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Labour only vrs Supply & Build

  • 17-01-2011 10:05am
    #1
    manufan16
    Registered Users, Registered Users 2 Posts: 251 ✭✭


    I currently have my build out to tender and I was wondering what are the pros and cons are of having a contractor provide labour only i.e. the client pays for materials compared to the contractor supplying all materials and building.

    Has anybody experiences good or bad of this method?

    Thanks in advance for replies.


Comments

  • #2
    sas
    Registered Users, Registered Users 2 Posts: 1,282 ✭✭✭sas


    First of all the vat rate will be different.

    If the contractor supplies labour and materials, the VAT rate in most cases will be 13.5% for the job.

    If you buy the materials the VAT rate will be 21%.

    The contractor will likely also be able to get better discounts than you based on him being a frequent customer in builder providers etc.

    If the contractor is labour only, you'll be getting hassle all the time for materials. Don't assume giving them plenty of notice will cover you, they'll forget something that they need NOW and you'll have to sort it. When a delivery doesn't turn up you'll be the one ringing the suppliers. I'm building direct labour and getting materials in on time is an awful pain. I've managed it so far by running things very slowly, not the best strategy!

    If you are going with a contractor, I wouldn't consider going labour only.


  • #3
    fm
    Registered Users, Registered Users 2 Posts: 671 ✭✭✭fm


    sas wrote: »
    First of all the vat rate will be different.

    If the contractor supplies labour and materials, the VAT rate in most cases will be 13.5% for the job.

    If you buy the materials the VAT rate will be 21%.

    The contractor will likely also be able to get better discounts than you based on him being a frequent customer in builder providers etc.

    If the contractor is labour only, you'll be getting hassle all the time for materials. Don't assume giving them plenty of notice will cover you, they'll forget something that they need NOW and you'll have to sort it. When a delivery doesn't turn up you'll be the one ringing the suppliers. I'm building direct labour and getting materials in on time is an awful pain. I've managed it so far by running things very slowly, not the best strategy!

    If you are going with a contractor, I wouldn't consider going labour only.

    Regarding the vat, there is a law called the two thirds vat rule meaning that if a contractor buys material for say €120 inc 21% vat he has to charge €200(120 and 80) plus 13.5% vat at the minimum if its material and labour he is providing.if he is charging under €200 he has to charge 21% with or without labour.Pricing windows myself at the moment and its cheaper to buy the windows and the labour together from the one supplier but this seems to be the trick so i will get both from them.


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