General contractors in Berlin: general contracting vs separate contracts, costs and risks

A general contractor (GU) takes responsibility for all construction work under a single contract: it performs some trades itself and awards the rest to subcontractors, which it coordinates. For you, this means one point of contact, consolidated defects liability and less coordination — in return for a coordination surcharge. The alternative is awarding individual contracts to several specialist firms. This guide explains the difference between a general contractor and a management contractor, the advantages and disadvantages compared with separate contracts, contract models and insolvency risk.

Key points at a glance

• General contractor (GU): coordinates all trades and performs some itself — one contractual partner and a single source of defects liability
• Difference from a management contractor (GÜ): the GÜ performs no construction work itself, only awarding and coordinating contracts¹
• Separate contracts are usually cheaper, but transfer coordination and interface risks to you
• Based on our market experience, a GU's coordination surcharge is usually around 10 to 15 per cent (no reliable industry statistics available)
• Insolvency risk: if the GU goes bankrupt, the entire site stops — link interim payments to progress (§ 632a BGB), use the 5 % completion security (§ 650m BGB)⁴

What is a general contractor?

A general contractor (GU) takes responsibility for all construction work under one contract, performs some trades itself and awards the remaining work to subcontractors, which it coordinates. This differs from a management contractor (GÜ, also known as a Totalübernehmer): it performs no construction work itself, exclusively awarding and coordinating subcontracts, and frequently also undertakes the design.¹ In both cases, you have just one contractual partner and contact for the entire project. Legally, a GU/GÜ contract is a contract for work under §§ 631, 650a ff. BGB, often supplemented by VOB/B.²

General contractor or separate contracts?

With separate contracts, you appoint each trade individually — this is usually cheaper, but requires you to manage coordination, schedules and interfaces yourself. A GU takes this off your hands and provides a single point of liability, but charges a coordination surcharge.

The frequently quoted surcharge of 10 to 15 per cent is a practical experience-based estimate, not a documented industry statistic — the actual amount depends on the project and market. For separate contracts, you need a clear bill of quantitiesso that the trades fit together properly.

Defects liability and contract models

The GU's greatest advantage is defects liability from a single source: when a defect occurs, you do not need to establish whether the drylining contractor or installer is responsible — you contact the GU. Buildings are subject to the statutory five-year defects liability period (§ 634a BGB), unless VOB/B with four years has been agreed. Lump-sum contracts are common: a fixed price for clearly defined work, with the GU bearing the estimating risk — however, every subsequent change to the work produces a variation.³ A clear, complete specification is therefore particularly important with a GU.

What happens if the general contractor becomes insolvent?

As all trades fall under one contract, a GU's insolvency affects the entire site: work initially stops in practice, and the insolvency administrator decides whether it continues.⁴ Important: a general contractor is not a property developer. With a GU, you build on your own land and are therefore better placed than buyers from a developer, who initially owns the land. To limit risk, keep interim payments low and link them to verifiable progress (§ 632a BGB). Under a consumer construction contract, you are also entitled to completion security of 5 per cent from the first interim payment (§ 650m BGB); there is no statutory defects liability security, which would need to be agreed separately.⁵

When is a general contractor worthwhile in Berlin?

For standard building fabric and owners with limited time, a GU considerably simplifies the project. For complex older Berlin properties subject to listed building or neighbourhood conservation protection, professionally supported separate contracts are often the better choice, allowing greater control over conservation-appropriate work. In both cases, check the firm carefully — our guide explains how Finding & comparing renovation firmsand, specifically for larger firms, our guide Comparing construction companies.

Frequently asked questions

What is a general contractor (GU)?

A general contractor takes responsibility for all construction work under one contract: it performs some trades itself and awards the rest to subcontractors, which it coordinates. The project owner therefore has just one point of contact and contractual partner for the whole project.

What is the difference between a general contractor and a management contractor?

A general contractor (GU) performs some construction work itself. A management contractor (GÜ, also called a Totalübernehmer), by contrast, performs none itself, exclusively awarding and coordinating subcontracts, and frequently also undertakes the design.

GU or separate contracts — which is better for me?

A GU offers everything from one source: a single contractual partner, consolidated defects liability and less coordination. Separate contracts give you full control over trades and selection, but transfer coordination and interface risk to you. Anyone seeking planning certainty and little personal involvement is usually better served by a GU; those seeking maximum control and potentially lower costs by separate contracts.

What happens to defects liability when a GU builds?

With a GU, a single contractual partner is liable for all trades. When a defect occurs, you do not need to find out which subcontractor is responsible — you contact the GU. Buildings are subject to the statutory five-year defects liability period (§ 634a BGB), unless VOB/B with four years has been agreed.

What happens if the general contractor becomes insolvent?

As all trades fall under one contract, a GU's insolvency affects the entire site: work initially stops, and the insolvency administrator decides whether it continues. If you build on your own land, you are better placed than buyers from a developer. Keep interim payments low (§ 632a BGB) and secure the 5 per cent completion security (§ 650m BGB).

Would you like quotes from vetted firms for your Berlin project? Use our introduction service for vetted specialist firms. For an overview of the entire firm selection process, see our guide Finding & comparing renovation firms.

Sources

1. Gabler Wirtschaftslexikon, management contractor / general contractor — definitions and distinctions
2. § 650a ff. BGB, construction contract (GU/GÜ contract as a contract for work, potentially supplemented by VOB/B)
3. Forum Verlag, lump-sum contract vs. unit-price contract (estimating risk, variations)
4. Verband Privater Bauherren (VPB), construction insolvency — work stoppage and risks; distinction between GU and developer
5. Verband Privater Bauherren (VPB), security: 5 % completion security for consumer construction contracts (§ 650m BGB), no statutory defects liability security