During the phases of a building renovation, the client may find themselves faced with a series of challenging issues. Since they’re often not experts in the field, the challenges they face end up being overwhelming and amplified financially. This is why a general contractor is often chosen.
Who is the general contractor?
The term general contractor, or more commonly, general contractor, refers to a natural person or legal entity identified by the final client who is responsible for optimizing construction processes and phases. This person must possess adequate organizational, technical, implementation, and financial capabilities.
The objective behind hiring a general contractor is to optimize time and cost, as well as diversify the client’s technical and legal responsibilities.
Duties and responsibilities of the general contractor
This role was introduced into our legal system to improve the implementation of public works; in fact, entrusting the entire task to a single entity makes it easier to overcome difficulties and coordinate the work.
Article 194 of the Public Contracts Code (Legislative Decree 50/2016) defines the duties and responsibilities of this role:
Preparation of the executive project and the technical-administrative activities required by the contracting entity;
Acquisition of the areas of intervention;
Expropriation powers in the absence of a commissioner;
Execution of the works by any means;
Prefinancing, in whole or in part, of the project;
Identifying the construction management methods and the managing entities, if required;
Informing the contracting entity of the plan for assignments, expropriations, material supplies, and all other elements useful for preventing criminal infiltration into the design process.
Characteristics of the general contractor
Typically, those in this role have very specific and well-defined characteristics. Within the working group, or staff, there will be professionals specific to each sector, who know the subject matter down to the smallest detail. They are thus able to understand the critical aspects of the projects and, with their experience, will find the most appropriate and effective solution, in the shortest time and at the lowest cost.
It is not uncommon for the staff to also include a sector dedicated to financing, which has been increasingly contributing in recent times.
The advantages of an external company
Hiring a third party offers numerous advantages, especially for complex and multifaceted processes. Among these advantages is their expertise in construction processes and their understanding and knowledge of the various deadlines to be met. Their approach and interpretation of the contractor’s challenges includes, in addition to technical deadlines, bureaucratic ones, failure to meet which all too often leads to uneconomical setbacks.
Among their duties and advantages is also that of coordinating all the other professionals involved in the construction or renovation process. This role allows for the reduction of downtime and waiting times, while also providing an excellent financial advantage to the client, as subcontractors are selected based on their experience and cost-effectiveness.
The general contractor in the Superbonus
The use of the general contractor role in the private sector is closely linked to the Superbonus, or rather, to the critical issues that have developed in recent years.
Taking for granted what the Superbonus is, when it was introduced, and its context in Italian law, we return to the dedicated article; here, we focus on the role of the general contractor. Unlike public procurement, private law does not include the role of the general contractor as a cornerstone of project development. However, the complexity of the subject matter and the requirements to be met due to tax deductions and ongoing regulatory changes have highlighted the need to adopt the managerial skills of this role within the private sector as well.
That said, let’s understand who this role is within the Superbonus.
Typically, this is a natural person or a company of specialized professionals, entrusted by the client to complete the Superbonus process for a property they own, from the design phase to the energy efficiency and seismic retrofitting. This third party, with its own organization and resources, undertakes to carry out the work and supplies necessary to complete the projects.
Furthermore, given the option of converting the deduction into a transferable tax credit or an invoice discount, the general contractor also takes care of the legal and administrative aspects.
This is usually a company, rather than a single individual, given the numerous tasks and expertise in different fields that must be analyzed.
The primary skill this figure must possess is organizing and coordinating all the stakeholders involved in the construction or renovation process, namely technicians, accountants, companies, and the client.
How to manage the relationship between general contractor and client
We have already noted that in the private sector, there is no specific regulation governing the relationship between these two parties. However, an analogy can be found with public procurement contracts, as described in Article 1655 of the Italian Civil Code, which defines:
A procurement contract is a contract “by which one party undertakes, with the organization of the necessary resources and management at its own risk, the completion of a work or service for a monetary consideration.”
This is the relationship established in the case of various types of construction projects. Returning to the Superbonus regulations, it is important to emphasize that this type of relationship is subordinate to other employment relationships, as a large number of parties are involved. Therefore, beyond the mere employment relationship with the company carrying out the work, a series of contracts come into play, including:
Subcontracting agreement;
Credit assignment agreement between client and contractor;
Credit assignment agreement between client and bank;
A general contractor, therefore, represents the most cost-effective and optimal solution for particularly complex projects. The client will benefit from entering into a single contract and dealing with a single point of contact, as well as being supported by a team of highly qualified experts and professionals.