Key takeaways
- The GC builds the work and earns its margin from the contract. The owner’s rep manages the project and is paid only by the owner.
- Lump-sum contracts reward scope gaps and change orders. A percentage fee on cost-plus work grows as cost grows.
- The architect’s construction administration and the GC’s project manager do not replace an owner-side construction manager.
- Bring in an owner’s rep before choosing the builder, while budget decisions are still open.
On every construction project, some people are paid to build: the general contractor, its subcontractors and suppliers. The general contractor and the owner’s representative both read drawings and talk schedule and cost. The difference is whose interests each one is paid to protect.
What a general contractor does
The general contractor (GC) holds the construction contract and delivers the work in the drawings and specifications:
- Pricing the work and carrying the risk on that price, as far as the contract says
- Hiring and coordinating subcontractors: concrete, framing, roofing, electrical, plumbing, HVAC, finishes
- Running the site through a superintendent: safety, deliveries, sequencing
- Calling inspections and fixing failed work
- Submitting monthly pay applications and paying subs and suppliers
- Warranting the work
A GC is a business with its own margin and risk, and its contract defines what it owes you. Anything outside the contract becomes a negotiation.
What an owner’s representative does
An owner’s representative is a construction professional hired and paid by the owner and accountable only to the owner. The rep holds no contract with the builder and does not do the work. The job is to manage the business of the build:
- Setting up the budget, feasibility, schedule and team
- Running design with the architect and engineers, including buildability and value-engineering reviews
- Managing permits and board approvals
- Building bid packages, vetting contractors and comparing bids line by line
- Negotiating price, allowances, retainage (the share of each payment held back until the end), change-order rules, schedule and warranties
- Checking every pay application against work in place
- Reviewing and negotiating change orders
- Leading meetings and reporting to the owner weekly
- Checking quality, then running the punch list and closeout
Side by side
| Question | General contractor | Owner’s representative |
|---|---|---|
| What is it hired to do? | Build the work | Manage the project on the owner’s behalf |
| How is it paid? | A fixed price, or cost plus a fee. Profit comes from the margin | A flat retainer or a percentage of construction value, paid by the owner |
| Takes money from the build? | Yes: labor, materials, markups and fee | No markups, no referral fees, nothing from contractors or suppliers |
| Runs the trades day to day? | Yes, through its superintendent | No. It manages contract, budget, schedule and quality for the owner |
| Role on the pay application | Prepares it | Checks it against the site and recommends what to pay |
| When it joins the project | Usually when invited to bid | From feasibility and design onward, or at any stage |
Where incentives split
Most contractors act in good faith. The issue is how the contract is set up.
On a lump-sum (fixed-price) contract, the GC’s profit is the gap between its price and its cost. Scope gaps in the drawings, thin allowances and owner changes all widen that gap.
On a cost-plus contract, the GC is reimbursed for costs plus a fee. If the fee is a percentage of cost, it grows as the job gets more expensive. A guaranteed maximum price (GMP) caps that, but only as well as the scope, allowances and contingency language behind it.
Example only: on a $4,000,000 cost-plus build with a 10% fee, every $100,000 of added cost adds $10,000 to the contractor’s fee. Someone should be asking whether the $100,000 was needed.
There is also an information gap. The contractor prices construction every day, and most owners build a few times in their lives. An owner’s rep closes that gap.
Three common assumptions
“My architect handles this.”
The architect designs the building and often provides construction administration: answering the contractor’s questions (RFIs), reviewing submittals and observing the work. Architects usually don’t negotiate the construction contract, level bids line by line, track the budget weekly or manage owner decisions across consultants. And when a dispute involves the design, the architect is a party to it.
“The GC has a project manager.”
That project manager answers to the GC and is paid to deliver the contract profitably and on time. Protecting the owner’s budget is a different job.
“A rep is just another layer of cost.”
In our experience, contractor proposals often carry 10–20% of negotiable room once scope is clarified and terms are pushed. Example only: on a $3,000,000 proposal, 10% is $300,000, before counting the savings from checked pay applications and fairly priced change orders.
How the two work together
The owner’s rep and the GC are not adversaries. A good rep makes the GC’s job easier: decisions come on time, drawings are coordinated, pay applications are reviewed promptly against agreed rules, and the owner speaks with one voice.
A typical week:
- An owner-architect-contractor (OAC) meeting led by the rep, with an action list and decision log
- A site walk to check progress and quality
- Review of open RFIs, submittals and change-order requests
- A written report to the owner: progress, photos, budget, schedule and decisions needed
When to bring each one in
The GC comes in when there is enough design to price. The owner’s rep should come in earlier, at feasibility or early design, while the decisions that set the budget are open. A rep can also step in mid-construction when a job is over budget or behind.
How Monster Project Group fits
Monster Project Group works for the owner. We hold no contract with your builder, take no markups and accept nothing from contractors, vendors or suppliers. Osher Dyce started his career on the GC side and built MPG after seeing where owners were exposed in their contracts, budgets and schedules.
Can one company be both my general contractor and my owner’s rep?
If the firm building the work also represents you, the same party prepares and approves the pay application. An owner’s rep should hold no contract with the builder.
If I hire an owner’s rep, do I still need a general contractor?
Yes. The GC builds the work and runs the site. The owner’s rep manages the project for you and holds the GC to its contract.
Will my contractor object to an owner’s rep?
Experienced contractors work with owner’s reps regularly. Most like an owner who decides on time and pays promptly against clear rules.
Does an owner’s rep replace my architect?
No. The architect stays responsible for the design. The owner’s rep manages budget, contracts, schedule and payments and coordinates the architect with the team.