In Costa Rica you have two options in construction contract type, key-in-hand or cost plus. Below we explain a couple of the pros and cons which we will also discuss in our September Webinar.
Pros and Cons of Key-In-Hand Construction and Cost Plus Construction.
Pros Key-In-Hand:
Fixed Price: A final construction cost is established before the signature of the contract.
Time: In the contract there should be a completion date that the constructor should be held to.
Less Involvement: You (the client) have a very small administrative role during the building process.
Cons Key-In-Hand:
Less Customisation: As everything is agreed at the start, there is much less flexibility to change aspects of your project.
Cost Differences: You may be paying more/not getting the best price for building products than if you did Cost Plus.
Supervision: Quality can be affected if the contractor cuts corners and there is no supervision.
Pros Cost Plus:
More Flexibility: Gives you, the client flexibility to make minor changes to the scope of the work throughout the process.
Could Be Cheaper: As it is your burden to source materials, you may find better deals on items and eliminates risk to the contractor, which makes the cost to lower.
Supervision: Reduces the risk of the contractor to cut corners and you will have access of all the expenses of the project every month. (Unlike in Key-In-Hand)
Cons Cost Plus:
Sticking To A Budget: Without good supervision / management the cost can easily increase over the price estimation.
Mistake Cost: If there is a mistake during the construction, the client (you), end up paying for that mistake.
More Involvement: As already mentioned, you need to very present during the construction process, taking time away from your work or personal life to supervise your build.
Want to learn more? Join us on this months webinar which is about Construction and Value Engineering.
If you have any questions please contact us at info@investingcostarica.com
and if you'd like to book a call with a specialist, Book a free call with Jake (Investment and Real Estate Consultant) or with Ana (Relocation and Real Estate Consultant).
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