What's the Difference Between a Contractor and a Construction Company?

When you’re planning a home renovation or a new build, you’ll hear two terms thrown around a lot: contractor and construction company. People use them like they mean the same thing. But they don’t. And mixing them up could cost you time, money, or even your peace of mind.

What Is a Contractor?

A contractor is usually an individual or a small team that takes on specific building jobs. Think of them as the person you hire to redo your kitchen, build a deck, or install new windows. They might work alone or have one or two helpers. Most contractors specialize in one area - plumbing, electrical, framing, or tiling.

In New Zealand, many residential contractors operate as sole traders or small partnerships. They don’t have a big office or a fleet of trucks. They show up with their tools, get the job done, and move on. You might find them through word of mouth, a local Facebook group, or a trade directory like Master Builders.

Contractors typically don’t manage the whole project. If you need an architect, a structural engineer, or a demolition crew, you’ll have to organize those yourself. They’re hired for their skill in one trade, not to run the entire show.

What Is a Construction Company?

A construction company is a registered business with staff, systems, and structure. They handle full-scale projects from start to finish. That means they manage permits, coordinate subcontractors, order materials, schedule inspections, and handle payments to everyone involved.

These companies often have project managers, site supervisors, admin teams, and even in-house designers. They’re the ones you hire when you’re building a new house, adding a second story, or doing a major commercial fit-out. They don’t just do the work - they make sure everything fits together.

In Wellington, you’ll find construction companies with years of experience navigating council regulations, building codes, and weather delays. They carry liability insurance, workers’ compensation, and often have bonds in place to protect you if something goes wrong.

Who Handles the Paperwork?

This is where things get real. If you hire a contractor, you’re often on the hook for getting the building consent, arranging inspections, and making sure everything complies with the Building Code. That means you’ll need to understand what’s required, fill out forms, and chase down council appointments.

With a construction company, they do all that for you. They submit the consent applications. They schedule the inspections. They handle communication with the council. You just show up on the day of the final sign-off and get the code compliance certificate.

One homeowner in Lower Hutt hired a handyman to build a garage. He thought it was simple - until the council stopped the job because no consent was filed. He spent three months fixing paperwork, paying late fees, and redoing work that didn’t meet standards. A construction company would’ve handled it all before the first nail was driven.

Who’s Responsible When Things Go Wrong?

Let’s say your new bathroom leaks six months after the job finishes. Who do you call?

If you hired a solo contractor, you might have to track them down. They might be hard to reach. They might not have a business address. And if they’ve moved on to another job, you’re stuck.

With a construction company, you have a clear point of contact. They usually offer a warranty - often 10 years for structural work and 2 years for finishes - backed by a legal entity. They carry insurance. They have a process for handling complaints. If something breaks, you email them, they send someone out, and they fix it.

That’s not just convenience. It’s protection. In 2024, the New Zealand government tightened the rules around builder warranties. Only registered companies can legally offer a 10-year structural warranty. Solo contractors can’t.

Cost: Cheaper or Just Less Safe?

Yes, a contractor will usually cost less upfront. They don’t have office rent, payroll taxes, or insurance premiums built into their rates. A handyman might quote $15,000 for a kitchen remodel. A construction company might quote $22,000.

But here’s what that $7,000 difference really buys you:

• Permits and inspections handled correctly - no fines
• Subcontractors vetted and insured - no liability if someone gets hurt
• Material warranties - if your tiles crack, the company replaces them
• Project management - no missed deadlines or scheduling chaos
• Legal recourse - you can take them to the Disputes Tribunal if they disappear

One client in Porirua saved $5,000 hiring a contractor to extend her living room. Three months later, the foundation cracked because the footings weren’t deep enough. She ended up paying $18,000 to fix it - and lost three months of her home while it was torn apart again.

When to Hire a Contractor

You should hire a contractor when:

• You’re doing a small, single-trade job - like replacing a roof or rewiring a room
• You have the time and knowledge to manage permits, inspections, and scheduling
• You’re confident you can find and coordinate other trades yourself
• You’re on a tight budget and accept the risk

Many homeowners in Wellington hire contractors for minor jobs like installing a heat pump or replacing a fence. That’s fine - as long as you know you’re not getting project management.

When to Hire a Construction Company

You should hire a construction company when:

• You’re building something new - a house, a garage, a granny flat
• You’re doing a major renovation - whole kitchen, bathroom, or floor addition
• You don’t have time to manage the project
• You want a warranty and legal protection
• You’re using a bank loan or KiwiSaver HomeStart grant - most require a registered builder

For anything that involves structural changes, multiple trades, or government approvals, a construction company is the safer, smarter choice.

How to Tell Them Apart

Here’s how to spot the difference before you sign anything:

• Check their registration: Go to the Master Builders Association website. Only registered builders can legally offer a 10-year warranty.
• Ask for their business address: A contractor might work from home. A company has an office.
• Ask who manages the project: If they say "I’ll do it," they’re a contractor. If they say "Our project manager will handle it," they’re a company.
• Ask about insurance: A construction company will show you their public liability and workers’ comp certificates. A contractor might say "I’m covered," but won’t show proof.
• Ask for references: A company will give you 3-5 recent job references with contact info. A contractor might only have one or two.

What Happens If You Get It Wrong?

Getting the wrong type of builder isn’t just an inconvenience - it’s a risk. In 2023, the New Zealand Building Performance Authority reported over 800 complaints about unregistered builders failing to complete work or deliver substandard results. Most of those cases involved homeowners who thought they were hiring a "builder," but ended up with a solo contractor who couldn’t deliver.

You could end up with:

• A house that doesn’t pass inspection
• No warranty if something breaks
• No way to claim on insurance if a worker gets injured on your property
• Legal trouble if the work doesn’t meet code
• A pile of unpaid invoices from subcontractors the contractor never paid

It’s not just about money. It’s about safety, legality, and peace of mind.

Bottom Line

A contractor is a skilled tradesperson. A construction company is a project partner.

If you need a single job done and you’re ready to manage the rest, hire a contractor. But if you’re building something important - something that will last decades - hire a construction company. The extra cost isn’t a markup. It’s insurance. It’s expertise. It’s protection.

In Wellington, where weather and regulations can turn a simple job into a nightmare, you don’t want to cut corners. Choose the right partner - not the cheapest one.