This method has proved to be the most easy method. Hence, it is the most popular method.
If contract is with material plus labour.
For a particular project detailed specification of work is finalized.
The proposed rate is worked out on the basis of estimated material cost, labour cost and overhead expenses to complete the unit as a finished product.
The billing is done as [build-up area (in sqm/sft) of building] x [agreed rate in rupees/per sqm/sft].
Mode of payment is fixed at various stages of work, as per the percentage agreed in the contract.
If the contract is only with the labour.
In this method, the work is split into various items, e.g. R.C.C., masonary, tilling, plumbing etc. These works are entrusted to small but specialized petty contractors on labour rates only.
The labour rate is arrived at, considering the labour component of the estimated cost, for that particular item.
The billing and the mode of payment is the same as explained above.
