Many site problems start with a one-page labour contract: unclear scope, unlimited advances, and no rule for work that must be redone. A tidy contract need not be long, but it must answer the questions that will certainly come up.
Clauses it must have
| Clause | Contents | Example |
|---|---|---|
| Scope and limits | What work, where, to which drawings; who supplies materials and tools | Blockwork on block C5, materials from the contractor, hand tools from the foreman |
| Price | Per unit, lump sum or daily; what it includes | 600 m2 × Rp35,000 per m2 = Rp21,000,000 |
| Schedule | Start, finish, and late sanctions | 6 weeks, following the project schedule |
| Payment | On regular measurement; an advance limit | Weekly measurement; advances up to 80% of the value measured |
| Retention | The part held until the maintenance period | 5%, paid after the project’s first handover |
| Quality | Standards, inspection, repairs at the foreman’s cost | Walls plumb and true; repairs at no extra cost |
| Variations | Only with a written instruction | Priced at the contract unit rates |
| Safety | Safety gear, safe working, responsibility for accidents | Helmets and boots required |
| Termination | When the contract can be ended and how the last payment is worked out | If more than 2 weeks late without reason |
Keeping it in line with the main contract
- Obligations to the client (quality, schedule, maintenance) are passed down to the subcontractor for their work.
- The subcontractor’s retention and maintenance period are no shorter than the main contract’s.
- Variations from the client are passed on with the same written instruction.
- The subcontract uses the budget’s work item codes, so cost and progress can be matched.
Common mistakes
- Scope written as "wall work" with no location or limits.
- Unlimited advances, so the foreman is paid far ahead of the work.
- No retention, so defect repairs are hard to enforce.
- Variations agreed verbally.
The full guide is in How to build a construction cost report that catches overruns early. It has a free template (Excel or Google Sheets) and a checker that reads your own workbook.
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Common questions
What goes into a labour-contract agreement?
Scope and limits, price, schedule, payment on measurement, an advance limit, retention, quality, variations, safety and termination.
What advance limit is safe?
A share of the value of work already measured, for example 80%, so the foreman is never paid ahead of the work.
Why must the subcontract match the main contract?
So the quality, schedule and maintenance obligations to the client are also carried by the subcontractor for their work.