We live in a crazy world…. And since this crazy world has meant a LOT of my dear builders are jumping into labour only work, I thought the despite having written about labour only a bazillion times before, you may find it useful for me to write a tips list for both types of labour only contracts, fixed price and charge up. So grab a cuppa and a toastie and get comfy.
Labour Only - Charge Up
- USE A CONTRACT
- Super crazy common, especially when the scope of works is not set in stone and is inclined to creep around……
- The type of work that is most likely to end up a sh*t fight when the total cost works out to be ‘more than the client expected’. Trust me, I’ve cleaned up quite a few of these.
- To make life easier for yourself you want to……
1. Firstly, agree on the charge out rate for all team members
2. Agree how materials required will be dealt with…. Are you providing? Them providing? The margin on materials? How they will be detailed on the invoicing?
3. Billing, how often and how detailed? When will they be due? 20th of the following or 7 days?
4. Clarify time spent managing other trades will also be on charged.
5. Make sure the rate you use is enough to cover offsite overheads as well as the staff member….. this is DIFFERENT to using just the labour charge out calculation sheet you already have from us (or you need to get from us if you haven’t already!). Your minimum labour charge out is only covering that person… it's not covering the margin you need to make on a job to cover your offsite overheads.
Labour Only - Fixed Price
- USE A CONTRACT
- Measure and price it PROPERLY. Measure the materials and apply labour constant to each item…. This is the one and only way to make sure you get the correct hours total for a fixed price job. Not sure? ASK US. We can help you with this if you need it.
- You will probably need to apply a global labour charge out rate for this – its generally a bit too hard to know at the outset what the boy will do versus your top carpenter. Be careful here, make sure the split is accurate when you are coming up with an average charge-out price.
- Remember…. Fixed price is fixed price, you don’t need to go into details, just provide the client with a fixed price total and your tags….. Don’t leave yourself open to quibbling over rates. A fixed price is at YOUR risk, not your clients.
- TAGS. Be VERY clear about how you expect the labour only contract to work, your tags will show your hours of work, access requirements, sanitary and power requirements, exactly what the labour only component will be (so you can claim a VO for anything over and above, like managing other trades!). Spend 5 minutes thinking about all the labour only jobs you have done where you have been asked to do anything extra, and clarify those extras on your tags as to if they are covered or not……
Labour only is cool because it takes out the overheads of material supply and subcontractor costs, but you still need to watch your back and set it up so it runs as smoothly as possible. You can’t claim for grey hairs after all!!!