General Contracting 101 — What Every Owner Should Know
Understand contractor license classes, insurance and bonding, deposits and payment schedules, contracts, change orders, and lien protection before you sign.
Common Project Types and Typical Scope
Kitchen Remodel
Scope: Demolition, cabinetry, countertops, plumbing and electrical relocation, flooring, finish carpentry.
Watch for: Hidden water damage behind cabinets, undersized electrical service, permit requirements for moved plumbing.
Best for: Owners who want one accountable party coordinating four or more trades in a small space.
Bathroom Remodel
Scope: Waterproofing, tile, fixtures, ventilation, plumbing rough-in, lighting, accessibility upgrades.
Watch for: Slab plumbing relocation, mould or rot in wet walls, ventilation that does not meet code.
Best for: Full gut-and-replace jobs; a single-fixture swap usually only needs a plumber.
Home Addition
Scope: Design and permits, foundation, framing, tie-in to the existing structure, mechanical extension, exterior and interior finish.
Watch for: Setback and zoning limits, impact fees, HOA approvals, matching existing finishes.
Best for: Adding a bedroom, in-law suite, or second storey without moving.
Whole-Home Renovation
Scope: Structural changes, full mechanical replacement, window and door packages, every interior finish.
Watch for: Living arrangements during the build, scope creep, sequencing across a dozen trades.
Best for: Older homes where the systems have reached end of life at the same time.
New Custom Build
Scope: Site work and utilities, foundation, shell, all mechanical systems, finishes, final inspections and certificate of occupancy.
Watch for: Allowance items that balloon, soil and drainage surprises, lender draw schedules.
Best for: Owners building on their own lot who want a single contract from permit to keys.
Light Commercial Build-Out
Scope: Tenant-improvement drawings, partitions, ADA compliance, HVAC and electrical distribution, fire and life-safety.
Watch for: Landlord work-letter limits, occupancy classification changes, inspection lead times.
Best for: Retail, office, medical and restaurant tenants fitting out a leased shell.
What Does a General Contractor Cost?
A general contractor is paid one of two ways: a fixed-price contract, where the bid includes labour, materials, subcontractors and the contractor's margin, or cost-plus, where you pay actual costs plus a management fee of roughly 10–20%. Fixed price gives certainty; cost-plus gives transparency and flexibility when the scope is still moving.
Expect the contractor's overhead and profit to be 10–25% of the project total. Materials and subcontractor labour make up the rest, so the biggest cost lever is scope and finish level, not the fee.
Always get at least three written bids on the same drawings and specification. A bid far below the others usually means something was left out. Quality of supervision matters more than the headline number for how the project actually finishes.
Contracts, Deposits and Payment Schedules
A written contract should spell out scope, drawings, allowances, a payment schedule tied to milestones, a change-order process, the start and substantial-completion dates, and who pulls permits. Never work from a one-page estimate on a project of any size.
Deposits of 10% (or 10% of the first $1,000 plus a small percentage after, in some states) are typical. Be cautious of a contractor asking for a third or more up front. Progress payments should follow work completed, with a final payment of 5–10% held until punch-list items are done and lien releases are in hand.
Change orders happen on nearly every project. Insist that every change is priced and signed before the work is done, so the final invoice never surprises you.
Licensing, Insurance and Lien Protection
Before You Sign, Confirm:
- - An active state licence in the right class (in Florida: CGC, CBC or CRC)
- - General liability insurance with you as certificate holder
- - Workers' compensation coverage or a valid exemption
- - A physical business address and references from the last two years
- - Who will supervise on site day to day
Protect Yourself From Liens:
- - Record a Notice of Commencement where your state requires it
- - Collect lien waivers from the contractor and subs with each payment
- - Respond to any Notice to Owner from a supplier or sub
- - Keep copies of every invoice and cancelled cheque
- - Hold retainage until the final lien release is delivered
When You Need a General Contractor vs. a Single Trade
Hire a general contractor when the job involves three or more trades, needs a building permit with plan review, changes structure or layout, or has to be sequenced so one trade's work does not undo another's. The GC carries the schedule, the permits, the inspections and the subcontractor contracts.
A single-trade job such as replacing a water heater, rewiring a panel or repainting rooms is usually better handled directly by a licensed plumber, electrician or painter. Paying a GC's management fee on a one-trade job rarely buys anything.
Design-build contractors bundle architecture and construction under one contract, which simplifies accountability but limits your ability to bid the construction separately. Decide which matters more to you before you start interviewing.
Ready to Find a General Contractor?
Browse our directory of licensed general contractors.
Browse Directory