Construction costs and general building advice

[OscarMike]

Hi all, I am going to build our own place here instead of buying one from a development. I know there are many pitfalls to doing this but it can also work out cost effective if done correctly plus we get what we want (in theory).

Since I am new to all of this I would like to use this thread to ask questions as there will be plenty and there are many knowledgable folk on this forum.

Is it usual for builders to price the job per square meter and if so what is the going rate?

What is the best way to find a good (reliable) builder?

Would it be better to buy all of the materials ourselves or let the builder decide?

That will do for starters, thanks in advance for your input.

[TypicallyTropical]

Good luck and welcome to Headache 101! While I have not built a house in Thailand, I have owned a real estate company for 16 years and have built numerous homes. Yes, builders will quote you a price/sqm with allowances for everything. If you want something more elegant/higher priced than the allowance than you have to pay the difference. One good advice I can give you: have an IRONCLAD contract outlining EVERYTHING. Have at least five draws to the builder with the last 10% payable AFTER completion.
Building a home has its advantages, especially that you get a house exactly the way what you want.

[STEVE G]

I've had one house built up in the NE and am about to start another one in Hua Hin and my way of going about it is to basically find a builder who has built a house that you think is up to the standard you want and make an agreement for him to build you another to the same standard for an agreed amount.
For this to work you need to find the actual builder who did the construction and not a developer who is just going to sub-contract the work out.

[kendo]

I know a really good british builder built lots of bespoke houses in Thailand pm me if interested chaps.
kendo.

[Khundon1975]

OscarMike

It may help if you know how it should be built. Do some homework before you sign any contract with a builder, look at some of his previous work and speak to the owners.

Good luck, you're going to need it.

[hhfarang]

Is it usual for builders to price the job per square meter and if so what is the going rate?

Yes, for the builder's standard of materials and fixtures. You need to know what those standards are to decide if the price is reasonable or not. I built my house 6 (and 5 and 4 and 3 ) years ago so I don't know the current rate.

What is the best way to find a good (reliable) builder?

As Steve and Khundon said; past reputation. Find a builder who has already completed homes that you like the quality of and talk to some of the owners if possible to see what were the problems or if there were and post build/warranty problems.

Would it be better to buy all of the materials ourselves or let the builder decide?

You can probably save money and get better quality by acquiring a lot of the materials yourself. We did and raised the quality considerably at less cost than the builder would have charged because there is no middleman; however, this has to be coordinated and calculated carefully to meet the building schedule and to make sure you have the necessary amount of a particular material (with a small overage for breakage, but not so much as to waste money). It is important to get items like tiles, marble, granite, or ceramic in one lot as if you fall short and have to place a second order the material may not exactly match the first order in appearance.

Whether you buy the materials or let the builder do it, insist on a Bill of Materials prior to construction. This is a list of exactly what will be needed to build the house down to the liters of paint, and number of cement blocks, tiles, cubic meters of cement, etc. A good builder should be able to provide this from a complete professional set of drawings (another thing to insist on). This list can be verified and then you know better about what your money is going for and how much of it is for labor. The Bill of Materials should specify not only numbers and amounts of building materials, but quality and type of materials right down to brand names so that you know exactly what you are getting. Otherwise, you could end up with wiring that is too small a gauge and will go bad rapidly or substandard cement, tiles, steel, paint, etc. A lot of builders will cut corners by using inferior materials (especially the construction materials that are hard to verify) to save cost for themselves and make a bigger profit.

Finally, as Typically Tropical already mentioned, stage the payments (in at least 4 or 5) with milestones to be completed before each payment and hold back a final payment until turnover of the completed and inspected house. It is also helpful to have a late fee (by day, week, or month) written into the contract to be charged back to or held back from the builder for not completing the job in the time he quotes. Some homes here have been quoted in months and years later are still under construction. Do not build in absentee mode. You either have to be here to check the work done nearly daily, or hire a third party you trust to inspect the work often and report to you.

By Building mine, I got exactly what I wanted and probably saved 30% as opposed buying an already completed home the same size, but it was the worst (most stressful) two years and four months of my life.

It is a minefield, but if you do your homework, find the right builder, and verify, verify, check and verify again, you can come out with a product at a good price that you are happy with.

Good luck!

[stgrhe]

It is also helpful to have a late fee (by day, week, or month) written into the contract to be charged back to or held back from the builder for not completing the job in the time he quotes.

In contractual terms this is normally referred to as Liquidated Damages and here is a wording example:

"If the House construction is not completed at the agreed time for Delivery, the Buyer shall be entitled to compensation from the date on which Delivery should have taken place until Delivery is made. The compensation shall, after a grace period of thirty (30) days, be payable at a rate of xxx thousand Thai baht (THB x,000.00) for each commenced day of delay."

In this case the penalty is activated after 30 days delay, which is fair IMO. It is also IMO better to have a compensation calculated on a daily basis.

Remember, the initial quote is one thing; that commitment should then be formulated into a proper contract comprising:

- The Agreement (who, what, when, how, how much, etc. plus all law clauses)
- Technical Specifications
- Complete House Drawings
- Master Time Schedule
- Permits (Building Permit, Builder's Permit, Well Permit, etc as applicable)
- Builder's Company record showing who has the right to sign on behalf of the company

A comprehensive construction contract could comprise the following clauses:

PREAMBLE
RECITALS
AGREEMENT
CLAUSE 1 - DEFINITION OF TERMS
CLAUSE 2 - ORDER OF PRECEDENCE
CLAUSE 3 - BUILDER’S UNDERTAKINGS
CLAUSE 4 - BUYER’S UNDERTAKINGS
CLAUSE 5 - PRICE AND ALLOCATION OF COSTS
CLAUSE 6 - TERMS OF PAYMENT
CLAUSE 7 - CHANGES TO THE HOUSE PLANS OR SPECIFICATIONS
CLAUSE 8 - MILESTONE ACCEPTANCE INSPECTIONS
CLAUSE 9 - COMPLETION OF CONSTRUCTION
CLAUSE 10 - RISKS AND PASSING OF RISKS
CLAUSE 11 - TITLE
CLAUSE 12 - DELIVERY TIME
CLAUSE 13 - LIABILITY FOR DAMAGE
CLAUSE 14 - WARRANTIES FOR DEFECTS
CLAUSE 15 - REPRESENTATIONS AND WARRANTIES
CLAUSE 16 - SUBCONTRACTORS
CLAUSE 17 - THE DEVELOPMENT
CLAUSE 18 - INTELLECTUAL PROPERTY RIGHTS
CLAUSE 19 - INDEMNITY
CLAUSE 20 - FORCE MAJEURE
CLAUSE 21 - RESOLUTIONS OF DISPUTES
CLAUSE 22 - CONFIDENTIALITY
CLAUSE 23 - WAIVERS
CLAUSE 24 - SERVERABILITY
CLAUSE 25 - NOTICES
CLAUSE 26 - ASSIGNMENT
CLAUSE 27 - TERMINATION FOR DEFAULT
CLAUSE 28 - HEADINGS
CLAUSE 29 - ENTIRE AGREEMENT
CLAUSE 30 - COUNTERPARTS
CLAUSE 31 - GOVERNING LAW AND LANGUAGE
CLAUSE 32 - JURISDICTION
CLAUSE 33 - SURVIVAL AFTER EXPIRATION OR TERMINATION
CLAUSE 34 - ANNEXES
CLAUSE 35 - EFFECTIVE DATE OF CONTRACT
CLAUSE 36 - EXPIRY DATE
CLAUSE 37 - GOOD FAITH
CLAUSE 38 - SIGNATURES

[STEVE G]

I appreciate what you're saying with all that contractional stuff, but I'm not sure my Issan builder could even read much let alone understand all that lot!
We just sort of came to an agreement over a bottle of Chang, which is probably not a wise thing to do but he actually did a good job.

[hhfarang]

Well, in a way, you were probably lucky to find an honest man, Steve, and in my humble opinion, Thai builders have a better reputation for honesty than the ones who have come here (from farangland) and set up shop with little or no credentials. Everyone I know personally who got ripped off by a builder in Hua Hin was involved with a foreign owned construction company, not a local one.

[OscarMike]

Thank you for all the responses, I'm overwhelmed and do not know where to start!

I guess we'll be buying most of the materials ourselves and building in stages as finances do not permit doing it all in one go so deadlines can be very flexible. What should we pay per sqm, ballpark, for labor for a 3 bedroom 180sqm bungalow - very approx?

A local builder will be used, similar to Steve G's experience as I don't think they will understand reams of legal contracts - or be willing to sign them.

What kind of permits do we need? Are there any "extra payments" to make because I'm not Thai?

[STEVE G]

I think you're normally looking at between 8,000 bt to 15,000 bt per metre for construction costs, but that's with the materials supplied by them.
Obviously it can differ by a lot due to the finishing standards you require; you might get a very basic structure for less than that and a marble lined palace for much more.
If you're going to supply the materials yourself and have someone to control things, it is possible to hire workers on a daily, weekly or monthly basis to build for you.

[hhfarang]

Permits have to be applied for and approved by the Tessabahn office. To get that done legally you have to present a complete set of drawings to them and have them approved (of course many people get around that with an under the table payment but I would not recommend it).

So, the first step is to get an architect to your land, come up with the design you want and get that person to make a complete set of drawings. I'm not talking about a page or two or just a floor plan.... I'm talking about 20 to 30 pages that detail the foundation plan, floor plan, roof plan, electrical plan, plumbing plan, elevations, materials, etc. This will cost you typically around 100k baht or more depending on the house and builder.

Then you (or the builders representative) submit this for approval to the Tessabahn and they will have one of their engineers look at the land and approve the plan (at least that's what happened in our case).

After that approval you (your builder) will get a building permit and ground breaking can begin. I highly recommend you do everything legally and by the book to avoid future problems. I can't begin to tell you how many people I know who have made mistakes otherwise here and lost or severely depleted their life savings by trusting the wrong people or trying to go around the rules or laws. The board moderators would not want me to go into that subject here either so I won't do it, but be afraid, be very afraid; and do your due diligence every step of the way. And, I'm not saying that every foreign builder is dishonest. There are several that post on this forum that I think are honest, knowledgeable, and do their best to meet their obligations to their clients, and I'm sure there are crooks among the local builders too. I'm just relating my personal experiences and the experience of people I know here in Hua Hin when I said that the people I know who have been cheated have all used foreign builders.

[splitlid]

building a home is one of the biggest expenditures of most peoples lives.
cutting corners, because you wife, bg, mate down the pub says its the way its done here is total rubbish.
the old saying 'you get what you pay for' stands worldwide.
hhfarangs advice is good.

of course building a 1m baht house compared to a 10m baht house is different so chose the best option for your situation.

do you know what you really want?

[STEVE G]

Just to add to what HHF says above, if you're on a tight budget there are government pre-approved plans available for a variety of house designs that can be then submitted to the Tessabahn which will save you a couple of steps without doing anything illegal.
Obviously that isn't any use if you want anything unique but it will put a roof over your head and they do have quite a few different designs.
(This is if you're at the 1m baht end of the spectrum mentioned by splitlid.)

[deepee]

Agree with all advice so far but it may be prudent to to quietly follow up just exactly how involved you can become in a building project in respect of what you are plannig to do OscarMike.Signing up on contracts is one thing I'm told but getting heavily involved with material purchasing and sub-contracting and the construction MAY leave you open to breach of law regarding work permits.So far I have not come across anyone who has had this problem but have heard and read a couple of stories along this line, especially if jealous local builders have been left out of a job. Has anyone else come up against this issue as I am going to be in a similar position soon too?