General transferee and general contractor: what’s really the difference after all?

The construction of a house is imminent and construction companies have to be commissioned. Many are initially overwhelmed and do not really know what is important when planning and selecting construction companies. Then terms such as general transferee and general contractor also come into play. Laymen may not be able to make much sense of these terms. Therefore, we try to explain these two terms in an understandable way and show the difference.


What is the general transferee?

In common parlance, the general contractor is also known as the total transferee. On the basis of a construction contract, the general contractor assumes all tasks for the client, from planning and engineering services to all execution and financing services. He takes over the construction program, the design and the supervision of the execution of the construction. As a rule, he is the sole contractual partner of the property owner and coordinates the subcontractors to whom he hands over the construction and planning services. This means that the general contractor is mainly the coordinator for a construction project, but is not involved in the construction process itself. It does not undertake any construction work of its own, but performs work services, i.e. it subcontracts tasks to third parties. Consequently, the general transferee does not have any craftsmen or construction workers of his own. Nevertheless, he is responsible for the overall concept.


The difference to the general contractor

In contrast to the general transferee, the general contractor takes over all construction services for the construction of the building object, but without planning services up to the handover of the keys. The general contractor often has his own company, usually a shell construction company or a carpentry firm, with which he completes his orders. He has his own craftsmen who take care of the work involved. Only in rare cases are subcontractors brought in. However, a general contractor is only an option if the client owns a building plot. An architect often takes over the planning for the project. In addition to the planning, he also takes over the supervision of the construction progress. The craftsmen commissioned by the general contractor only have a contractual relationship with the general contractor. This means that clients do not have to deal directly with the craftsmen in the event of problems; instead, they can turn to the general contractor. Due to the architect’s responsibility for planning and monitoring the construction, the client does not have to deal with any coordination issues.


Why does it make sense to hire a general transferee or contractor?

The main advantage of a general transferee for the client is that the entire execution of the project is commissioned via only one construction contract. This means that the client has only one contact person during the entire construction process, which makes coordination much easier. This is because the client only has to contact the general transferee in the event of problems and therefore has no independent coordination tasks to deal with. In addition, the general transferee makes it easier to calculate the costs incurred, because he can usually quote a fixed price for his costs and the costs of the subcontractors commissioned. In return, the services expected by the client must be clearly agreed in advance. In addition to cost planning, there are several other advantages of the general transferee:

Other advantages of a general transferee:

  • Cost planning (completion at a fixed price)
  • Scheduling and timely completion
  • Technical competence of the general transferee
  • General transferee as sole contact for the client
  • Liability for defects by the general transferee
  • Construction project from a single source
  • Security: if, for example, craftsmen are unavailable, the general transferee has a large network of other craftsmen and companies that can be called upon.

Disadvantages of a general transferee:

  • Limited options for individual design
  • Owners cannot instruct subcontractors directly
  • Decisions of the general transferee must be accepted, unless otherwise contractually agreed

The general contractor has construction expertise, technical requirements and experience in the construction industry. The advantage for the client is that he does not have to deal with many individual craftsmen but has the general contractor and the architect as contact persons. These are responsible for complaints and organizational issues. In addition, exact cost planning is also possible with the general contractor. Here, too, it is important to specify exact ideas and wishes in the contract, because the general contractor tries to work as cost-effectively as possible. This means that he has the right to install less expensive equipment, unless certain models or features are stipulated in the contract. The advantage of a commissioned architect is that he takes individual wishes into account and at the same time knows the work processes of the general contractor. This means that work processes can be better coordinated so as to avoid getting in each other’s way.

Advantages of a general contractor:

Planning of the project according to own conception
Two contact persons: architect and general contractor
Easy cost planning, because fixed price agreed with GC

Disadvantages of a general contractor:

  • Client cannot give direct instructions
  • Price-saving construction of the GC possibly impairs the construction quality


Areas of responsibility of the various parties

After the client places the construction order with the general transferee and concludes a construction contract with him, the general transferee or the architect takes over the planning and supervision services. In addition, the general contractor hands over orders to general and subcontractors and coordinates them. After completion of the project, he hands over the turnkey construction work to the client. The general contractor can be commissioned by the general transferee. He carries out the construction work ordered or subcontracts any tasks that arise. The subcontractors then carry out the tasks on the instructions of the general contractor or transferee. Both GC and GT are specialized companies in the construction industry. With the help of both, building owners can save time on construction and have uniform contact persons as well as an exact cost calculation.


Helpful tips when commissioning a GC or GT

  • All specific ideas and wishes should be recorded in the contract so that they can ultimately be implemented according to individual needs. Because often general contractors or transferees try to build as cheaply as possible.
  • Financing should be done in installments.If there are still visible defects to be repaired, you should withhold payment. This is because an installment is not due until the corresponding construction progress is achieved without defects.
  • If construction is not supervised by the client’s own architect, an additional independent expert should be commissioned to check the process and the final product.
  • Before construction begins, all documents and performance plans should be with the client.
  • In the event of problems, both the general contractor and the general transferee are responsible, not the subcontractors. This is because contractually the general contractor or the general transferee is the contact person and therefore liable to the client.
  • Important parts of the contract are: all construction work to be undertaken (if possible, in great detail), special requests, cost breakdown, construction description (documents on interior finishing, construction, etc.), completion date, legal conditions.


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