General contractor or separate trades: the effect on the budget

One price, one contract, one party answerable. The impresa generale (the general contractor) takes on execution of the whole project, organises the work, coordinates the firms to which it subcontracts the specialist trades and answers to the committente (the client) for the overall result. Its price includes the work items, coordination and a margin on the subcontracted parts.

Interfaces are the contractor's problem. Who cuts the chases for the services, who closes them up after the pipes go in, who makes good the plaster around the windows: with a general contractor these questions have a single answer. A work item forgotten between two trades stays inside the contract, unless the design did not provide for it at all.

Variations are discussed with a single counterpart. The civil code regime applies to the single contract: written authorisation of agreed variations (art. 1659), necessary variations (art. 1660), and variations ordered by the client within one sixth of the overall agreed price (art. 1661). With a single price, the one sixth is also calculated on a single basis; the ANCE guide on variations in private contracts (April 2024) states that all variations are added together.

The limit is the price. The client pays for coordination and the margin on the subcontracted parts, and has less visibility of the prices of individual trades. A bill of quantities priced item by item and annexed to the contract reduces that limit and provides a reference for variations.

Individual trade prices may be lower, but the sum of the contracts is not the cost of the project. Each firm prices its own scope. Anything that lies between one scope and another, if no contract allocates it, stays with the client.

• Coordination. Someone has to programme when each firm arrives on site, check that the previous work is ready for the next, and manage overlaps. If the direttore dei lavori (the works director) or a project manager does this, the task must be provided for in their appointment and their fee; if the client does it personally, the time and the risk must be counted.
• Interfaces and forgotten items. Builder's work in connection with services, making good, cleaning, waste disposal, shared scaffolding: these are the items that most often fall between two contracts. They must be allocated explicitly to one firm in the bills of quantities, or estimated as a client item.
• Knock-on delays. If one firm runs late, the following ones cannot start. With separate contracts, the firms have no contract with one another: claims for lost time generally come to the client, who organised the sequence and carries its financial risk.
• Variations across several contracts. Each contract has its own overall agreed price and, on a literal reading of articles 1660 and 1661, which refer to the total agreed price, its own one sixth (a point the sources examined here do not settle). A change affecting three trades generates three variation requests, three prices to be agreed in writing and three running totals to keep.

With several firms on site, the client has duties of its own. Where several contractors are expected on site, even not at the same time, the client or the responsabile dei lavori (the client's appointed works manager for safety purposes) appoints the design-stage coordinator at the same time as awarding the design appointment, and the execution-stage coordinator before awarding the works (D.Lgs. 81/2008, art. 90(3) and (4)).

The duty depends on the number of firms, not on the form of contract. A general contractor that subcontracts may also bring several contractors onto the site. With separate trades, however, there will certainly be more than one from the outset, and both appointments must be in the budget from day one, together with the coordination time they require.

Small private works benefit from an exception. The duty to appoint a design-stage coordinator does not apply to private works not subject to a permesso di costruire (building permit) and worth less than 100,000 euros; in that case the execution-stage coordinator also takes on the other's functions (art. 90(11)). The execution-stage coordinator is still required. Where these costs sit within the total cost is covered in From works budget to the total cost of the project.

Useful combinations exist between the two models. The most common is a general contractor for the building work and most of the specialist trades, with one or two separate contracts for clearly bounded work, such as windows or made-to-measure joinery, whose interface is simple and described. Another is a general contractor with some supplies bought directly by the client and installed by the contractor at an installation-only price.

Every item taken out must carry its interface with it. Who takes the measurements, who receives and stores the materials, who does the builder's work, who answers if the installation is not compliant: the answers must be written into both contracts. Without them, taking an item out produces the same hidden costs as separate trades, on a smaller scale.

The comparison is made on the same basis. To choose, the client asks the general contractor for a quote on the complete bill of quantities and the separate firms for quotes on their respective scopes of the same bill, as described in Comparing contractor quotes on the same basis. Only then can the sum of the separate contracts be compared with the single price.

In renovation, interfaces are the rule. Services run through existing walls, demolition reveals unforeseen conditions, work items overlap in confined spaces. This is the setting in which separate trades generate the most coordination cost, and in which items forgotten between two firms are most frequent. For orders of magnitude of the cost of this kind of project, see the page on the cost of a full house renovation.

The stazione appaltante (the public contracting authority) may divide the contract into lots, but the value remains that of the whole project. Where there are lots, the total estimated value of all the lots is taken into account (D.Lgs. 36/2023, art. 14(9)), and "a contract may not be split in order to avoid the application of the rules of the code" (unofficial translation), save for objective reasons (para. 6). Dividing into lots may meet organisational needs, but it may not be used to change the applicable procedure.

For the budget, lots have the same effects as separate trades. More contracts mean more interfaces, more coordination for the contracting authority, through the works director and the RUP (the single project manager), and more variations to manage contract by contract. The quadro economico (the project's overall cost schedule) must contain the resources for this work.

The example is entirely fictitious, with amounts excluding VAT. For a private project, the client receives a quote from a general contractor and three quotes from separate firms on their respective scopes of the same bill of quantities.

The real saving is not the apparent one. The difference on the quotes alone is 60,000 euros; on the comparable cost it falls to 15,000 euros. The client must then ask whether those 15,000 euros make up for the risk it takes on: if the allowance for delays proves insufficient or an interface has been underestimated, the advantage disappears. The safety coordinators do not appear in the table because, with several contractors expected, they would be required in both cases.