Day Rate vs Fixed Price: Which to Agree for Building Work

Two ways to buy the same fortnight of building work: a fixed £6,800 for the finished thing, or “me and the lad at £480 a day plus materials”. Neither is inherently better, they allocate risk differently, and choosing wrong for the type of work is how both overpriced quotes and runaway day-rate jobs happen.

What each structure really is

Fixed price: the builder estimates the labour, materials and problems, adds contingency and margin, and sells you certainty. If it takes longer, that’s their cost; if they’re efficient, the upside is theirs too. You pay a premium over bare cost, that premium is the product.

Day rate (time and materials): you pay for time as it’s spent and materials as they’re bought. No estimating premium, and no ceiling. Every inefficiency, every surprise, every slow Tuesday is yours. The builder carries almost no risk, which is exactly why it’s the fair structure for work nobody can honestly price.

Choose by definability, not preference

The hybrid is underused and excellent: fix everything definable, carve out the genuinely unknown as a provisional sum or day-rate section, and the premium you pay shrinks to cover only the real risk.

Running a day-rate job without the drift

Day rate fails when treated as an open tap. The controls:

1. Benchmark the rate, UK trade day rates run roughly £200–£350/day depending on trade and region (London at the top). Know what you’re paying per person, and what a “day” is (8 hours on site, not 9-with-an-hour-at-the-merchant).¹
2. Define the crew, £480/day for two named people, not “the team”.
3. Set a budget cap with a check-in, “proceed up to 6 days; review together before any more”. This converts open-ended risk into tranches you approve.
4. Daily brief accounting, a line each evening: hours, what was done, materials bought (receipts). Two minutes, and the site diary corroborates it.
5. Materials at cost + receipts, agree the handling markup upfront (0–15% is the honest range).

Watch the incentive: on day rate, slow is profitable. A good outfit doesn’t exploit that, but if progress per day looks nothing like the productivity a job should show, have the conversation early, and be equally honest with yourself about whether your changes and indecision are the drag.

Fixed-price traps to dodge

Fixed price fails differently: through what wasn’t fixed. A “fixed” quote with a vague scope is a variations machine; a suspiciously low fixed price is often a deliberate door-opener with the margin recovered via extras. The defences are the ones this series keeps returning to, a tight scope, written variations only, and a contract that says what happens when the unforeseen appears.

The bottom line

Fixed price for anything you can define; day rate, capped, crewed and accounted, for what you genuinely can’t; hybrid where a definable job has one dark corner. And whichever you choose, in writing: the structure only allocates risk if the paperwork says who’s holding it.