New ways to calculate labour cost OR is it a scam?

[Viking]

I talked to a guy some time ago and he said when they had their house renovated earlier this year, the labour cost was calculated as a percentage of the cost of the materials being used!

I told him that I never heard of that method before. Sounds crazy to me that I would have to pay much more for the labour if I choose expensive tiles compared to regular tiles.

Have you heard anything like this or was he scammed?

[scott h]

3 hours ago, Viking said:

Have you heard anything like this or was he scammed?

You can never tell what methods might be used here. I do know that when we built our house each laborer was paid by the day, based on his skill level, the lowest being the daily minimum wage.

If I were to hazard a guess, your buddy probably asked for an estimate of the labor cost and that was the method the contractor used. Just as they estimate the cost of materials based upon the square meter size of the house to be built. The estimate they gave us was surprisingly close.

[BrettGC]

4 hours ago, Viking said:

Have you heard anything like this or was he scammed?

I run with the idea of "You pay peanuts, you get monkeys" with the guys that do the work around here.  Same as Scott, I pay by skill level on a daily basis for longer term projects.  Having said that, I'm sure that they'd love a percentage of the cost, but no, it's not happening. 

[Mike J]

I have heard it used in terms of cost of labor when building the entire house.  An architect for example will calculate materials at XXXX peso and labor at XX percent of materials.  As others have posted I have never heard of used for daily labor or job costs.  I think you example of tile is a perfect argument against it as to how to pay local labor.

[Clermont]

In all our buildings we’ve asked for written quotes and at the end payed the extras, (yes always extras) . Just keep an eye on there work, but that’s how they cost and work. Use only tradesmen not in-laws, like Bret said, pay peanuts you get monkeys.

[Onemore52]

My experience with workers is that they will lie to you, keep asking for  Advance in their wages and then do a runner when they have sucked enough money out of you.

If ther lips are moving then they are lying to you . If you are kind to them you are see as weak. They will steal from you in  a heartbeat 

This is my experience in the province.

They are not to be trusted.

[scott h]

6 minutes ago, Onemore52 said:

They are not to be trusted.

Sad but true.

The foreman who ran the crew who built our house did a great job. So, our neighbors hired him. He got the labor money up front and did a runner. So even those who come recommended should not be fully trusted.

I personally ordered and payed for all the materials, inventoried it as it was delivered. The wife personally handed each laborer their weekly pay envelop. There were absolutely no advances on salary given, and we took daily attendance. 

 

[Tommy T.]

1 hour ago, scott h said:

I personally ordered and payed for all the materials, inventoried it as it was delivered. The wife personally handed each laborer their weekly pay envelop. There were absolutely no advances on salary given, and we took daily attendance. 

 

That sounds like very wise labour management. We have had one or two contractors for various projects ask for advances and then the runner... Fortunately they were for small projects, but still... I hate that!

[hk blues]

We've had a few smallish projects done over the past 7 or 8 years.  All have been done to a reasonable standard, some better than others.  

We've always paid per project, never daily amount per worker - that's what they asked for and we were OK with that.  I feel more comfortable that way but others may have a different idea. We've also not had any contractors do a runner but we have been selective at who we choose but even that's no guarantee.  The last contractor took way too long to finish the project but he did.  We've also never had to pay more than agreed amount - I'm very aware that's because there was likely enough fat on the bone in the original price.  That said, I do not pay outrageous amounts.

As for costing method, we have used the "buy and pay for materials" method and the labour and materials method.  Both have worked for us.  I will add though, that if you use the labour and materials method it is likely you will have to pay upfront for materials as smaller contractors may not have sufficient cash flow - this is a calculated risk but a risk nonetheless.  

 

[jimeve]

19 hours ago, Viking said:

I talked to a guy some time ago and he said when they had their house renovated earlier this year, the labour cost was calculated as a percentage of the cost of the materials being used!

I told him that I never heard of that method before. Sounds crazy to me that I would have to pay much more for the labour if I choose expensive tiles compared to regular tiles.

Have you heard anything like this or was he scammed?

Yes, I have heard of this before. I got some plain cheap tiles to counter this and it worked, not a happy tiler and not a good one at that I sacked him and his brother in the end.