Labor Costs and Sources of Labor
Labor arrangements for custom homes can broadly fit into three categories:
1. Owner-builder, who personally undertakes most or all of the labor.
2. Owner-contractor, who manages the project and contracts some or all of the labor from others.
3. Owner-client, who hires a general contractor to carry out all phases of the construction on the owner’s behalf.
The majority of homes in North America do not involve the owner at all in the planning or construction process. In 2013 73% of the 569,000 single-family homes built in the United States were built for sale on speculation, while 14% were built by a general contractor on behalf of a client. Only 7% were owner built or owner contracted.14 Readers of this blog are likely to fall into the latter two categories.
Important questions to consider include:
Who is doing the labor?
Who is undertaking each of the distinct elements or phases of the building?
Are there legal/code requirements for licensed practitioners?
What is the skill level required for the task?
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Do you have the ability to undertake tasks?
Does the required expertise exist locally?
Is labor being imported? From how far?
Are there service or warranty issues associated with imported labor?
Are you balancing material and system costs with their associated labor costs?
Are less expensive materials going to cost you more in labor?
What is the value of your labor input to the project?
Do you lose income while working on the project? What is the balance between lost income and labor costs saved?
Are signed contract documents in place before tasks begin?
Is the scope of work carefully defined?
Are payment terms clear?
Are processes for dealing with deficiencies well outlined?
How are costs being calculated?
Time and materials or fixed quote?