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General Contractor (GC)
What is a General Contractor (GC)?
A general contractor (GC), also commonly referred to as a prime contractor, is the main contractor responsible for managing an entire construction project. They are in direct contact with the build’s owner/developer and hold primary responsibility for the construction, execution, quality, and completion of the project under the agreed terms and schedules. As such, the GC addresses concerns and resolves issues related to the project, contributing to the effective execution and timely delivery. The GC also manages the procurement of materials, labor, and equipment, ensuring compliance with building codes and regulations.
A critical part of the GC’s job is hiring and managing trade contractors, also known as subcontractors, who specialize in specific construction trades like electrical, plumbing, framing, etc. The GC essentially acts as a hub, contracting out portions of the work to skilled trade contractors while retaining overall control of the project operations.
GCs have a vested interest in working with subcontractors who not only are highly skilled in their respective trades but also have efficient, well-defined operational and financial workflows to ensure reliability and consistency in their performance. Streamlined billing processes are crucial in this regard. When subcontractors can quickly and accurately generate pay applications—complete with the necessary compliance documentation and lien waivers—it allows the GC to bill the project’s owner promptly and get paid faster. Delays in subcontractor billing can significantly impede the GC’s ability to get paid in time, thereby causing delays in payments to other contractors, too.
This is where a solution like Siteline can ultimately benefit GCs by helping their subcontractors streamline billing processes. Siteline accelerates subcontractor billing by automatically generating pay apps per GC specifications, tracking compliance requirements, managing change orders and lien waivers, and providing payment visibility. When subcontractors use Siteline to automate billing, GCs receive accurate, compliant pay applications faster, allowing them to bill project owners promptly and get paid quicker as a result.
See how Siteline can accelerate your construction billing cycle and get you paid faster by scheduling a demo today.
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Other construction terms
What is Days Working Capital?
Days Working Capital (DWC) in the construction industry is a financial metric used to measure the effectiveness of a company's short term liquidity and operational efficiency. It's calculated by dividing working capital by daily operating expenses. The result represents the number of days a company can continue its operations with the current level of working capital. A lower DWC indicates a company is managing its cash flow efficiently, and a higher DWC may suggest a company is not using its short-term assets efficiently. The construction industry often has a high DWC because of the long project durations and upfront material and labor costs that are required before payment is received. In other words, they have money tied up in work-in-progress. So, for a construction company, it's crucial to manage DWC effectively to maintain a healthy cash flow and remain competitive.
What is Net D?
Net D, in the context of the construction industry, refers to the "net deliverable" square footage or area of a constructed property. It applies to the actual usable space that remains after the subtraction of communal areas such as shared hallways, staircases, and residential utilities from the gross square footage. In commercial real estate, it typically excludes areas reserved for mechanical systems, structural elements, elevator shafts, and similar components. This figure is critical as it impacts the leasing or selling value of a property and also informs space allocation, cost assessment, and planning considerations during a construction project. Therefore, understanding Net D is key to optimizing building layouts and the planning of space allocations within any construction project.
What are Fixed Costs?
Fixed costs, in the context of the construction industry, are the expenses that a contractor has to pay regardless of the level or volume of building activity. These costs, also known as overhead costs, remain constant and do not change with the fluctuations in work demand or project size. They typically include items such as rent or mortgages for office space, salaries for permanent staff, insurances, property tax, machinery depreciation, among other expenditures. The ability to manage fixed costs effectively is vital for a construction company's profitability and viability, as they represent a substantial portion of the total expenses.
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