Labour-only, item-rate or turnkey contractor in India (2026)
Design IRL Editorial · Figures checked 7 November 2026 · For owners comparing contractor quotes for a new house · How we make our guides
In India, a labour-only contractor charges about ₹250–500 per sq ft plus the materials you buy, while a turnkey contractor charges about ₹1,800–3,500 per sq ft all-in. Item-rate contracts are priced line by line against a BOQ. Labour-only often looks 10–20% cheaper, but only if you have time to buy materials and manage the site.
The three models
| Model | What the contractor does | Typical rate (approx.) |
|---|---|---|
| Labour-only | Supplies workers; you buy all materials | ₹250–500 per sq ft of built-up area, plus your materials |
| Item-rate (BOQ) | Supplies and builds each item at an agreed measured rate | Priced item by item; contractor margin roughly 10–18% |
| Turnkey | Handles labour and materials for a lump sum or package | ₹1,800–3,500 per sq ft all-in; margin roughly 15–25% |
Labour-only often looks 10–20% cheaper than a full contract. That saving is real only if you have the time to buy materials, check deliveries and manage the site.
Who carries the risk
- Labour-only: you carry price rises, wastage and the quality of materials. You also manage the schedule.
- Item-rate: quantities can change, so the final bill moves with what is actually built. You need someone to measure work fairly.
- Turnkey: the contractor carries more of the price risk, which is part of why the margin is higher. Your risk shifts to specification. Vague specs let cheaper materials creep in.
How to compare quotes
Ask every bidder to price the same bill of quantities (BOQ), drawn from the same drawings. A contractor who will not share a BOQ is a warning sign. Check that each quote names the brands and grades of cement, steel, tiles, fittings and wiring, and says what is excluded. Compound wall, sump, borewell and approvals are often left out.
Get 2 to 3 quotes
Quotes for the same house can differ widely. Get at least 2 to 3, on the same BOQ, and keep a 10% contingency whichever you choose.
Which model suits you
- Labour-only can work if you live nearby, have time most days, and know materials or have an engineer who does.
- Item-rate suits owners with complete drawings and a clear BOQ, and someone to measure work at each stage.
- Turnkey suits owners who are busy or live away from the site, as long as the specification is written down in detail.
- Whichever you pick, hire your architect independently, so someone checks the contractor's work on your behalf.
Vetting checklist and red flags
- Verify GST registration, PAN and a real office address.
- Visit one finished site and one ongoing site.
- Call past clients you choose yourself, not only those the contractor suggests.
- Be wary of a refusal to share a BOQ, pressure to sign quickly, or a request for a large advance.
- Be wary of a very low quote with vague specifications.
What the contract should say
Put everything in a written agreement and have a lawyer review it. It should cover:
- Scope of work and material specifications, with brands and grades.
- Total cost, GST terms and the payment schedule.
- Timeline, delay penalties and how change orders are priced.
- Warranty, retention and the defects-liability period.
- Termination and dispute resolution.
Payment schedule and retention
Pay against work that has been checked, not by the calendar. Keep the advance small. A schedule like the one below is a reasonable starting point for a G+1 house.
| Milestone, checked complete | Share of contract |
|---|---|
| Agreement and mobilisation | 5% |
| Foundation, plinth beam and backfill | 15% |
| Ground-floor roof slab | 15% |
| First-floor roof slab | 15% |
| Brickwork, all floors | 10% |
| Plaster and concealed services | 10% |
| Flooring and tiling | 10% |
| Doors, windows and painting | 10% |
| Fittings, external works and handover | 5% |
| Retention, released after the defects period | 5% |
Retention of about 5–10% is usually held for a 6 to 12 month defects-liability period. If you have a home loan, bank tranches often arrive 1 to 3 weeks after each stage because of inspections. Line up the contractor schedule so you are never asked to pay before the bank can release.
Common questions
What is the difference between a labour contract and a turnkey contract?
A labour-only contractor supplies workers at about ₹250–500 per sq ft while you buy all materials. A turnkey contractor handles labour and materials for about ₹1,800–3,500 per sq ft all-in. An item-rate contract prices each item against a bill of quantities, with a contractor margin of roughly 10–18%.
Is a labour-only contract cheaper than a full contract?
A labour-only contract often looks 10–20% cheaper than a full contract. The saving is real only if you have time to buy materials, check deliveries and manage the site, because you carry price rises, wastage and material quality yourself.
Which type of contractor suits me if I don't live near the site?
A turnkey contractor suits owners who are busy or live away from the site, as long as the specification is written down in detail. Labour-only works if you live nearby and have time most days, and item-rate suits owners with complete drawings and someone to measure work.
How do I compare house construction quotes?
Ask every bidder to price the same bill of quantities drawn from the same drawings, and check that each names brands and grades of cement, steel, tiles, fittings and wiring. Check exclusions, since compound wall, sump, borewell and approvals are often left out. A contractor who won't share a BOQ is a warning sign.
What payment schedule should I agree with a house contractor?
Pay against checked milestones, not by the calendar, and keep the advance small. A reasonable G+1 schedule starts with 5% at mobilisation, 15% each at foundation and the two roof slabs, and ends with 5% retention released after the defects period. Retention of 5–10% is usually held for 6–12 months.
How do I check a building contractor is genuine?
Verify the contractor's GST registration, PAN and a real office address, visit one finished and one ongoing site, and call past clients you choose yourself. Be wary of a refusal to share a BOQ, pressure to sign quickly, a large advance, or a very low quote with vague specifications.
Find the people
Related guides
- How to build a house in India, step by step (2026)A plain walk-through of building an independent house in India, from budget and plot checks to design, approvals, the construction stages and handover.
- House construction quality checklist in India, by stage (2026)What to look at on site at each stage of building a house, from soil test to snag list.
- House construction cost in India, stage by stage (2026)How house construction costs break down by stage in India, with per-sq-ft rates, soft and hidden costs, and a worked 2,000 sq ft example for Mumbai and Jaipur.
- Home construction loan disbursement in India, by stage (2026)How a construction loan is released in stages, what the bank needs at each one, and how to line up your contractor's payments with it.
- How much cement, steel and sand a house needs in India (2026)Per sq ft rules for cement, steel, sand, aggregate and bricks, what changes them, which grades to buy, and a worked example for a 2,000 sq ft house.
Sources
Most published cost figures come from firms that sell the work. We give ranges and you should get 2–3 quotes.
- NoBroker: 4 BHK house construction cost
- Houseyog: labour contract vs full contract
- Brick&Bolt: house construction cost in India 2026
- Brick&Bolt: questions to ask before hiring a construction company
- Brick&Bolt: safest payment structure for homeowners
- JK Cement: how to hire a reliable contractor
- Construction Estimator India: hiring a contractor
- Houseyog: sample contractor agreement (PDF)
- HDFC: home loan disbursement
- Tata Capital: subsequent disbursement