You're safe...
The spell flaming sphere says
A burning globe of fire rolls in whichever direction you point and burns those it strikes. It moves 30 feet per round. As part of this movement, it can ascend or jump up to 30 feet to strike a target. If it enters a space with a creature, it stops moving for the round and deals 3d6 points of fire damage to that creature, though a successful Reflex save negates that damage. A flaming sphere rolls over barriers less than 4 feet tall. It ignites flammable substances it touches and illuminates the same area as a torch would.
The sphere moves as long as you actively direct it (a move action for you); otherwise, it merely stays at rest and burns. [n.b. What this means is up to the DM] It can be extinguished by any means that would put out a normal fire of its size. The surface of the sphere has a spongy, yielding consistency and so does not cause damage except by its flame. It cannot push aside unwilling creatures or batter down large obstacles. A flaming sphere winks out if it exceeds the spell's range.
By a strict reading--which some may find silly--, the effect created by the spell flaming sphere must enter a creature's square to inflict damage, yet creatures can enter and leave the effect's square freely, without fear of fire damage or catching on fire. The effect's not given an object's hardness nor hp nor nigh-invulnerability a la the spell wall of force, so the effect doesn't impede movement (and would likely say so were the spell to do so as that would increase the spell's combat value significantly).
No, I have no idea how the effect looks, how the effect feels, or how it only burns folks when it's launched at them, but it's been pretty much the same for, like, a decade. I'm just reading the spell.
...But the spell "ignites flammable substances it touches"
That's all the spell has to say about the matter. A creature "touched" by a flaming sphere follows the normal procedures for Catching on Fire, as follows:
Characters exposed to burning oil, bonfires, and non-instantaneous magic fires might find their clothes, hair, or equipment on fire. Spells with an instantaneous duration don't normally set a character on fire, since the heat and flame from these come and go in a flash.
Characters at risk of catching fire are allowed a DC 15 Reflex save to avoid this fate. If a character's clothes or hair catch fire, he takes 1d6 points of damage immediately. In each subsequent round, the burning character must make another Reflex saving throw. Failure means he takes another 1d6 points of damage that round. Success means that the fire has gone out—that is, once he succeeds on his saving throw, he's no longer on fire.
A character on fire may automatically extinguish the flames by jumping into enough water to douse himself. If no body of water is at hand, rolling on the ground or smothering the fire with cloaks or the like permits the character another save with a +4 bonus.
Those whose clothes or equipment catch fire must make DC 15 Reflex saves for each item. Flammable items that fail take the same amount of damage as the character.
Pathfinder designer Sean K. Reynolds even says so.1
A creature's possessions are attended objects, therefore sharing their owner's saving throws instead of making their own saving throws. Also, were an ifrit to catch on fire, he has only a 1-in-6 chance of taking 1 point of fire damage per turn, so time is on his side. Finally, were an ifrit to catch on fire, ask the DM if the ifrit's possessions share his resistance to fire 5. I'd argue that such a creature's possessions should or else everyone on the Plane of Fire (a fire-dominant plane) is probably roaming around naked. In fire.
- There's a followup thread about fireball if you're interested.
While it's not clearly stated in the description of the magic item, I'd say that you would need to provide the building materials.
This is due to several aspects of the description. First is the fact that it specifically states that it reproduces the labour generated. Secondly, that it doesn't state that it generates the building etc from nothing (or by magic). Lastly, other spells and/or magic items, that reproduces stuff, clearly mentions this in their description. As well as the upper value cap of the materials produced.
So, in short: The item as written only specifies that it replaces the workforce, not the raw materials.
Best Answer
I'm going to support @BBlake on this one by pointing out that this is theoretically a problem for basically any type of elemental interacting with the normal universe.
In all cases, it looks like the Elemental is basically in control of its form and its interactions with the "normal" universe into which it is summoned. If this wasn't the case, the elementals would have all kinds of problems and would likely start dying or massively destroying things just by being summoned into the world.