Real estate development 101 If you are doing a personal guaranty, you ultimately own all the construction risk, no matter who you hire as a GC, what you think, or anyone tells you otherwise. Backstory: in 2006/7, we had a previously well-performing GC tank out on two major under-construction condo projects. Ended up they had spent contract funds from our project to support other projects that were underwater, didn’t pay subs from draws we paid, and were totally underwater on their budget with us relative to their internal sub/fee/gen conds. budget. So we did what we had to, took over the project, notified the subs their contracts were being reassigned and now were owned direct by our LLC, invoked our GC license (A/B license in CA). Hired our own super, and worked the deals with our partners to completion on both projects (2006/07/08). A bad time to be finishing deals BTW. When we brought all construction operations in-house (we still operate that way to this day), a good friend in the RE business told me we were crazy, he said this: “Dude, keep using a GC, shift the construction risk to them” But when I reflected on this, here’s where I arrived: This GC failed (we chose them, had proven themselves on previous deals, got themselves overextended). We were managing and paying the subs direct. (Side note: We would go onsite and see that labor loading was low/non-existent, ask subs why, subs would complain they didn’t get paid, when in fact we had paid the GC for their draw). Basically, we were already managing the construction operations, just to save the deal. We ended up with all the construction risk anyways. Bottom line: Use a GC or build direct, that’s not my point for this post. Of course, choose and vet carefully, but know subs and GC’s are notoriously bad at gauging their own over-extension. Lump sum and GMAX contracts are only as good as the underlying financials of the counterparty to the contract. Do be totally aware, that no matter who you hire - as the PG - you ultimately own the risk of success or failure for the completion guaranty no matter what. Don’t fool yourself into thinking a GC will step up, if the you-know-what hits the fan.