Direct labour

Direct labour consists of hiring all of the individual tradesmen yourself.

Direct labour consists of hiring all of the individual tradesmen yourself. It is attractive when you focus on the financial cost savings only, and on the fact that being on site all the time you retain control of the project and finishes.  

But direct labour projects typically take longer to complete than the main contractor route. You must also factor in the time you will need – you will basically be working full time on the project, with associated loss of earnings.

Remember that all new builds in NI, regardless of the project management route, are zero VAT rated and with direct labour you will need to keep every receipt as you go along. In ROI you only benefit from the reduced 13.5 per cent VAT rate if you hire a builder and they purchase the materials for you, otherwise you are liable to pay the full 23 per cent rate on all supplies. That said the tradesmen you hire will charge their labour, and any materials they buy through their company/sole trader status, at 13.5 per cent. Be weary of cash-in-hand payments as you will have no recourse if anything goes wrong. 

On this same topic, cash flow will also be easier to manage with a builder with whom you’ll have agreed on a payment schedule. With direct labour tradesmen will have to get paid as soon as they are finished their work, which will not always coincide with the stage payments. Some will prefer to be paid weekly.

At this stage if you are project managing the build you will need to carry out a number of tasks including: 

  • Unless you have previous experience, start early on your efforts to identify good (preferably local) tradesmen. 
  • Expect to be spending a lot of time chasing subbies (subcontractors / tradesmen) – even once the project has started, you may find yourself chasing them to show up. Regular contact is essential to keep your project in their books. 
  • Check and record the insurances held by each subcontractor.
  • Ensure there is a dry, secure space for storage and break times. 
  • Perform all the Health & Safety duties, including being in charge of toilets and other facilities such as having a kettle available. A constant presence will be required to keep on top of what is happening on site. 
  • Set up an account with your local builder’s merchant. 
  • Price materials from three suppliers (the savings can add up) and check what arrangements are for delivery as heavy items will come on pallets, the equivalent of tonne bags, which can cost in the region of £50/€80 each. Whilst this can be absorbed for specialist items as a one-off, your local builder’s merchant will be your go-to supplier as their delivery fees will be very reasonable, even for heavy items like blocks 
  • Be ready to deal with any issues on site in terms of checking against delivery (wrong or damaged item should be sent back immediately)have arrangements in place for transport within the site and storage.  
  • Check how long specialist materials take to deliver and order so they arrive in time – too early and you will have to store them without them getting damaged or stolen, too late and the build could be held up waiting for delivery. 
  • Have a system in place to keep a record of expenses, receipts and all relevant documents such as certificates. 
  • Make arrangements to reduce waste on sitemanage what waste is left and have processes in place to maximise efficiencies. 
  • Invest in tools you will be regularly using on a DIY basis and have them under lock and key. 
  • Organise your tool and scaffold hire with clear instructions as to who is responsible for the health and safety aspects of each. Do check that operatives have the experience and certification to use hired equipment.

Above all, any mistakes will be your responsibility to fix. You will also be in charge of the snag list, which could entail having to call back tradesmen to site – not an easy task if they have been paid for the work already. 

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