Main contractor or separate packages: the budget effect

	Entreprise générale (main contractor)	Lots séparés (separate packages)
Number of works contracts	one	one per package
Coordination between trades	included in the price	borne by the client
Margin on subcontractors	included	no main contractor margin
Interfaces between packages	risk borne by the main contractor	risk borne by the client
Unit prices	often higher	often lower
Costs outside the price to be budgeted	low	coordination, provision for interfaces, the client's time

The difference is not moral, it is a matter of accounting. A main contractor sells coordinated works; separate packages sell services that the client has to assemble. The price of assembly exists in both cases: it sits in the main contractor's tender, and in the client's budget when packages are let separately.

One price, one responsibility for execution. The main contractor commits to the whole of the works and itself organises the trades, which it carries out or subcontracts. The roles and contractual relationships of this arrangement are covered in the article on contractor and main contractor.

Coordination is in the price. Programme, sequencing of trades, the contractor's site meetings, management of subcontractors: these tasks have a cost, and the main contractor prices it. The client pays for it, but knows it from the tender onwards.

So is the margin on subcontractors. The main contractor applies a margin to the work it subcontracts. That is the counterpart of the risk it takes in guaranteeing its completion and how it fits together.

The lump sum covers the whole. In a private marché à forfait (lump-sum contract) based on a plan drawn up and agreed, article 1793 of the old Civil Code forbids the contractor from asking for a price increase without a change authorised in writing and an agreed price. With a main contractor, that protection covers, in a single contract, all the works shown on the plan, including the junctions between trades that form part of them; anything not shown still has to be negotiated.

Lower prices, but a narrower scope. Each package contractor prices its package, with no main contractor margin and no overall coordination. The total of the packages is therefore often lower than a main contractor's tender. That total is not the cost to the maître d'ouvrage (bouwheer, the client).

Coordination stays with the client. Nobody carries it by default. The architect, whose involvement is compulsory for works requiring a building permit, subject to exemptions (act of 20 February 1939, art. 4), designs and supervises execution; that does not make the architect responsible for organising the contractors among themselves, unless the appointment provides for it. If the client entrusts that coordination to someone, it has a price; if the client keeps it, it has a cost in time and risk.

Interfaces become orphan items. The junction between structural work and joinery, the openings left for building services, the finishes after another trade has passed through: this work falls between two packages. If the specification does not assign it explicitly, it comes back as a variation, or is not done.

Delays spread from one package to the next. A delay on one package pushes back the following ones. The delayed contractor has no contract with the one that caused the delay: it claims from the client, and it is for the client to turn, contract by contract, against the responsible contractor, with evidence.

The client's own obligations weigh more. Safety and health coordination is required as soon as several contractors are involved, subcontractors included, but it carries more weight when several contractors follow one another or work side by side on site. The client appoints the design-stage and construction-stage coordinators itself for a structure of 500 m² or more; below that, the designer and then the party in charge of supervising execution do so.

These costs belong to the total project cost, just like fees or the contingency. They are budgeted from the outset, as described in the article from works budget to total project cost.

A lump sum protects only its own scope. With separate packages, each contractor is bound by its own contract; none is bound by what lies between two contracts. A client who chooses separate packages to save on prices must therefore also gain on the precision of the documents, otherwise the saving is lost in variations.

The quality of the specification becomes decisive. A clear scope boundary for each package, a list of interfaces with their allocation, a common programme annexed to the contracts: these are the tools that prevent interface variations. Drafting them has a design cost, to be weighed against the expected saving.

Termination costs per contract. Article 1794 of the old Civil Code allows the maître de l'ouvrage (the client, in the wording of the Code) to terminate a lump-sum contract at will, compensating the contractor for its expenses, its work and what it could have earned. With separate packages, replacing a defaulting contractor or abandoning a package is negotiated package by package, with the knock-on delay for the others.

The arrangement can bring the project within or take it outside the scope of the loi Breyne (Breyne Act). For the construction of a dwelling, the number of contractors to whom the works are entrusted plays a decisive role, according to the test analysed in the article on the single contractor test.

For the budget, the consequence is measured in protection, not in euros. A client having their home built therefore also compares what they gain in price with what they lose or keep in statutory guarantees. This point is checked before choosing the arrangement, with the page devoted to it.

The pouvoir adjudicateur (contracting authority) may divide its contract into lots. Each lot then receives separate tenders, whose prices are examined in the same sequence: correction, price verification, examination of abnormal prices.

A procedural rule specific to lots exists. The royal decree of 18 April 2017 (art. 90, 3°) allows the procédure négociée sans publication préalable (negotiated procedure without prior publication) for each lot below 100,000 euros HTVA (excluding VAT) of a contract whose estimated value does not reach the European thresholds (art. 11), provided that the cumulative value of those lots does not exceed 20% of the estimated value of the contract. The general threshold of 140,000 euros excluding VAT (art. 90, 1°) is assessed on the expenditure to be approved.

Coordination costs exist in the public sector too. A contracting authority that awards five lots to five contractors carries the same interfaces as a private client. It must budget for them in the estimate and deal with them in the specification, otherwise they will come back as modifications during execution.

The following example is entirely fictitious; the amounts are round and reflect no market price.

Item (excluding VAT)	Main contractor	Separate packages
Works tenders	€1,000,000	€900,000 (sum of six packages)
Coordination entrusted to a third party	included	€40,000
Provision for interfaces and omissions	included in the contractor's risk	€30,000
Client's monitoring time	low	to be valued, here €10,000
Comparable cost	€1,000,000	€980,000

The apparent gap of 100,000 euros shrinks to 20,000 euros once the costs outside the price are added, and it depends entirely on the assumption about interfaces. With an imprecise specification and a doubled provision, separate packages become dearer than a main contractor. With very precise documents and an experienced client, the gap can hold.

From the budget's point of view, five questions guide the choice. They are asked before tendering, not after:

• Are the documents precise enough to draw the boundaries of each package? If not, separate packages transfer to the client a risk the client cannot price.
• Who coordinates, and at what price? Unassigned coordination is not free: it is paid for in delays and variations.
• Does the client have the capacity to follow several contracts? Several contracts mean several états d'avancement (interim valuations), several final accounts and several counterparts.
• What statutory protection is at stake? For a dwelling, the choice of arrangement is checked against the single contractor test.
• Does the local market offer both? Depending on the size and nature of the works, main contractors or specialist contractors may be scarce, and competition weak in one of the two arrangements.