What Do General Contractors Do? Understanding the Construction Industry
General contractors are the businesses and professionals that manage construction projects from concept to completion. While an individual GC oversees a single project, the general contracting industry as a whole is the engine that turns architectural plans into physical buildings — homes, offices, hospitals, schools, roads, and every other structure in the built environment.
In the United States, the construction industry employs over 7 million people, and general contractors represent the largest segment — approximately 30 percent of all construction firms. These range from solo practitioners remodeling bathrooms to multinational firms building billion-dollar infrastructure projects.
The Construction Project Lifecycle
Every construction project, regardless of size, follows a standard lifecycle that general contractors navigate:
1. Design and Pre-Construction
Before any dirt is moved, the GC works with architects, engineers, and the owner to develop the project scope. This includes value engineering (finding cost-efficient alternatives without sacrificing quality), creating detailed cost estimates, developing the project schedule, identifying long-lead materials that must be ordered early, and applying for permits. On large projects, a GC may be brought on during the design phase through a “design-build” contract, where the same firm handles both design and construction.
2. Procurement and Subcontracting
Once the design is finalized, GCs solicit bids from subcontractors — typically 6 to 12 specialty trades on a medium-sized project. The GC evaluates bids based on price, schedule availability, past performance, and financial stability. They also purchase materials, rent equipment, and set up site trailers and temporary utilities. On a typical commercial project, the GC may manage 15 to 25 separate subcontracts simultaneously.
3. Construction and Site Management
This is the most visible phase. The GC coordinates the sequence of trades — site work, foundations, structural framing, roofing, MEP (mechanical, electrical, plumbing), interior finishes — so each trade works efficiently without conflicts. Daily responsibilities include safety inspections, quality control checks, progress meetings with subcontractors, document management (RFIs, submittals, change orders), and progress reporting to the owner and lender.
4. Closeout and Handover
After construction is complete, the GC manages the closeout process: final inspections by building officials, punch list (a list of minor items to fix), commissioning of building systems (HVAC, fire alarms, elevators), assembling the operations and maintenance manuals, training the owner’s staff on building systems, and recording lien waivers from all subcontractors. The closeout phase is often the most paperwork-intensive part of a project.
How General Contractors Operate as Businesses
Bidding and Estimating
GCs win projects through competitive bidding or negotiated contracts. Estimating is a specialized skill — the GC must accurately predict labor costs, material prices (which fluctuate significantly), equipment needs, subcontractor fees, permits, and overhead, then add a profit margin (typically 3 to 8 percent on commercial projects). A bid that is too high loses the job; one that is too low loses money. Many GCs employ full-time estimators who use specialized software like Bluebeam, PlanSwift, or HCSS.
Bonds and Insurance
On most commercial and public projects, GCs must provide surety bonds — a three-party guarantee that the project will be completed. There are three types: bid bonds (guarantee the GC will honor their bid), performance bonds (guarantee the project will be completed), and payment bonds (guarantee subcontractors and suppliers will be paid). Bonding capacity is a key measure of a GC financial strength and reputation. GCs also carry general liability insurance, workers compensation, and umbrella policies — insurance costs can be 2 to 5 percent of revenue.
Project Delivery Methods
GCs work under several delivery models. Design-Bid-Build is the traditional approach where design and construction are separate phases. Design-Build combines both under one contract — this is the fastest-growing method because it reduces disputes and accelerates schedules. Construction Manager at Risk (CMAR) involves a CM who acts as a consultant during design and becomes the GC during construction, guaranteeing a maximum price. Each model shifts risk differently between the owner and the GC.
The GC Ecosystem: Who They Work With
A general contractor never works alone. They operate within a complex ecosystem of professionals:
Architects design the building and administer the construction contract. The GC builds what the architect designs — when conflicts arise between plans and field conditions, the architect issues clarifications or change orders.
Structural, Civil, and MEP Engineers design the building systems. The GC coordinates their input and ensures construction follows engineering specifications.
Subcontractors perform the actual trade work — framing, electrical, plumbing, HVAC, roofing, drywall, painting, flooring, landscaping. A GC is only as good as the subcontractors they hire.
Suppliers and Material Vendors provide lumber, concrete, steel, fixtures, and finishes. Material lead times and price volatility are among the biggest risks GCs manage.
Building Inspectors from local municipalities inspect work at key milestones — foundation, rough-in, final — to verify code compliance. Failed inspections cause costly delays.
Technology in General Contracting
The construction industry has undergone a technology transformation in the last decade. Modern GCs use:
Project Management Software: Platforms like Procore, Autodesk Build, and CMiC manage RFIs, submittals, change orders, schedules, and daily reports from a single dashboard. Procore alone is used on over $1 trillion in construction projects annually.
Building Information Modeling (BIM): 3D digital models that integrate architectural, structural, and MEP designs, allowing the GC to detect clashes (e.g., a duct running through a steel beam) before construction starts — saving millions in change orders.
Drones and Site Cameras: Aerial photography for site progress tracking, earthwork volume calculations, and inspection of roofs and other hard-to-reach areas. Time-lapse site cameras provide daily progress documentation.
Mobile Field Tools: Superintendents use tablets and smartphones for daily reports, photo documentation, punch lists, and safety inspections — replacing paper forms that were standard a decade ago.
Industry Trends Shaping General Contracting
Labor Shortage: The construction industry faces a severe skilled labor shortage. The average age of a construction worker is 42, and fewer young workers are entering the trades. This drives up labor costs and forces GCs to invest in training and technology.
Prefabrication and Modular Construction: More GCs are using off-site prefabrication — building walls, bathrooms, or entire rooms in factories — to reduce on-site labor needs, improve quality control, and accelerate schedules. Modular construction can cut project timelines by 30 to 50 percent.
Sustainability and Green Building: LEED certification, net-zero energy buildings, and sustainable materials are increasingly standard requirements. GCs must understand green building practices, waste management, and energy-efficient systems to compete for modern projects.
Frequently Asked Questions
What is the difference between a general contractor and a construction manager?
A general contractor holds the contract and assumes risk for the completed project. A construction manager acts as a paid consultant to the owner during design and construction but does not typically hold subcontracts or assume the same level of financial risk. In practice, many large firms offer both services.
How do general contractors find work?
GCs find projects through competitive bidding (on public projects, bidding is required by law), negotiated contracts with repeat clients, referrals from architects and real estate developers, and online platforms like Planroom and Dodge Construction Network. Relationships are critical — most GCs get 60 to 80 percent of their work from repeat clients or referrals.
What is a general contractor markup?
The GC markup covers overhead and profit. On commercial projects, the markup is typically 8 to 15 percent of total project cost. On residential projects, it ranges from 10 to 25 percent. Markup includes office expenses, project management salaries, vehicle costs, insurance, and profit — the net profit margin for most GCs is 2 to 5 percent of total project value.
Do general contractors need a degree?
Not always, but it helps. Many successful GCs start as tradespeople — carpenters, electricians, masons — and work their way up. Others earn construction management or civil engineering degrees. Large commercial GCs typically require a degree for project manager positions, while smaller residential GCs often prioritize field experience over formal education. All GCs must hold a state license, which requires passing a trade exam.
