I would say he wants to do it this way because he doesn't have his building license, and doesn't want to take out the liability insurance, but wants to be paid to project manage.

It can be done, but you'll need to draw up a very detailed contract with saying that he is financially liable for any issues that may arise, and with a detailed quote. You'll also need to include what your expectations and requirements are in great detail. Eg. What tiles, grout colour... Every little thing you can think of so if it's not right, you have something to fall back on.

Financially, it'll probably cost you the same to get a builder vs pay him to project manage, so it just depends on if you're willing to take a risk with him. Having said that - you'll always be taking a risk with renos and building.