they still say they need the steel framing and drywall. Sounds like Rush Limbaugh–style capitalism to me.
—La Crescent, MN
I have been in a situation with some of them.
The sad thing is that they ask for a proposal, and we spend time and energy to get the proposal to them on time. Then when they get the job, they stop taking your calls for a while. If you are persistent in calling them, they finally tell you that they already sold it out to someone cheaper (if they have bought out the job), or they try to beat your price down to match an incredibly low price that they don’t expect you to agree to.
It happens all the time on the smaller projects, and nine out of 10 times the GC loses money or the owner pays 35 percent more for his project.
This has been become of great concern for subcontractors. We are finding that scopes of work are being tailored and manipulated to give the advantage to the self-performing GC and CM. On CM work, we find our scopes filled with added general conditions (Dumpsters, unidentifiable cleanup, non-working safety directors, etc.) as well as ambiguous scope items that leave unanswered questions on our end, yet the self-perform CMs have all the answers. Owners need to be educated as to “who’s watching the store.” When you police yourself, the extras will flow through the process, unchecked, at higher rates. In the end, owners will pay more.
We are losing all the small jobs ($1,500 to $10,000) that used to be our bread and butter. These jobs normally have a greater potential for profit, which is now greatly missed.
No breaking news here; it has been happening in Michigan for over 10 years. Major GCs/CMs want to raise sales their sales/profit and tell owners they can give them a better job if they use own workforces instead of subcontracting drywall. GCs/CMs want the subs to bid their projects, showing the owner they have competitive bids, but they have all the cards to stack the deck. Nine times out of 10, the GC’s/CM’s drywall division wins project. Very hard to combat. I’ve tried going to owners, talking with the GC’s executives—neither has evened the playing field.
There was a time when there actually were general contractors who had project managers and superintendents and carpenters and laborers on the site, and coordinated the work of the trades and handled the little overlooked or unanticipated tasks that were not really in anyone’s scope. Or they would do some scopes themselves.
GCs are performing more work with their own forces today than normal. I would guess that over the last couple of years some drywall hands have been laid off and went to work for GCs just like hospitals have hired our trained people from us and gave them an inside job and cut us out of most of the remodeling work.
The suppliers are the real culprit, in my opinion, selling to anyone who walks in the door. They say that their price is 20 percent higher (I believe that, ha ha), and they deliver it and stock it for the unknown contractor just like they do for us, but I pay my bills on time and I know some of the so-called contractors do not—that is hurting all the established contractors in this very hard market we are in. Suppliers have forgotten about the people throughout the years who have paid their bills.
—Scott City, MO
Yes!!!! Our suppliers are of no help. They provide no price protection for the drywall and ceiling contractors who have been their bread and butter for all these years. If a supplier makes between 15 percent and 35 percent shouldn’t they allow us the same when selling to a general? Or better yet—retail pricing. Manufacturers need to step it up and start holding them accountable and educating suppliers or start letting us buy direct again.
It is a growing trend and has happened during previous recessions. It presents a real challenge for specialty contractors.
I have been running into contractors who are keeping their carpenters busy by filling in with hanging their own work—mostly smaller, under 20 sheets.
I am busy enough where it doesn’t affect me much as they still have me do their finishing. I’m plenty busy enough as it is. Plenty of work here in Minneapolis for quality finishers.
It’s not just ceilings but all carpentry/drywall. Entire hospital projects are going to the self-performing GCs.
DPR has extensively been performing wall and ceiling work. They tell the owners that they are protecting them from gouging subs and controlling schedule. So DPR inefficiently performs the work on T&M at a 30 percent or higher cost to the owners and convinces them there getting a deal! They will continue to work toward 100 percent self-perform.
Very common in metro Phoenix, on residential and commercial remodel and smaller tenant improvements. Often home builders try to turn drywall subs into labor vendors as well by purchasing materials directly. This is part of a very long-standing, high-handed mentality wherein they also demand all manner of the sub’s proprietary cost and quantity information. Coupled with one-sided indemnification and scheduling demands, one wonders why we put up with it. We are lenders, employees (yet not), insurance companies, free estimation services … yet we are merely licensed to nail and putty chalk on walls and ceilings. Amazing.
In Central Illinois we are seeing more and more GCs taking on work as a construction manager, or construction manager at risk.
General contractors had something to say in their defense:
As a general contractor my first priority is making a living for myself. I will self-perform as much as I can until I have more work than I can do myself. Then I will bring in subcontractors. There is no reason for me to stand and watch someone else work when I can be doing it myself.
Presently the subs are taking more of the money, resulting from the current atmosphere in our society of wanting and getting everything so cheap. The bids are so low you cannot afford to have subs. In California, the undocumented workers are working for mere dollars per day, and I do not mean hundreds per day.
The whole premise of having a general’s license is slipping away. Sadly for the trades, so are the good generals and the experienced tradesmen. Many tradesmen are finding it better to change industries and keep some self-respect rather than work for nothing and pay for everything. This way if a job opportunity, (as in a project) comes along, you can bid it professionally rather than just to put food on the table, not relying on it to actually come true. But if it does, then you make the money you would want, rather than being a bottom feeder. This I say with 37 years of hands-on experience.
In lean times the GCs are going lean and are cutting down the middleman by not going turnkey. This is common in foundation work as well as ceiling and wall. I speak from experience as I am a GC.
Another issue is not getting the warranty work by the trade after the work. It becomes a challenge to get the trades to come back and correct or service their work. In these cases the GC has to be resourceful and get his own workers to correct or complete work. The GC has the ultimate responsibility to complete the project no matter what. They do not have the luxury of walking away from the job to go and work on another higher paying job. Performance bonds, insurance, contracts and such follow them until complete and beyond.
As a general contractor we are self-performing more of this work with our own crews. Subcontractors are trying to cut costs and want to come in and bang out the whole job in one trip. They expect everyone else to be off the project when they are there and do not want to return to finish if they could not get it all the first trip. They hit us up for high priced extras for everything little thing they could find. It is impossible to get them back to correct their mistakes. We find it much less hassle to just do it with our own crews. I need subs who understand it takes a team working together to get the project done.