Building Design and Construction Handbook - Merritt - Ventech!

CONSTRUCTION PROJECT MANAGEMENT 17.3
Package (Turnkey) Builders. Such companies take on a contract for both design
and construction of a building. Often these services, in addition, include acquisition
of land and financing of the project. Firms that engage in package building usually
are able to show prospective clients prototypes of similar buildings completed by
them for previous owners. From an inspection of the prototype and discussion of
possible variations or features to be included, an approximate idea is gained by the
prospective owner of the cost and function of the proposed building.
Package builders often employ their own staff of architects and engineers, as
well as construction personnel. Some package builders subcontract the design portion
to independent architects or engineers. It is important to note that, when a
package builder undertakes design as part of the order for a design-construction
contract, the builder must possess the necessary professional license for engineering
or architecture, which is required in most states for those performing that function.
Sponsor-Builder. In the field of government-aided or subsidized building, particularly
in the field of housing, a sponsor-builder may be given the responsibility for
planning design, construction, rental, management, and maintenance. A sponsor
guides a project through the government processing and design stages. The sponsor
employs attorneys to deal with the various government agencies, financial institutions,
and real estate consultants, to provide the know-how in land acquisition and
appraisal. On signing the contract for construction of the building, the sponsor
assumes the builder’s role, and in this sense functions very much as an ownerbuilder
would in building for its own account.
17.2 CONSTRUCTION
COMPANY ORGANIZATION
How a construction company organizes for its work depends on number and size
of projects, project complexity, and geographical distribution of the work.
Sole Proprietor. This is a simple form of organization for construction contractors.
It is often used by subcontractors, including those licensed in plumbing, electrical,
or mechanical work. The advantage of operating as a sole proprietorship is that
taxes on profits are much lower for individual owners. But there is the disadvantage
of having the personal exposure to potential debts associated with a disastrous job.
Partnership. This is the joint ownership and operation of a company by two or
more persons. Each partner, however, is personally liable for all the debts of the
partnership. Profits and losses are shared in some manner predetermined by the
partners. A partnership comes to an end with the death of one of the partners. (For
typical provisions to be included in a partnership agreement, see Richard H. Clough,
‘‘Construction Contracting,’’ John Wiley & Sons, Inc., New York.)
Corporation. This is the most common form of organization used by general
contractors. A corporation is an entity that has the power to act as a separate body
and enter into contracts. It has perpetual life and is owned by stockholders, each
of whom has a share in the profits and losses of the corporation. An important
advantage of the corporate form of ownership for general contractors is the absence
of personal liability of the stockholders. This is desirable because of the risks of