Roles of a Contractor, Builder, and Developer in Indian Real Estate
The Indian real estate industry includes three major players in construction and development: contractors, architects and developers. While these positions may seem interchangeable, they have distinct roles and responsibilities in the construction sector.
The collaborative efforts of contractors, architects and developers create a successful project. While all contribute to the construction and development process, it is important to distinguish between these major players if you are interested in real estate in India.
This article explains the differences between contractors, architects and developers in India and their specific duties.
What is a Contractor?
A contractor is an industry term identifying a person or company hired to provide labour and materials for a specific project. They are responsible for the project’s construction and turn the architectural design into brick-and-mortar buildings.
Contractors play an important role in the real estate industry. Their responsibilities include site preparation, construction of the plinth, slabs and walls, installation of plumbing and electrical systems, and construction supervision. They are responsible for the day-to-day operations of the construction site, including collaboration with subcontractors.
Types of Professional Contractors
There are different types of contractors based on their expertise and the quality of their services. Some common types of contractors in the real estate industry are:
- General Contractors: They oversee the entire construction process, from start to finish. They supervise subcontractors, coordinate with architects and engineers, and ensure the project meets all necessary codes and standards. General contractors are usually hired by builders and developers for the actual construction.
- Subcontractors: These workers specialize in specific industries or trades, such as plumbing, electrical, or carpentry. General contractors are hired to perform specific tasks on a large project.
- Independent Contractors: These contractors work in any industry and are not directly employed by any particular company. They offer specialized services and are hired for their expertise in a specific area.
Who is a Builder?
A builder is usually a level above contractors. They oversee the construction of the project and are responsible for the adherence to local rules and regulations. Although builders primarily focus on construction, they collaborate with architects, engineers and other professionals for specialized design and technical assistance.
The defining point of builders is that they usually do not own the land – they typically come into the picture once the land has been procured for construction. Though some builders may invest in the land for a project, it is usually the developer who owns the land.
Role and Responsibilities
Builders are involved in the project from initial planning to the final stage of handing over the finished space to the residents. Their responsibilities include overseeing the construction site, coordinating with subcontractors, ensuring compliance with building codes and regulations, and maintaining project quality. They are also responsible for purchasing and maintaining materials and supplies for a construction project.
Types of Builders
Builders generally specialize in specific construction projects such as residential, commercial, or industrial. Some builders focus on areas like tall buildings, while others specialize in sustainable or environmentally friendly construction. The success and quality of the project are a testimony to the industry knowledge and experience of the builder.
Defining a Developer
A developer is a real estate visionary who identifies opportunities and conceptualizes projects. They acquire land, secure financing, obtain necessary permits, and oversee the entire development process. Developers are crucial to shaping the country’s real estate landscape.
Role and Responsibilities
Developers are involved in the early stages of a project, from ideation to execution.
They conduct market research to identify potential opportunities and ideation of a project. They acquire land suitable for development and secure the necessary financing. Developers collaborate with architects, engineers, and other professionals to design the project and obtain the required approvals and permits. Developers are overseers of the entire construction process and ensure the project meets market demands and regulations.
Types of Developers
Developers can be primarily grouped under residential and commercial developers. Residential developers focus on building homes, condos, and other dwellings for residential use. On the other hand, commercial developers specialize in constructing office buildings, retail spaces, malls, hotels, and other commercial properties. Some top developers, such as DLF or Godrej, have expertise in developing both commercial and residential spaces.
Developers may also specialize in specific sectors, such as healthcare, education, or hospitality.
Differences Between Contractors, Builders, and Developers
We now know the roles of contractors, builders, and developers in the construction and development process. What makes them different, though? Let’s discuss these differences in scope of work, project management, expertise and skills, and financial considerations.
Scope of Work
- Contractors: Contractors are primarily responsible for executing the construction process. They may contribute labour and materials to the construction and generally follow the designs that builders or developers give them. They are not ideators.
- Builders: Builders specialize in the physical construction of buildings and structures. They lay the groundwork, build walls, and roof the structure.
- Developers: Developers are the ideators in the real estate industry – they identify opportunities, acquire land and manage the entire development process. Developers conceive and plan Real estate projects, sometimes decades in advance.
Project Management
- Contractors: Contractors are responsible for the day-to-day operations on the construction site, coordinating with subcontractors and ensuring the project is completed within the allocated time and budget.
- Builders: Builders manage the construction site, coordinate with subcontractors, and ensure building codes and regulations compliance. They oversee the quality of work and procure necessary materials and resources.
- Developers: Developers oversee the development process, from the initial planning to the final execution. They collaborate with architects, engineers, and other professionals to design the project, obtain necessary approvals, and ensure project alignment with market demands.
Expertise and Skills
- Contractors: Contractors have expertise in construction techniques and project coordination. They have a deep understanding of the construction process and ensure the successful execution of the project.
- Builders: Builders possess knowledge and skills in various aspects of construction, including building techniques, materials, and code compliance. They supervise the construction process and ensure the quality and integrity of the structure.
- Developers: Developers have a broad range of skills other than construction, including market analysis, financial management, and risk assessment. They understand the real estate market and identify opportunities for profitable projects.
Financial Considerations
- Contractors: Contractors provide estimates and bids for construction projects based on the scope of work and materials required. They manage the project budget and ensure that costs are controlled.
- Builders: Builders are responsible for procuring and managing the necessary materials and resources for the construction project. They ensure that the project stays within the allocated budget.
- Developers: Developers secure financing for the project, including loans, investments, or partnerships. They manage the economic aspects of the entire project, including budgeting, cost control, and profitability.
Importance of RERA Registration for Builders and Developers
In India, the Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced to regulate the real estate sector and protect the interests of homebuyers. RERA registration is mandatory for builders and developers involved in real estate projects. It ensures transparency and accountability and safeguards the rights of homebuyers.
Builders and developers must register their projects with the respective state RERA authority before advertising, selling, or marketing the properties. Contractors are not required to be RERA-registered.
RERA registration provides credibility to the project and instills confidence in buyers. It ensures that the project complies with regulations and that the necessary amenities and facilities will be provided as promised by the builder/developer.
RERA has a regulatory framework for resolving disputes between buyers and developers. Real Estate Regulatory Authorities (RERAs) in each state address grievances and resolve issues related to the real estate sector. RERA aims to promote fair practices, protect consumer rights, and create a transparent and accountable real estate market in India.
Conclusion
Contractors, architects and architects play distinct but interrelated roles in the Indian real estate industry.
Contractors are responsible for the execution of the construction of the buildings, builders focus on the physical and regulatory aspects of construction, and developers conceptualize and oversee the development and completion of real estate projects. Each has unique responsibilities and contributes to the success of a project.
Understanding the differences between contractors, builders, and developers is crucial for anyone in the real estate sector. Moreover, builders and developers must comply with RERA regulations and ensure their projects are registered with the respective state authorities. By adhering to RERA’s mandates, builders and developers can build trust, credibility, and transparency in the real estate market, benefiting buyers and the industry.
