Will you be paying sub contractors by the hour? Is the markup added by the sub with another markup added by the GC?

I've only seen this done on very small jobs.

Keep in mind the rate to these subs has to include covering their fixed costs. Specialty equipment, vans, licenses, admin costs like insurance, accounting, retirement savings, income taxes.

I think those rates are quite reasonable. Nationwide the average cost to operate a repair technician in a van is around $47 and he doesn't have more than hand tools.

You should only compare rates for your immediate area. Rates vary by as much as 100% across the US.

If the markup is from the subs their OH&P is separate from their hourly rates. You need to tell us what these numbers mean.

Would you build a new house paying the workers by the hour? Describe the contract, the parties involved and the method of compensation. Will there be a GC? Will you be the GC? Rates for workers vary with these decisions.

Thanks for the response.
1) This is a new home
2) Built in the Midwest
3) We have a General Contractor which will make 10% above all rates.
4) Subs will be paid time and material.

For this area, electrical and plumbing seem low.

For this area painting seems high, although that's about what mine charge.

In my experience, a Time and Materials contract is appropriate for house repairs or small renovations where the scope of work is not known or for owners who are unconcerned with the final cost or completion date of the project and want to continue to design during construction.

For a new home with reasonable cost controls, a more appropriate contract is "Cost of the Work with a Fee" with or without a Guaranteed Maximum Price. You would negotiate a % of Cost Fee with the General Contractor who would then bid or negotiate fixed prices for the subcontracts to control the cost and time of the project. You would not know or care what the hourly rates or markups are for the subs although Unit Prices might be put in the contract for Changes in the Work.

I too am in the Midwest. Like renovator8, I've never seen new construction bid with T&M. That doesn't mean it doesn't happen, just something new to me.

Time and materials on a new build is just insane. It's a recipe for giant cost overruns. T&M is for fixing hidden conditions in a renovation that can't be determined by the original fixed price scope of work document.

As a licenced builder/renovator, I've only paid general labourers or trusted carpenters doing extra miscellaneous work, by the hour.

I see this as one of those situations that is a recipe for disaster. It is entirely possible that your General Contractor has done this for years and he is just incredibly good at managing subs to keep cost overruns down. But the whole situation just has a bad risk versus reward. From a financial perspective your risk is WAY too high for the reward. The potential for cost savings is fairly minimal, while the potential for cost overages is monumental.

Wierd concept to build a home. Very contractor friendly though. Not gonna be anything that comes in on budget.

Have to agree with just about every one above. My question is why would you pay t&m when the conditions would 100% known? There is no benefit to anyone but the guy getting paid to do this project t&m. Definitely no way to control costs and a recipe for disaster.

Some builders in our area contract to build homes on a cost-plus or management fee basis, material prices are variable, but subcontractor scopes of work are defined and performed for a fixed price. I agree that doing a new construction project on a T&M basis shifts too much risk to the client. Proceed with caution.

All rates are low compared to Minneapolis St. Paul. with the exception to painter/carpenter