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General contractor or separate trade packages: the budget effect

📐 Article

By , construction economist

Information verified on 10 min read

What you will learn The Luxembourg rule for public contracts (lots as the principle, a general contractor as the exception), what each procurement route does to price, interfaces and budget risk, the rules specific to a general contractor (procedure threshold, price analysis of subcontractors, price revision excess), small lots, and the choice in a private contract.

Choosing between a general contractor (entreprise générale) and separate trade contracts (corps de métier) means choosing who carries the coordination and who carries the omissions. A general contractor sells a price with coordination included; separate lots offer prices trade by trade, but leave the client (maître d'ouvrage) with the interfaces, the coordination and the risk of whatever falls between two lots. In a Luxembourg public contract this choice is not free: lots are the principle, the general contractor the exception.

The rule in public contracts: lots first

The implementing grand-ducal regulation (règlement grand-ducal, RGD) of the public procurement law sets out the principle of lots. Contracting authorities "may decide to award a contract in the form of separate lots" (RGD of 8 April 2018, art. 2, unofficial translation, as are the other quotations in this article). Article 5 (1) organises the exception: "by way of exception to the principle laid down in article 2", a general contractor is chosen essentially for major works involving different trades, or where the indivisibility of responsibilities requires it. It may be overall or partial (art. 5 (2)).

For the budget, this means a general contractor has to be justified; it is not presumed. A contracting authority that chooses one for a modest building or to simplify its own management departs from the principle; one that chooses it for a major multi-trade building or for indivisible responsibilities relies on the text. A partial general contract (for example, the weathertight shell entrusted to a single contractor, with finishes let in lots) is an intermediate route that the text expressly provides for.

The choice does not escape the calculation of estimated value. Whatever the split, the estimated value of a contract divided into lots is the overall value of all lots (law of 8 April 2018, art. 12, § 5, g)). Splitting does not bring a contract below a threshold; it is the whole that determines the procedure, as explained in the article on the contracting authority's estimate.

What each route does to the budget

The two routes do not cost the same, nor in the same place. The table compares their effects from the client's point of view.

Point General contractor Separate lots
Price one price for the whole, including coordination and the general contractor's margin one price per trade, with no general contractor margin
Interfaces between trades carried by the general contractor carried by the client and the designers
Omissions between lots borne by the general contractor within the limits of its contract borne by the client, often as additional works
Competition between general contractors, who are fewer trade by trade, often wider
Delay in one trade managed by the general contractor passed on to the other lots, with a risk of claims
Reading the prices totals per trade if the tender breaks them down direct, lot by lot
Final account comparison per trade has to be reconstructed comparison per trade is natural

The general contractor's margin is not a pure extra cost. It pays for coordination, interface management and part of the risk of omissions, which the client would otherwise pay for in additional works, delays or an enhanced coordination appointment. The fair comparison is therefore between the general contractor's price and the sum of the lots plus the cost of what the lots leave with the client.

Separate lots require a file with no gaps. Every interface (who supplies, who installs, who connects, who makes good) must be allocated to a lot in the description. An omission in the description is paid for twice: through a price negotiated during the works, and through the delay it causes to neighbouring lots. The usual split of costs between trades is covered in the article on the breakdown by trade.

Rules specific to the general contractor

The threshold for the restricted procedure with publication of a notice is not the same. For a works contract below the European thresholds, this procedure is possible when the amount estimated according to an estimate (devis) exceeds €125,000 at index 100 value of the consumer price index at 1 January 1948, that is €1,294,525 excluding VAT in 2026; for a general contractor, the threshold is €625,000 at index 100 value (law, art. 19 (1)). The updated 2026 value of this second amount does not appear on the public procurement portal pages dealing with thresholds. These two thresholds, however, apply only to works relating to a building project (ouvrage) whose estimated amount does not exceed the European threshold, that is €5,404,000 excluding VAT in 2026 (art. 19 (1), subparagraph 4); yet the second, five times the first, reaches €6,472,625, so that in 2026 article 19 does not allow the restricted procedure with publication of a notice for a general contractor's contract.

Price analysis can reach down to subcontractors. When a justification of prices is requested, the general contractor may be required to provide its subcontractors' quotations; justification by price analysis allows a minimum period of 15 days (RGD art. 89). For a public client, this is a way to read the make-up of an overall price that would otherwise remain opaque.

The price revision excess applies per subcontractor. The regulation provides for an excess (franchise) of 2% of the total value of materials for price adjustments, applied per subcontractor under a general contract (RGD art. 117). The revision mechanism is covered in the article on statutory increases and the budget's base date; here it is enough to note that the excess is not assessed on the overall contract.

For a municipality, a general contract also changes the document that is approved. The municipal council (conseil communal) normally approves the detailed final design; under a general contract, a specification "accompanied by an overall cost estimate" takes its place (RGD art. 146). The voted budget then rests on an overall estimate, and any significant later departure must be approved by the municipal council and the supervisory authority (art. 147).

Small lots

The law allows certain small lots to be taken out of the procedure for the whole. "Small lots" are works lots of less than €1,000,000 excluding VAT, which may be let under the rules of Book I, provided their total does not exceed 20% of the value of all lots (law, art. 53 (5)). The rule is therefore only of interest for schemes whose whole falls under the rules of Book II.

For the budget, small lots are a tool for flexibility, not for savings. They allow low-value trades to be handled more simply, but the overall value of the scheme is still calculated on the whole, and the 20% cap has to be monitored throughout the tender.

The choice in a private contract

In a private contract, the client chooses freely, and the choice rests on the same criteria: ability to manage interfaces, quality of the file, appetite for risk. A client without a supervision team often has an interest in entrusting coordination to a general contractor, provided a price is signed on a precise file; how to invite tenders and sign a lump sum (forfait) is covered in the article private contract: inviting, negotiating, signing a lump sum.

The Luxembourg Civil Code settles two useful points on the persons the contractor employs. The contractor is answerable for the acts of the persons it employs (art. 1797). Workers employed by the contractor have a direct action against the client, limited to what the client owes the contractor (art. 1798): paying the general contractor without tracking what remains due is therefore a risk to be measured. The risks specific to subcontracting are covered in the article on subcontracting and its risks.

Deciding: a simple grid

Three questions are enough to guide the choice. Does the building involve many trades with tight interfaces (building services, façade and structure closely interlocked)? Does the client have a team able to coordinate and hold the programme? Is the file precise enough for every interface to be allocated?

If the answers are yes, no, no, a general contractor protects the budget better, at the price of a margin and narrower competition; in a public contract, the conditions of article 5 must also be met. If the answers are no, yes, yes, separate lots make better use of competition. In between, a partial general contract is worth considering.

The choice is made before tendering, in particular when the estimate exceeds the budget. That is the point at which a change of procurement route can still make a difference, as explained in the article on the estimate exceeding the budget. Once tenders are opened, changing route means cancelling and re-tendering.

This article sets out the rules as they stood on the date of checking and is intended as professional guidance. It does not replace legal advice or an examination of the specific case.

Frequently asked questions

No: the regulation makes it an exception to the principle of lots, chosen essentially for major works involving different trades or where the indivisibility of responsibilities requires it (RGD art. 5). It may be overall or partial.

No: the estimated value of a contract divided into lots is the overall value of all lots (law, art. 12, § 5, g)). It is the whole that determines the procedure.

Its price includes its margin and the coordination. A fair comparison adds to the separate lots the cost of the interfaces, omissions and coordination that the client then carries itself.

Works lots of less than €1,000,000 excluding VAT that may be let under Book I, provided their total does not exceed 20% of the value of all lots (law, art. 53 (5)).

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