Direct Labour v Fixed Price Contract - Your thoughts?

mr_edge_to_you

Hey everyone,

just interested in getting an idea as to what people's opinions are on building by going the direct labour route or employing a contractor to build it all for a fixed price?

We have gone for the fixed price contract option.

We've just finished our first week's building and things have gone really well and efficiently. I can't imagine that if we had gone the direct labour route we would've gotten the same amount of work done with no hassle whatsoever - my phone didn't ring once nor did I have to ring anyone.

Myself and my OH have no building experience whatsoever so we wouldn't be able to contribute any significant skills to the build.

I know that there is a cost saving attached but is it really worth it? We got through the week without a single phonecall from the builder. I also heard from friends that budget overruns are common with DL builds and delays with the build are common too.

There is also higher stress levels with a DL build, you become the project manager and all the problems are left to you resolve. Our site isn't exactly near where I work should my prescence be required on site.

If you were doing it all again which route would you go?

Cheers,
Mr Edge.

A country home

this site its brilliant, and now that we will be building i can run things im unsure of by everyone here.

Mr edge. I see you have decided on a route. we probably are in a similar situation, i have seen so many going DL in the last 10yrs, so now that its our turn to build we are wondering which route to take, so.. here is what we have done 2 date,

given the current market, we said we would be fools not to throw it out to a few contractors for a few prices, , but. . . we dont want a rushed build which you will get with a contractor taking full contract, so we decided on getting a contractor in for phase 1, basically building the core part, foundation, septic tank, walls, sills, roof & natural slate. I will source the windows, (havent a clue about those yet, i am sure ill find posts here about same) the house is 3,500 sq ft, and for phase 1 prices came in at 78K up to 142, but 3 qutes came in around the 94k, including vat. and we are actually very please with one of the 94K contractors, very precise and attention to detail type of builder. . I have been told by recent DL builds that they would advise if i got the shell up for 94k, go for it. its a lot of slow work done, and responsibilty passed on. I have no decisions made on plumping, electrics ill will work on those once the contractor is picked. If i was to get a full contractor id have to make these decisions fast. I told the guy (we prob go with) that I just want hime to come in, build the shell, and leave, then ill get windows in, but that if he wishes to put in a price for electrics and plumping plastering etc. . id review them all.
I will look at DL for plastering,plumping and electrics. i will insulate my self.

we did look at a few of the prices that came back for the full contract, but could not pay out the extreme profit that some were taking, I had a from the prices of the way we are thinking of building we reckon a builder to do the whole job would take 30-40 k profit, , , way too much for us. .

happy building Mr edge. .

Carlow52

ACH:

Interesting, given all the decisions that you have not made that you are in a position to calculate profit levels for your builder:)

Your judgement that clients can 'jump all over' contractors in the current climate is most lightly based on pub based 'macho' type discussions.

You are either foolish or mis-guided to think that you can build the shell without making decisions on elec/ plumBing, insulation etc

Anyone who thinks that a fixed price contract will have no extras, variations, etc etc is dreaming.

On the edge:
end of first week with no fone calls is creating a false sense of security: who is overseeing the job?

mr_edge_to_you

Carlow52 wrote: »

ACH:

Interesting, given all the decisions that you have not made that you are in a position to calculate profit levels for your builder:)

Your judgement that clients can 'jump all over' contractors in the current climate is most lightly based on pub based 'macho' type discussions.

You are either foolish or mis-guided to think that you can build the shell without making decisions on elec/ plumBing, insulation etc

Anyone who thinks that a fixed price contract will have no extras, variations, etc etc is dreaming.

On the edge:
end of first week with no fone calls is creating a false sense of security: who is overseeing the job?

We are fortunate that my fiancees father is a retired builder who is on site every day as they live on site.

I was impressed with the way everything was done with military precision eg as soon as the last bit of foundations were dug out the steel was put in and a truck load of concrete arrived straight away and was poured. This was immediately followed by deliveries of blocks, sand and storage container. If you were going the DL route you may have to organise this yourself! I do expect that there will issues along the way that will require urgent visits to the site, phone calls etc.

I am also aware that a fixed price contract means that if you want to change anything during the build the builder is allowed to charge for it and is deemed an "extra" for a reason. As the house goes up people will obviously realise this may not how I imagined it and will makea change. I believe that by the time we complete our house we'll have paid the builder much more than original price agreed but we will have it agreed beforehand so there should be no surprises.

So Carlow52, as per the thread title, what would you do Direct labour v Contractor???

poochie2009

well guys,
i have started my house a little while ago and im doing it direct labour way.It really depends on your knowledge and backround.my dad is an electrician so from an early age i have been on sites working and learning.im a civil engineer by profession and i have been on sites for the last 7 years running projects .i never looked into a fixed price contract because i was convinced i could get prices cheaper.i have found it good fun so far although answering calls on the phone in the office in the present climate can be tricky sometimes..
so far i have got the labour in the foundation,blocklaying and roofing for all under 12.5k and the men i have got are top class.the most stressfull part for me will be finishing it but the OH will have to step up to the plate on that one!!
my point being is that there is somethings im not good at and somepeople are so if a fixed price makes it more comfortable then so be it.but,i will disagree that a fixed price will be cheaper because iv never seen a contract that never went over budget.
p.s.picking windows is a little annoying tho!!!

A country home

Carlow52 wrote: »

ACH:

Interesting, given all the decisions that you have not made that you are in a position to calculate profit levels for your builder? yeah. . and? thats my point, i have no decisions made, regarding kitchen, what lights i want.. . . but a full contract price is way above anyones calculation. Im not asking you to accept it. I just posted my findings.:)

Your judgement that clients can 'jump all over' contractors in the current climate is most lightly based on pub based 'macho' type discussions. maybe, but as i dont drink i wouldnt know. anyone that i have been on to about pricing the job, lets say nobody said they wouldnt. . .. all quiet. . just look at the quotes

You are either foolish or mis-guided to think that you can build the shell without making decisions on elec/ plumBing, insulation etc ??? did i actually say id have no opinion on electrics/plumping while the shell is going up.. dont think i did somehow. .

Anyone who thinks that a fixed price contract will have no extras, variations, etc etc is dreaming. I agree with you, so i dont know what this comment is for

On the edge:


end of first week with no fone calls is creating a false sense of security: who is overseeing the job?

why the attitude? I see a fair bit of it in posts.
there are kinder was of replying to posts carlow. if the truth hurts dont stare directly at it. .

but to reply to your post. see my comments above

sinnerboy

The more you know about building and the more you really know ( as opposed to what you think you know ) about what you want from your own building - the more it makes sense for DL .

Most people know less about building and often less about what they want from there own building than they realise .

For example - the RTE programme ( Designs for Life I think it's called ) and the C4 programme with the Geordie architect ... you will often hear people say something like " I'm delighted - I would never have thought of that "

Remember - good people ( architects / engineers / builders ) only make something seem easy to do because they are very , very good at it ....

JuniorB

Fixed Price Contract all the way for me. I'm a firm believer in the 'division of labour' theory of economics. Stick to what you are good/competent at and let the experts stick to what they are good at.
Huge competition between a few contractors down my way. Heading for tender in next few weeks so fingers crossed that the competition continues and we get a bit of value.
From mates I know who went down the DL route - loads of phone calls that you'll have to be able to take at work and general apprehension for the duration i.e. am I doing the right thing, getting shafted etc?

Great to hear the first week went well Mr Edge... tus maith leat na h'oibre !:)

muffler

JuniorB wrote: »

and general apprehension for the duration i.e. am I doing the right thing, getting shafted etc?

That scenario can be found with a fixed contract pricing too depending on the contractor and the client.

sinnerboy

Not when Sinners' around .....:D

muffler

I warned you about carrying that baseball bat around

JuniorB

That's true Muffler. Again I'm only starting out so would not be able to comment with any degree of certainty. I would have thought that people would get more professional advice on pricing etc (in one go as such) going down the fixed price route and then let the job get on with relative minimum interference. Where as DL is like 20 different contracts/jobs to be sorted.

Sure each to their own. In current market both routes are possible with a lot less 'hassle' than a few years ago I would have thought.

A country home

i will add, everyone is different, some people will have it and others wont. . . . its all about finding whats right for yourselves. also whats right for the bloop-pressure. . .:D