Labour contract Vs Material contract (Lump sum contract)

[Pratap]

Dear Friends,

I am planning construct a duplex house G+1 floor of around 1800 Sft built up area with good quality material. Whereas I am unable to come to conclusion whether do I go only with Labour contract or Material contract (Lump sum contract). Considering the factors like quality, cost of construction, duration, risk etc please advise me on what kind of contract is best for me.

I will be free on Saturdays and Sundays and I can take leave on key stages to look after the work. whereas my family members are available on all days. will it suffice to balance my construction if I go with only Labour contract? do I really save on overall cost? Will it be really challenging?

Thanks in advance.

Pratap

[girish1984]

Hi Pratap,

If you want to save some amount of money then go for labor contract.
If you have somebody to look after during construction or who knows little knowledge of construction of building then go for labor contract.
If you have somebody who is ready to go and purchase any materials at any moment then go for labor contract.

Keep buying major materials like cement,Steel,Sand or any materials on Saturdays/Sundays.
After your office work, if you are nearby or if you have enough time, then give a visit to your site to see the work done.
Keep molding work only on Saturdays/Sundays.

Yes, it will be very very challenging task, but you will feel satisfied that you have used good materials and good work is done. Any alterations can be done in labor contract. But in material contract, engineers will stick to the plan and there will be not much alterations done.
You will gain knowledge in labor contract . If you completed successfully, then you can surely guide others.

But all depends on Mason, how you treat him, how he works, does he have enough people to get work done on time. Does he have enough experience to give suggestions/ideas.

In labor contract you need to look after each and every work. Electrician,centering,barbender,plumber,flooring,painter,carpernter etc...

If you have family members who can look after, then I suggest you to go for Labor contract.
I hope this helps.

Regards,
Girish

[venkyn]

As Girish said, if you need to save money i recommend you to go for labor contract.
However, here are few things which you need to remember.
- Work can get delayed by few months, so, if you are in tight budget for loan payment
- Need to have patience a lot.
- Lot of ground work needs to be done.

Most important thing is you need have labor who listen to you and use the material given by you
to build the house.

[pribaaji]

hi pratap,

We are building our house on labour contract.We are in the same position as yours wherein my husband gets time only on saturday, sunday and can dedicate some time on required days.Construction day to day basis is taken care by myself,my dad and currently my mom is going to site to check tile work. Some points i could tell from my experience with labour contract is:-
＞ You need to stay close to the site.
＞You need to delegate the responsibilities to each of the family members, like me and my husband would decide on the material dealers after price negotiation and i would take responsibility to order materials and follow up when required.My dad and mom used to supervise on the site and get work done since they have construction knowledge.I would manage the accounts and wages.
＞There would not be a great amount you would save on labour contract but for the same amount you will end up using good materials and would feel satisfied.You can make alterations as told by the members.
＞ Main thing is you need to get a good labour contractor who can finish work without delays.For our luck we got a good person who finished our g+2 floors before 6 months.
＞Labour contract requires you to have a fair knowledge on contruction which you can gain from internet, this forum and discussing with friends and family who have experience.Employ a good structural engg who will inspect and give confidence aboutthe work that has happened.This will help.

These are some things i could share from experince.You are free to ask me queries on this.

Regards,
Priya Balaji.

[girishd]

Just a few points based on my experience.
- Procuring materials by yourself demands a lot of effort/time
- Labour contractors are looking optimize labour on day-to-day basis. Its your job to get the right things done - which again demands constant supervision
- My first contractor put me in loss and I had to fire him and re-do things. In my case I happened to get a pretty good contractor who did most of the work from re-doing stage.
- With material contractor is best to do what I did - put down the quality of materials to be used on paper. I had initially asked for Ultratech Cement, SAIL steel and Trichy or Kollegala sand. We changed the cement to Zuari as we found that Ultratech guys don't want to give 43 grade cement.
- Material prices can vary significantly in just a few days. My second roof was done when cement was 297 rupees. After Modi got elected, the price jumped straight to 340 and to 365-370 in just few days. The one thing I did at the beginning was to sign a contract with a clause that 5% increase in basic material price will have to be absorbed by contractor. Beyond that I will have to pay more for the item rates quoted. If you don't do that, the contractor will start screwing up the quality. He is not doing charity anyway!
- Go for item rate contract rather than lump sum (per chadra) contract. Helps in alterations/changes to original plan - which invariably will happen as the construction progresses
- Put payment schedule in contract

Eventually we have to understand that the contractor is here to make profit. When I changed contractor, I happened to find someone who did labour contract till couple of years back and recently started material contract. My observation is that such folks know the work and profit expectation is lower for them as they have not tasted the big money yet.

[Pratap]

Dear Mr. Girish, Mr. Venky and Ms. Priya thanks for all your inputs.