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Further Reading:

Construction Contracts

Bernd e-mailed to say "I have read all your articles since 1995. One subject which interests me personally was not mentioned. Does it make sense to buy the material and only contract the construction? I am aware that in this case all the necessary material has always to be on site when needed. What are reasonable costs for the architects drawings and the necessary calculations of a three bedroom house?."

It is most certainly possible in Thailand as in other parts of the world to build a house according to a variety of different financial and contractual models. These might range from a complete turn key design and build contract where one party (typically a contractor, though it could be an architect or a developer) takes on full responsibility for all aspects of the design and construction and agrees to supply these at a fixed cost, through to a model where the owner directly hires all the labour and directly purchases the material.

The full turn key model provides the simplest solution and is the most risk free in terms of the final price and build quality, but that said (since the risks are all carried by the supplier who must mitigate those risks in a greater profit margin) the overall costs will tend to be highest.

If you manage the whole job yourself, you will incur a considerable amount of your time and effort to manage the various hire and purchase contracts, however if you are well experienced in such matters, and know how to hire good labour and purchase materials at competitive prices, you should definitely be able to complete your construction at a lower cost than employing a general contractor. However that said you then bear all risks for price variations, material loss or defects and any building failures.

The model that you propose of taking a general contractor to provide labour and construction management, but supplying material directly is used sometimes in Thailand, but it's use is not that widespread. Typically a contractor calculates his costs and his margins for the whole job and then divides these overheads as a percentage of the total labour and material cost. If you ask to remove the material component of the contract the contractor will typically want to see an increase in the percentage overhead allowed on the labour to protect his overall margin.

Some contracts I have seen give the owner the right to supply certain materials (if he does not like the contractors price), but then typically the contractor will to reserve the right to charge an attendance charge or a material handling charge on those materials. If you are purchasing materials and building a house in a private name there may also be some tax savings for direct purchase, since the materials do not have to pass through the contractors accounts. At the end of the day however, whether money can be saved is more a matter of detailed negotiation of terms and responsibilities - and eventually deciding if the added risks and responsibilities, for you the owner, warrant the potential cost savings.

Architects fees in Thailand vary considerably. The Siam Architects Association has a table of suggested fees that it asks it's members to comply with. The rates are similar to those of other architectural association around the world and vary - with the type and value of building and the degree of duplication - from about 5 to 10% of the building value. In practice fees are far more negotiable. The negotiability is in part related to the skills of the architect as a designer, but are more particularly related to the scope of work that will be provided. How long will be spent in the design development phase? What working drawings will be produced - the minimum to obtain planning approval - or sophisticated drawings of all construction details? Are structural and mechanical and electrical drawings included in the scope? Will the architect attend regular meetings during construction progress and be responsible for all required shop or variation drawings as required?

You might be able to get a minimal set of drawings sufficient to obtain a planning approval for a three bedroom house for under a hundred thousand Baht, but you will probably have to pay about 8% for a detailed set of drawings and specification from which a job can be accurately and competitively tendered. Money saved on a cheap architect (or limited architectural services) is usually not money saved in the long run when considering the total build cost or final building (re-sale) value.