Preface: I understand this is a fairly general question, not typical for stackexchange. Given that, answers that direct me to do my own research are more than welcome. If I am asking this question in the wrong place, please direct me to the correct forum or stackexachange where this question would be most appropriate.

How does a company, that is currently a sales only office, allow themselves to accept and bill for materials and installation where a contract is involved?

My best guess is as follows: The company can hire a licensed contractor (Referenced as John) to sign contracts regardless of whether or not John will actually be doing the installation. John can be part time working as few hours as 20 a year paid hourly, given that he is only signing contracts. The actual install could be done by a second tiered sub contractor.

As always comments and corrections are welcome.

  • 1
    The jurisdiction where this is being done matters. I assume that you are doing the work in someplace that has adopted something similar to the Uniform Building Code which is widely adopted in most developed countries, but if you are not, the issues are very different. Obviously, the kind of project contemplated matters as well (e.g. industrial v. commercial v. residential v. small accessory dwelling v. renovation; single unit v. multiple units, government v. private sector, multi-story, location specific engineering concerns, etc.).
    – ohwilleke
    Aug 8 '17 at 19:31
  • Unfortunately it seems I failed to clarify that John is a sub contractor for acoustic materials. I can see how there is room for confusion in my question. Do you suggest I update this question, or post a new one? Aug 8 '17 at 19:38
  • All I know about jurisdiction would be that they are usually installs in businesses/offices in California. Aug 8 '17 at 19:39
  • If John is merely a subcontractor for acoustic materials he probably isn't qualified to do the job. California localities all adopt some version of the Uniform Building Code. Still not entirely clear what is being installed.
    – ohwilleke
    Aug 8 '17 at 19:52
  • Maybe I'm missing something. It's not clear to me who will be doing the actual work. If there are specifications for the project, that document will spell out who is responsible for materials and installation, what qualifications they must have, and so on. What kind of contract are we talking about? Aug 9 '17 at 15:59

Construction work is generally required to be done by people with the appropriate licenses pursuant to the building codes in most of the developed world.

Typically, one needs someone with a general contractor's license to oversee the work and insure compliance with the terms of the building permit for the job, and then subcontractors must have licenses pertinent to the part of the job that they are doing (e.g. the electrical subcontractor needs to have an electricians license).

Sometimes (depending on the nature of the project) it is also necessary to have an approved set of architect prepared plans for the general contractor to work from, and sometimes a project also requires that aspects of the licensed architect prepared plans be vetted by various kinds of licensed engineers in particular subspecialties (e.g. structural engineers and soils engineers) in formal engineering reports that are filed with the building code administrator in a local government agency responsible for the place where the project is being built, before construction begins.

Often the financial side of the project is also regulated. For example, in Colorado, a general contractor must hold funds received in connection with a construction in a trust fund that cannot be used to pay the general contractor or the owner of the property, until all subcontractors and materialmen are paid.

Many municipalities and/or lenders (in practice, almost all construction projects need some kind of construction loan from a professional lending institution) also require that financing sufficient to complete the entire project be fully confirmed, and require that the municipality approve the plans and confirm that the project is being built in a place that is properly zoned, before any work can begin. Otherwise, projects could be discontinued with half-built structures because the person building them runs out of money, which would be a blight to the city and a loss to anyone providing part of the funding. Often the architect or the lawyer or the general contractor, or some combination of the three will handle getting zoning approvals.

The general contractor would usually have to do more than just sign contracts. Normally, the general contractor would also be responsible for insuring that subcontractors comply with all building codes and permit conditions, and that subcontracts are paid only when they are entitled to payment and only upon tendering partial lien releases (since people who do construction work get a mechanic's lien against the project to protect their ability to be paid until they are paid in full or release their lien). This calls for periodic and regular inspections of the project on the ground, one can't do a general contractor's job entirely from some office building.

Some jurisdictions allow an owner to act as a general contractor without having a general contractor's license, so long as they have an "advisor" to the owner with a general contractor's license. This can work for a small home renovation project or an accessory structure project like building a garage. But, this is generally ill advised for any significant construction project and will often be forbidden by major construction lending institutions.

Also, any company embarking on this kind of project needs a duly licensed lawyer to draft the contracts and review them and handle disputes as they arise, and should hire licensed professional realtors to handle the sales side of the project (assuming that it isn't being built for the owner's own use) if the owner isn't already a realtor.

A do it yourself approach is a very bad idea in the highly multidisciplinary field of major construction projects.

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