Direct Labour or Building Contractor?

You have your design, you have your planning permission granted. Now the next big question is, do you go self build/direct labour or get a main contractor in to do it? As with pretty much everything in construction, there is no easy answer to this and when clients would speak to us there is no one answer that we will give every time. Each and every project has their own unique challenges and each client is different.

So what are the pros and cons for self building or using a Main Contractor? We will discuss both options here:

  • Self Builder:
    • Pros
      • Can save money
      • More control over all aspects of the build
      • Can use friends who are in the trade
      • No time pressure in getting it finished
      • A way to learn about construction
    • Cons
      • Huge amount of personal time taken up, managing and making material orders
      • VAT rate on materials is 23%
      • Project could potentially take longer to complete
      • Harder to line up all subcontract trades to run in sequence effectively
      • Bulk buying power is reduced
      • Any errors on site could be your fault and your cost to rectify
  • Main Contractor:
    • Pros
      • Will do all the chasing and programming
      • All material costs subject to 13.5% VAT
      • Builder will be liable for any snagging or rectifying of works
      • Have a guarantee/warranty on one point of contact to fix anything if necessary
      • Monthly payments, no bills to worry about for lots of trades
    • Cons
      • Can be more expensive
      • If the builder goes bust, could be liable for costs
      • Some builders will do work as they see fit, not how you want it done
      • Potentially use cheaper materials/subbys. May not always be the best quality.

With a self build, never underestimate the amount of time spent working on it. There are multiple phone calls in terms of lining up subbys, ordering materials, sorting out on site issues. I would advise that if someone who is going the self build route but is not experienced in construction, they should use a project manager who can do this chasing and sorting of issues. The time you spend on the project would be eliminated and the cost of this would outweigh the cost of your own lost time. However, this could often leave you with the same overall cost of just using a builder in the first place. This option may suit some, but if your own personal working time is flexible and you can afford to do the chasing and making calls, then there is a saving to be made there for sure.

If you are in the construction industry, ie a carpenter or blocklayer etc, it makes sense to go down the self building route. But don’t forget that there will potentially be your own loss of earnings from working on your house that needs to be factored in. A day you spend working on your own house is a days loss of earnings, so factor this into your equation of whether a builder is more expensive.

Another item that often gets overlooked is the VAT rates payable. When you use a builder, you pay 13.5% VAT on everything. However, if you are a self builder, you pay your sub contractors 13.5% VAT and you pay 23% VAT on all materials purchased. Over a one off house, these costs can often balance each other out, so it is not always an automatic case of self building being cheaper.

I have intentionally stayed off the subject of cash in hand payments. It’s a taboo subject but one that does still happen. Just always be conscious that in cash payments, there is often no come back should something go wrong. It may save you money in the short term, but always approach with a great sense of caution and be sure of what you are committing yourself too. There is also the legal obligations with regards to revenue, and revenue do carry out checks on one off house builds. Cash in hand payments are illegal. You are putting your self build at risk with uncertified payments and uncertified work. You may save money, but you are taking huge risks by doing so and long term, it is not worth the risk. The CIF issued a good report on the Black Economy and the points to note here: cif.ie/2013/08/19/black-economy/

In general though, if you have little or no experience or knowledge in construction, I would advise to use a builder. They bring their expertise to your project and it will be completed in a much shorter timeline and they will be there to come back to rectify any defective work. The time you would spend trying to learn as you go and potentially your own loss of earnings may not justify the potential to save some money. It also depends on how quickly you want to be finished too, if you have lots of scope and are prepared to spend your own time on it, then a self build may be a worthwhile and interesting way of doing it and you get a sense of ownership and pride to something you greatly contributed to. If you want your build completed in a prompt manner and with fewer headaches and a knowledge that someone is there to make sure it is built right, then go with a building contractor.

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