The construction industry in Ethiopia is faced with a lot of challenges ranging from projectrninception to hand over one of the main challenge in the execution of construction projects isrnconstruction method of delivery and an ever increasing project undertakings of labor-onlyrncontract and direct labor contract. This study therefore compares the performance of labor-onlyrnand directly employed contracts in Addis Ababa .Present construction projects in general arernbecoming highly capital intensive. rnIn recent years, the application of labor-based methods with employing equipmentâ€™s in buildingrnconstruction has been initiated due to its assumed economic advantages for owners. However,rnthere are inevitable doubts, especially among engineers and project planners, as to the feasibilityrnof the labor-based methods. Whether it would be possible to apply these methods withoutrnsacrificing quality standards, what effect they might have on the pace of construction, whatrnadditional strains they might place on scarce managerial resources, and of course, what therncomparative cost would be. rnThis labor based construction approach gained popularity late last century because it was seen asrna clever way to cut costs. Many property owners naively believed that project management was arnstraightforward exercise they could do in their spare time, and this enabled them to avoid payingrnthe margin to the builder that he would otherwise receive for performing this function. rnThe study focused on Addis Ababa region labor based construction projects and contracts, forrnthis study questioners and interviews were conducted as well as results and discussions based onrnthe scientific analysis were drawn based on the analysis and observed data. rnThe results show that, therefore, recommends that the use of the labor-only procurement systemrnshould be encouraged among construction participants trying to achieve small constructionrnprojects within the available budget. However, care must be taken while adopting this rnprocurement option for high capital and very technical projects. Because these projects mightrnneed well skilled man power, Since Controlling, quality of construction materials and riskrnassociated with the construction projects is very hard to manage for large projects.