Labor Contract Vs Material Contract – Buy Materials Yourself Or Let Contractor Handle It?

Labor Contract Vs Material Contract             – Buy Materials Yourself Or Let Contractor Handle It?

In today’s time, building a house has been a scene of chaos for amateur and new owners. Due to the growing business of builders and contractors along with Labour Contract and Material Contract, there must be some confusion for you if you fall in that amateur category. So, here we will provide the needed information about their comparison to know what and how you should process it. That should set things up for you.

Labor vs Material contract, both are right in their own ways.
You decide which best fits your need.

The Cost of building your house comes with the contract of hiring a contractor who knows the steps of building a house. And through his expertise, he builds your house. And in time you will make it into a home. But before that, what kind of a contract of cost management are you going to do, determines the cost value of the overall process.

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Concept of Labor Cost Vs Material Cost

Labor Contract vs. Material Contract
  • Labor Contract is the estimated cost contract where you will only pay the contractor for his labor workers, but supply the required materials by yourself. You, as the owner, will get to decide the product brand that you want to use and save the interest cost that should have been paid to the contractor.

It is the best way to overlook the progress of the material use and supply if you understand what you are doing. If not, then you can have a high chance of loss of time and effort with it.

  • The material Contract Agreement is the estimated cost contract where you give the complete authority to the contractor with the supply materials and overall development of the house. It is the best contract for an inexperienced owner to deal with If you are not able to put the complete time and effort throughout the building process.

The contractor with his links and connections will manage the labor along with supplying the materials and you wouldn’t have to go through the effort of proofing the transaction as that will all be handled by the person in authority. 

It is a bit costly contract, as the contractor takes the interests of 7 to 15% with which the total cost might increase by 5 to 10 %. In conclusion, it will come around to 60 to 70% cost of the house.

Labor Contract vs. Material Contract

Comparison of Labor Contract Vs Material Contract in terms of 


Quality can be termed with many things that go around the building process. From quality materials to quality workmanship, quality can be anything in between. Here we go into Labor Contract Vs Material Contract.

  • In Labor Contract, while you may choose the best brand for the materials, but the supplier might not be the best one. So what might be the result? You might get the best brand but not the best product. If you already know about these properties then you might have the experience for it. But if not, you might have to face the consequences.

With workmanship, it is the deal of the contractor to do the best job by hiring the best manpower. But when there is an extent of a loophole in the contract then you might get some compromising scene of lacking in quality.
Since you have taken the authority of looking after the job, the contractor might not try to oppose the authority and that might result in some limitations that grow due to your inexperienced skill.

  • In a Material Contract, you give the complete power to the contractor, so it will be his job to see over the quality product that gets delivered on-site. He takes the responsibility of contacting the suppliers that make the deal as he might have his own chain of supplying agencies. If any damaged products are found, that too will be his responsibility to deal with.
Labor Contract vs. Material Contract

Time and Owner Involvement

Without the resolution to do the project you cannot get yourself to make up the time and build your involvement for it. On with Labor Contract Vs Material Contract.

  • Going with Labor Contract, you will have to devote your complete time to meet the needs of supplies. Moreover, you also need to be present to look after the arrival and manage it too. As the contractor just deals with the work of his fellow laborers, you need to deal with the supplying agencies and be ready with the money.

You get to check everything on your account. So, you will know that nothing is short or missing from what had been ordered.

  • Whereas in Material Contract, All the specified job is handled by the Contractor and you will just be the observer of the work in progress. You get to visit at your own time and manage your day’s schedule accordingly. If you are an office worker or have important things to do, then you don’t have to worry about what’s happening at the site. He will be taking care of it and you can always visit later.
Labor Contract vs. Material Contract

Money and Time Delay

Starting with the money, you have to be prepared to spend the needed amount. It’s your dream project. On with Labor Contract Vs Material Contract.

  • With Labor Contract, the finance for your building project can be cut down as you will be dealing with the purchase yourself, and by minimizing the interest to the contractor,r you can save that part of the expense. But, on the other hand, with a lack of knowledge, you might be unable to bargain with the dealer.

This concept can have a fluctuating outcome as buying from different sources can count to be much more than from the same source.

This way of work can affect the time scheduling of work. When you get delayed with the supply, that directly affects the construction. The halt would result in more time for its completion. That would also increase the payment for the workers who will be paid on the daily basis.

  • Whereas, with Material Contract, the contractor has his connections and can effectively supply the materials. It would save you time and money with the efficiency that he plays. And as it’s his deal of showing his work dedication, he would try to complete the work much faster. 
Labor Contract vs. Material Contract

Result or Risks?

There are always going to be some risks with whatever you do. But trying to prevent it gives the best result. Let’s take it with Labor Contract Vs Material Contract.

  • In Labor Contract, the risk of any dispute or loss is considerably lower, as you are handling all the work with your sole authority. So, you will know what has been happening and what needs to be done. From construction design to legal paperwork you get the information directly from the officials. 

You can safely be prepared to control the situation if anything arises. 

  • With a Material Contract, it might not be the same. As you will not be dealing with everyday affairs, you will not know the updates. And if anything has been mistaken then as the owner, you will have to face it. The Contractor can be asked with the details, but it surely would not be as dealing with it first-hand. 

If the contractor is trustworthy and you know it well, then this risk factor might not arise. 

The completion of the project depends upon how he plans it to be. And with that reliability on him, he will do everything in his force to complete it within the estimated time and with minimal loss of materials.
If you have done good research with Labor Contract Vs Material Contract, then it should not be a big deal as you will get the needed information and the rest lies in how you can manage the construction process.

Labor Contract vs. Material Contract

Before you Choose any Contract

Both Labor Contract and Material Contract have their advantages or disadvantages. But, it all depends on which criteria you fall under. If you cannot deal with the effort and time, then you have to go with the Material contract.
But, if you want to dedicate and have the experience of dealing with the suppliers then your best option would be the Labor Contract. You should do this Labor Contract Vs Material Contract.

With that being said, the authority remains with you. You are the owner of the property, and whatever you say will be the answer. So, following these guidelines for understanding the contract will make you understand how you should progress with your construction.

Congratulations on your big dream project.

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