A General Contractor’s (GC’s) markup is one of the most misunderstood line items in a construction budget. Many owners see it as “extra profit.” That assumption is incorrect. Here’s what a GC’s markup covers.
PROJECT MANAGEMENT & SUPERVISION
This is the GC’s primary value. Markup supports on‑site supervision, coordination between trades, problem‑solving when drawings meet real‑world conditions, and daily decision‑making that keeps work moving. Without this, subcontractors operate independently—and the owner ends up managing the project, usually without the experience to do so.
SCHEDULING, LOGISTICS & COORDINATION
Subcontractors do not coordinate amongst themselves, especially if there are four or five trades involved in just one area of a project like a kitchen. The GC ensures their work is coordinated. Construction is not linear. One late delivery or failed inspection can stall an entire job. Markup covers scheduling, sequencing trades, coordinating deliveries, and constantly adjusting the plan as conditions change.
INSURANCE, LICENSING & RISK
GCs carry substantial liability so owners don’t have to. Markup helps pay for general liability insurance, workers’ compensation, licensing, bonding, and compliance. When something goes wrong—and eventually something will—the GC absorbs the first layer of risk.
QUALITY CONTROL & ACCOUNTABILITY
A GC is a single point of responsibility. They verify work meets drawings and code, reject substandard work, manage corrections, and handle warranty issues. You don’t chase ten subcontractors—you call one party.
OVERHEAD & BUSINESS OPERATIONS
A GC is a real business, not a pass‑through. Markup supports estimating, accounting, payroll, office staff, software, and legal compliance. Without this, no contractor can sustainably stand behind their work.
COMPARING GC MARKUPS
This is where many owners get misled. One GC may quote an 18% markup and another 20%. The 18% sounds cheaper, but often isn’t. Some GCs quote markup as profit only. Insurance, supervision, project management, and overhead then appear later as separate line items you still have to pay. Another GC may quote a higher percentage that includes all overhead and risk. In real dollars, the 20% GC may actually cost less overall, with fewer surprises and clearer accountability. Always ask the GC to break down their markup into separate line items.
WHY ACTING AS YOUR OWN GC OFTEN BACKFIRES
Many owners assume they can save money by acting as their own General Contractor and hiring subcontractors directly. However, this usually results in major mistakes that owners often live with for years, higher costs, longer construction schedules, and a lot of stress.
A frequent issue is bid comparison. Owners may solicit multiple bids from a trade—such as HVAC—assuming they are comparing apples to apples. In practice, they rarely are. One HVAC contractor may be pricing equipment and ductwork only, while another includes controls, startup, or coordination. Critical associated scopes—such as electrical, drywall repair, framing, or roofing penetrations—are often excluded because these are typically coordinated by a GC.
The result is a false sense of savings. What looked like the lowest bid quickly grows once the owner realizes additional subcontractors must be hired to complete the work. Worse, those trades may not be scheduled correctly, leading to delays, rework, or failed inspections.
Beyond scope gaps, self-GC owners also underestimate sequencing. Trades do not coordinate amongst themselves. If the electrical isn’t ready when the HVAC contractor shows up, the HVAC contractor leaves—and may charge a return trip fee. Multiply this across multiple trades, and costs escalate quickly.
There is also the issue of accountability. When multiple subcontractors are hired directly by the owner, no single party is responsible for the overall outcome. When something goes wrong, each trade can point to another, leaving the owner to mediate disputes they are not equipped to resolve.
Self-GC projects rarely fail because of bad intentions. They fail because construction requires constant scope definition, trade coordination, sequencing, and risk management—none of which are part-time responsibilities.
WHEN A GC MAY ACTUALLY NOT BE NECESSARY
Not every project requires a General Contractor. For smaller, tightly scoped projects involving three subcontractors or fewer, a GC may not be necessary. In these cases, I often act as a construction manager, coordinating trades, scheduling work, reviewing installations, and ensuring alignment with the design intent. This approach maintains professional oversight and accountability while keeping costs proportionate to the scale of the project. This is most effective for focused remodels, finish upgrades, and targeted improvements. My role is to help clients choose the right level of construction support for their specific project.
