I had an interesting question from a homeowner recently. The client was in the planning stages of a home remodeling project—in this case, the installation of some floor tile and backsplash tile in her kitchen. She was considering hiring a contractor to provide only the labor for the project. She planned on buying all the materials, thereby saving some money by avoiding the contractor’s markup. Her question to me was whether I thought this was a good idea, and could it result in a bad job. It brought to mind a number of possible issues. In general, I shy away from labor-only jobs.
Labor-Only Jobs Present Various Problems
Many of you probably wouldn’t have undertaken labor-only jobs when times were good, but perhaps more of these opportunities are coming across your desk these days. A job is a job, so projects such as this one might seem tempting. But are they really that much of an opportunity?
Before you break out the tools and agree to get started, here are five things to consider regarding any prospective labor-only job.
Be Wary of Homeowner-Provided Materials
When the homeowner says “I’ll provide all the materials”, what does that really mean?
Let’s take this lady’s tile job as an example. When she said she’d be supplying the contractor with the materials, I can just about assure you all she meant was she’d go buy the tile. But what about the grout, or the cement board? What about thinset or adhesive, latex additives, grout sealer, spacers, or anything else this job might require?
What would fall under the heading of “materials”, and what would be considered “supplies”? And if you’re technically only supplying labor, does that distinction even matter?
Who Calculates the Necessary Materials?
One other issue with labor-only jobs comes at the estimating and materials purchasing stage. The average homeowner is not going to understand waste allowances on a tile job, or on any other construction project. So you can probably assume that if they have a 10 foot x 10 foot floor to cover, they’re going to buy exactly 100 square feet of tile.
But what happens when you’re just about finished, and you run out of material? Is the homeowner going to go get more, or are you stuck with that task? And worse yet, what happens if they bought a close-out – and you just know they did! – and now there’s no more tile to be had!
Accounting for Unforeseen Expenses
Ceramic tile is just one example of material purchases. Perhaps your homeowner bought a chandelier on vacation in Italy, and your labor bid to them includes having your electrician install the fixture. But the instructions are all in Italian, and none of the brackets match up with American fixture boxes.
Editor’s note: See our article on using Italian fixtures.
When deciding whether you should take labor-only jobs, know exactly who picks up the tab for any delays and modifications.
What About Used Materials?
It’s not uncommon when bidding on labor-only jobs to have a homeowner ask you to install used materials like an existing appliance. They may also prefer a reclaimed or antique plumbing fixture.
While antiques can be quite costly, they still fall under the heading of “used”. In all likelihood, once you touch it, the homeowner is going to take the attitude that it’s your responsibility from here on out. If you encounter problems later on, you may not be prepared to deal with or pay to rectify them if you bear or accept the sole responsibility.
This is perhaps the biggest potential problem area you’re going to face. Suppose six months after the completion of work some of the tiles crack. The homeowner could claim poor workmanship and expect you to make the necessary repairs.
You, however, know the problem likely lies with the cheap tile they bought. Or it may be caused by the inferior thinset they provided or with some other aspect of the materials they supplied. You can well imagine the heated debates and accusations that will undoubtedly arise next!
How to Safeguard Yourself When Taking Labor-Only Jobs
It’s not that you shouldn’t ever take on a labor-only job. You just need to go into them with your eyes wide open to the potential problems, and address as many of them up-front as possible. Follow these suggestions:
Materials vs Supplies
Clearly decide on the difference between materials and supplies, and who’s providing what. One possible solution is to contract for labor only and then bill separately for any supplies you furnish. But be sure this is spelled out in your contract.
Make a Mandatory Materials List
Consider making a material list for the homeowner so you know they’re getting what you need for the job. This is typically a service that you’ll want to charge for.
Consider an Hourly Contract with a Maximum Cap
If possible, you’re usually better off with a per-hour labor agreement. Your contract needs to list the per-hour price, plus your labor markup. Agree on a ceiling cost for the job, that you won’t exceed without notifying the homeowner. If you’re providing a labor estimate instead, carefully spell out what that estimate includes.
Add a Disclaimer for Materials You Didn’t Supply
Add a disclaimer in your contract so that you’re not responsible for the materials the homeowner provides. Check with your attorney for the proper wording. But remember, material disclaimers do not absolve you from poor workmanship.
Get Everything in Writing!
Above all, don’t wing it – that’s how you get in trouble! Get all the details of your agreement in writing, and issue written change orders as needed if the original specifications are altered.