turnkey or labour contract better?

hayabusa1208
Posts: 4
Joined: June 5th, 2019, 8:59 pm

turnkey or labour contract better?

Postby hayabusa1208 » June 6th, 2019, 10:37 pm

Hi everyone, i'm planning of moving to india and would like to buy a land size of 1500 sqft around nearby bangalore and would like to build total of 2500 sqft built-up area. Ground +3 (each floor 600sqft). i have been searching in google and reading and found the asking price from builders is around 1400-2000 per sqft. My budget is only around 30 lakhs. So if i choose labor contact option, will i be able bring the per sqft price down to 1200 per sqft?

I have been doing my research and for labor contact i need to arrange for plumbing, electrical, excavation, cement, bricks, steel etc and also need to purchase tiles, flooring, etc on my own. So will i be able to do it under 1200 per sqft by hiring labor contract? also will it compromise on the build quality and aesthetics?


I have no idea how things work in india so your help and advice will be much appreciated.

msn1270
Posts: 1341
Joined: June 17th, 2009, 2:21 pm

Re: turnkey or labour contract better?

Postby msn1270 » June 7th, 2019, 8:01 am

FYI, as there is a saying, "If you through Peanuts, You get Monkey's Only".

Even with Rs. 2,000/sq.ft, You won't get good Quality work with today's material and Labor Cost from many contractors nowadays. Apart from that, in this cost of Rs. 2,000/sq.ft itself, there are plenty of works which are not covered and you have to spend from your pocket separately. Ex. Sump, Overhead Tank, Electrical Fittings, Interior works like Wardrobes, Modular Kitchen, Chimney....etc. Moreover, once you start construction activity, in majority cases, Budget shoots up by min 20-40% due to changes in the requirements coming as & when you progress.

So either you need to increase your budget or reduce your requirement.
Last edited by msn1270 on June 11th, 2019, 7:31 am, edited 1 time in total.

hayabusa1208
Posts: 4
Joined: June 5th, 2019, 8:59 pm

Re: turnkey or labour contract better?

Postby hayabusa1208 » June 7th, 2019, 7:34 pm

msn1270 wrote:FYI, as there is a saying, "If you through Peanuts, You get Monkey's Only".

Even with Rs. 2,000/sq.ft, You won't get good Quality work with today's material and Labor Cost from many contractors nowadays. Simple example is that in this cost of Rs. 2,000/sq.ft itself, there are plenty of works which are not covered and you have to spend from your pocket separately. Ex. Sump, Overhead Tank, Electrical Fittings, Interior works like Wardrobes, Modular Kitchen, Chimney....etc. Moreover, once you start construction activity, in majority cases, Budget shoots up by min 20-40% due to changes in the requirements coming as & when you progress.

So either you need to increase your budget or reduce your requirement.


Hi what if i got labor contract instead of turnkey contractors? I can order/buy the materials myself and i do not need expensive stuffs for kitchen cabinets, bathroom , floors etc. just normal material will do. Only thing i must get good quality will be the cement, steel etc for structure. So i'm trying to cut costs by getting labor contract instead of full contract.

Also for full contract, they add their profit into the cost like 15-20%(Maybe more). So if they quote price of rs2000 per sqft, it's actually rs1600 etc. And for carpentry work i have own contacts so not worried about that. so let me know your thoughts as i've been reading the forum and quite a number of people have used labor contract instead of full contract.

ardesarchitects
Posts: 961
Joined: June 20th, 2009, 2:12 pm

Re: turnkey or labour contract better?

Postby ardesarchitects » June 7th, 2019, 8:30 pm

Hi,
Construction cost per sft is not standard , it varies as per the building model and format.
To keep it simple, by opting for labour contract you cannot save more than 10% of total cost compared to material contract .
Most cases people end up speding more than material contract as you are not familier in this feild, every one will take advantage of the same.
In current market if you are looking at moderate finishes for your home, you need to spend nothing less than 2000/- per sft .

Regards,
Ar.Praveen.N
Ardes Architects and Interior designers
ardesarchitects@gmail.com
www.ardesarchitects.com
https://www.facebook.com/ardesarchitectsblr

Visualizer
Posts: 133
Joined: June 1st, 2018, 6:24 pm

Re: turnkey or labour contract better?

Postby Visualizer » June 7th, 2019, 10:27 pm

If you want to cut cost and build fast go for GFRG construction. The only condition is house design should
be simple 4 side wall in room kind as walls in GFRG are load bearing. You can cut costs by around 25% for same finish over block construction.

I have seen 3/4 GFRG homes and I studied lots of technical details .
One person I know has constructed recently in whitefiled as well.
I did not go for GFRG as I wanted number of french windows and other unconventional stuff requiring beams and columns which negates purpose of GFRG.

Other methods to cut costs are
1. Use a ready made house plan and directly work with a structural engineer for design. Custon design woth architect involves costs.
2. Dont go by conventional wisdom of contractors when it comes to foundation beams columns etc.
Often they over engineer like 16mm rod when 12 will do. Brief structural engineer what you need and minimise costs.

3. Choose simple rectangular house plan. Unconventional fancy ideas look good but suck money ( personal learning)

4. Cement or steel dont make much difference in overall costs. As a rule of thumb you can take 2.5 kg per sq feet as to estimate required quantity.
see my other post in this forum on same subject.
Choose primary steel (JSW, SAIL, Tata, Vizag) and any brand cement you are getting. At times primary steel can be cheaper then fancy brand secondary steels.

msn1270
Posts: 1341
Joined: June 17th, 2009, 2:21 pm

Re: turnkey or labour contract better?

Postby msn1270 » June 11th, 2019, 7:37 am

Many people think, They can save the 10-20% (Profit margin of a contractor) if they buy themselves all the raw materials. But, Prices always different for a one time buyer vs the Regular/Bulk Qty Buyer from any dealers, whether its Sand/Steel/PLY/Consumables....etc. Also regular buyers(Contractors) get the materials in Credit for 30 Days or more based on their business understanding with the dealer & they clear it once they get billing from the owner. Those are some of the financial management techniques available for the contractors to reduce their Burden.

For an individual, Unless they know the dealer very well, who can ready to sell you without profit, you can't save anything. In fact if you are not a material expert, you will definitely end up buying at a a higher Price or you may buy Sub-standard Materials.

Visualizer
Posts: 133
Joined: June 1st, 2018, 6:24 pm

Re: turnkey or labour contract better?

Postby Visualizer » June 25th, 2019, 11:55 am

If you are willing to read up a lot , plan and learn and willing to spend time on site and have bandwidth to supervise the work then labour contract is good.

However if you have a day job and there is no-one else in your immidiate family who can stand on head of labour and detect flaws at the time its better to give material + labour contract.

navhe
Posts: 51
Joined: June 15th, 2012, 1:36 pm

Re: turnkey or labour contract better?

Postby navhe » July 3rd, 2019, 2:59 pm

Better to go with Labor contract.

Turnkey contracts looks good initially but gets complicated as the work progresses. - many contractors start drama once the structure is over and keep asking for more money but work will slow down.
I have seen many people struggle with contractor at mid stage - lot of delay and tension. It is very difficult to get the estimate of work done in between ! If work is not going to as per expectation, then there is no easy exit. Terminating contract is very expensive affair.

Whereas in labor contract, it is known or limited risk. If someone is not doing good work, you can easily bring another worker.
Materials selection is not at all an issue - you have to spend some time initially to decide your brands and vendors nearby.
If you have a good architect, it becomes even easier.

ganeshncm
Posts: 71
Joined: June 22nd, 2017, 7:28 pm

Re: turnkey or labour contract better?

Postby ganeshncm » August 1st, 2019, 6:02 pm

I have experience with both the formats.

Turnkey - plus
less coordination (among different workers) headache
Have to spend less time monitoring

Turnkey - minus
They keep finding ways to cut corners in material quantity. When cement or steel prices go up, they will switch to the lowest priced one (birla super is over 400rs and bharati cement is below 300). You have little control over quality. They won't let you specify which cement, steel need to be used.

You often need to give big advances to them, and they might not produce work equal to the money paid. Money gets stuck with them.

Everyone in the food chain wants a fat margin, architect, engineer, contractor and maestri...each of them make a cool 10 to 15% of the total cost.. essentially 50% of your money goes to profits of middlemen

Labour contract - disadvantages
Need lot of time
Handling unskilled labour is complex and difficult
Need to have idea of everything to ensure coordination and sequencing

Labour contract - advantages
If you source all material from the wholesalers, you will save more than 30% on the total costs, plus, you will be satisfied that you used quality material. You can alter the brand of the material used on the go, without causing heartburn. You can even drop things on the go, or make changes.

Very little money in advance will.be with the labour contractor. If the guy doesn't deliver or escapes, you won't lose a lot

You can selectively engage architect, engineer etc as needed. That costs lot less than giving them overall assignment

At the end of the day, if you know someone too well, either a turnkey person or labour contractor , choose the person over the method .

Design2Konstruct
Posts: 4
Joined: August 14th, 2019, 6:43 pm
Location: Bangalore
Contact:

Re: turnkey or labour contract better?

Postby Design2Konstruct » August 19th, 2019, 2:00 pm

Hi sir
I would suggest to go ahead with a turnkey contractor as he will be able to manage both labor and material part. You have to believe on the contractor (IF u a get a honest contractor)and finalise things before the start of works as this will help you to complete your building without any hassels. You need to discuss your requirements initially and freeze the cost so that you will have an idea of the required budget. The owner cannot go around for the material and labor and he will only have a one point contact (Contractor) to arrange for things. Owners would had a bad experience with the contractor nowadays but all are not the same. Giving works to an Engineer who is also a civil contractor always helps in design and construction as it will be a all in one package.


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