Jump to content

Recommended Posts

I am almost ready to build my house in Ilocos Sur. My question to those that have built a house or now the cost process to pay contractors for construction. I have plans for a 700 square meter house. The contractor wants me to purchase all materials and he wants to be paid 40 percent of the cost of all materials to build the house. He would provide all workers and tools. This way I can make sure quality materials are used and negotiate material costs. Is 40 percent of material costs fair?

What does not make sence to me is that if I purchase tiles at $1.00 per square foot he gets 40 cents but if I purchase tiles at $10 per square foot he gets $4.00, so for the same labour he gets either much more or much less depending on what I build.

Any suggestions on how to pay the construction company? They don't want to be paid daily.

  • Like 2

Share this post


Link to post
Share on other sites

When I built we started on the % route. After a couple of months I sacked the engineer, I designed it anyway, re employed the workers I wanted and negotiated a daily rate with them. The rate I paid was slightly more than he paid them, I saved money and everyone was happy, apart from him.

  • Like 6

Share this post


Link to post
Share on other sites

40% might be fair for the shell of the house, rough plumbing and electrical. Hire your own contractors to finish the inside. Tell him you aren't going to pay him 40% of the car you park in the drive either!

  • Like 4

Share this post


Link to post
Share on other sites
44 minutes ago, Mike In Canada said:

What does not make sence to me is that if I purchase tiles at $1.00 per square foot he gets 40 cents but if I purchase tiles at $10 per square foot he gets $4.00, so for the same labour he gets either much more or much less depending on what I build.

It doesn't make sense to me either unless the logic is that if you can pay more for materials, then you can pay more for labour. In my renovations/construction, I got a set price for labour only and then I bought the materials myself. In both projects, the bosses were annoyed on the length of time to finish as the workers liked to work at our place because the food was good and they don't know what it will be like at the next worksite. 

  • Like 7

Share this post


Link to post
Share on other sites

Further to my earlier post, the reason I sacked the engineer was twofold. Firstly he was ordering more materials than was required to boost his money, something to really keep an eye on. Secondly was his consistent changing of my plan withoutconsulting me. All you need an engineer for is the actual drawing of the plans and as requirement for building permit. Find yourself a good foreman/tradesman who can read plans andyou are good to go.

Two important things that I have seen some expats here not do are pay the gain tax on plot before commencing the build andbe sure to get a building permit.

Good luck for the stress ahead!

  • Like 4

Share this post


Link to post
Share on other sites

Maybe I just got lucky.  But we hired an architect to design and build our house and have been so satisfied words could barely explain.  He has gone far and above anything I could have expected after reading and hearing all the horror stories and problems others have experienced when building here.  Of course we are not complete yet, but I have no worries and no stress.  Once our project is done, sometime late August, I will do a complete write up on my experiences with the architect.  Now to your question on payment.  Like I said we hired the architect for the complete project.  The cost to build our place complete is under 23,000 peso per meter.  His foreman is an engineer with great skills and the work force has ranged from 12 to 20 men depending what stage of the process.  Since we broke ground last November they have worked six days a week never missing and only taking off on the major holidays.  For payment he asked for 1/3 down, then 1/4, another 1/4 and the final payment when complete.  Although he does not yet know, he will receive a bonus. Everything has gone by the plan like clockwork and so many details completed without a single issue.  He may call us once or twice a week asking for opinions or choices and then sometimes two weeks may pass without a word.  He is managing several projects in different areas at the same time and only stops at our project two times a week or as needed.  I usually stop and check in every other day.  If I see an issue, which I have maybe three or four times, I usually take a photo is needed and send him a text or email.  He responds no later than an hour or so and the issue is resolved!  Like I said in the beginning, maybe I just got lucky.  I have built other homes in the US myself and many smaller remodeling jobs but this has got to be the least stressful bar none!

  • Like 13

Share this post


Link to post
Share on other sites
17 hours ago, Mike In Canada said:

Is 40 percent of material costs fair?

In my opinion? Not really.

Here is how things went when we built our house in brief. Our architect made blue prints from our basic home computer plans, arranged for the construction crew (foreman and laborers) visited the site on almost a daily basis. For this he was paid 10% of the "estimated" building cost based on his experience. In our case he estimated 4 million pesos. Actual cost was closer to 5 million because we used top of the line materials. We paid the crew ourselves on a weekly basis. (bearing in mind that here it is customary to offer a mid week pay, which almost all laborers took advantage of so in reality we paid the workers twice a week).

House came out great and exactly how we designed it. One caveat is that our architect is a 3rd cousin to my wife, so I do not know if he gave us a special deal (but I doubt it lolol).

paying a flat rate for his fee and the labor, again IMHO, opens up the possibility that he will pocket part of the workers pay, which might lead to unhappy workers.

Good luck

  • Like 3

Share this post


Link to post
Share on other sites

The 40% of material costs seems to be the asking price around here too (Iloilo).  When we built we were told the same.  I paid Uncle and he paid them. The house was almost finished before I even knew we had a contractor.  Only reason I heard of him was because for a couple days he pulled guys to work on the big hospital they were building in the city...  I thought it was just some cousins building our house.

The material estimate was so close to the actual cost it was almost scary. Uncle was in charge of buying materials and made the estimate.  The 40% bit was just for the house shell (what they call a complete house). Of course I added foreigner options like a ceiling, windows, floor tile, and paint. That was all done with individual contractors, negotiated separately. Total cost was around p10,000 per meter.

I liked the idea of a flat rate for the job because I wanted them to build it and get out, not drag their feet for more days pay.  :tiphat:

  • Like 6

Share this post


Link to post
Share on other sites

40% is the asking price.........

I wouldnt do it, negotiate down as your materials will be much higher spec and substantially more costly also.

Better to do as others said, manage labour yourself and the entire build process, perhaps get a good Foreman.  Much cheaper in long run if know what you are doing

  • Like 3

Share this post


Link to post
Share on other sites
37 minutes ago, Steve GCC said:

40% is the asking price......

 I am not going to enter this Topic as I have already said why I disagree with this Method :huh: eeeeer in another Topic of a similar issue, Time maybe to put them all together? It will make it all easier to respond :smile:

Edited by Jack Peterson
added a little
  • Like 2

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×