Webinar May 2024

[Richard Bexon]

Well, thanks very much everyone for joining our second webinar. We're going to continue to do these every month.

Our previous one, you guys can go onto YouTube and find it, was about investing in Costa Rica and just data on the industry. Today, we're going to be talking about construction and also building webinar here with myself, Richard Bexson, who I think that many of you have met or spoken to before. And also Eric Corral is here.

Eric is our head of construction and engineering along Costa Rica, which is our developer. Welcome, Eric.

[Erick Corrales]

Good afternoon, everyone. Where you are.

[Richard Bexon]

Fantastic. Well, today's agenda, guys, is we're going to take a look at the steps that are involved in construction. A lot of people, it could be quite complicated if you've never done it before.

And actually a lot of people when they actually do it here in Costa Rica are amazed at just actually how easy it can be here as well. It can either be great or it can actually be a nightmare. It just depends on how you look at it.

And really the idea of this webinar is to just give you the information in order to make kind of an informed decision and also ask the right questions when it comes to all of the individuals that are involved in the construction process as well. So we'll be talking about the design process, which is the first step, construction documents, also permitting as well. We're also going to talk about the bidding process, which is an actual really valuable part of the construction process, the contract and what things that that should kind of include and what it should not include.

And then also just the construction itself and how you kind of oversee that and also the management. At the end, we'll also give you the top five recommendations that we have. And then also there'll be a Q&A.

But if anyone does have questions that they would like answered at any moment through here, feel free to just answer them. And we'll stop at the end of kind of every section here and answer those questions for you guys. OK, it doesn't matter how, you know, there's no such thing as a stupid question, guys, or whimsical.

Feel free to ask it and we'll do our best to answer it. And if we can't, we'll find you the answer. And we typically do so.

So to give you guys kind of an idea of the timeline and steps in construction, OK, is the first step here is the design process. This is actually usually done with an architect when you're designing something. And we'll get into more detail on that.

That process can typically it can be as quick as three months, but typically it's about four months and sometimes go longer as you work backwards and forwards on floor plans and kind of designs and also the interior as well with the architect and their team. Then once that stage is done, you then move on to construction documents, which are, again, more of the documents that are used for permitting and also construction that usually takes about two months. And then you go into basically from there is permitting.

The architect and his team will then take it and actually go into permitting. And that can anywhere take from two to three months, depending on the complication and also the institutions themselves. In parallel, while this is happening, typically depending on what your process is, there's usually a bidding process here, guys, as well.

If you're working with a project management team, you'll go out to a more extensive bidding and value engineering. If you're just working with an architect, they may already have their construction company. You may already be married to them.

Our recommendation is always to bid a project, but it does complicate the process. But it can save you anywhere from five to 15, maybe even 20% of the project. Then basically once you're through that value engineering and the permitting has been improved, start working on a construction contract or maybe your lawyer already has one.

I would also suggest making sure that your lawyer reviews the construction contract so that everything that needs to be included is, and that you're also covering some of your liability as well. And that usually, it can be as quick as two weeks. It can be a month.

I say a month because usually there's a bit of backwards and forwards between lawyers there. And then basically you're into construction. And construction can take anywhere from eight to 12 months, depending on how big your property is, and also the construction methods that you guys will be using as well.

So the whole process from start to finish, I would say if you're really quick, you could probably get it done in 14, 15 months, but you better be very efficient. But I would say typically it's going to be 17 to 21 months here, guys, that it's going to take you to build something here in Costa Rica, okay, from start to finish, which is actually pretty impressive compared to other parts of the world. Our permitting process there of only two or three months is actually very quick because in some countries it can take years sometimes to permit.

So let's jump here into the first stage of that process here, guys, which is the design. Our suggestion is the way that we always work is to create what we like to call a program within this. And what I mean by a program is that you'll see it here.

It just is kind of the house size, bedrooms, how many floors, bathrooms, showers, certain things that you want in it and certain things that you don't, driveways, do you want a gym, yard, all of the kind of the nitty-gritty that you kind of want to the house, talking about ceiling heights. Also budget expectations is very important as well. And then also just kind of like a very short property brief where you'll also give kind of the lot planner as well, which is actually the plan of the lot, the lot location and any Pinterest ideas that you may have on kind of design as well.

I like to give this to architects because they like them from there is that they actually have something to work with, but it also starts, you know, it starts them off on the right foot rather than having to kind of spend the meeting trying to get all of these details. Whereas this we send out typically to architects prior so that when we interview them, they already have a basis in order to reference when we're having those meetings with them. And also to figure out which architects have done their homework as well, take a look at this because you're typically, as I've found is that architects that are very busy, or maybe they don't want to work typically don't always go into the greatest detail when looking at this.

So, so that's kind of the first thing that we suggest to do. Also have a very clear budget guys. My advice is do not give an architect a very wide open budget.

You know, I'll say it there. I love them. They're artists, but also they're painting art.

They're creating, you know, something beautiful, and don't always have a budget in mind. So make sure that your budget is really clear from the beginning here, you know, and make sure that that is a question that we constantly bring up. And we'll have that.

We have it a little bit further on, which is every time you go through changes is updating that budget, you know, and just having clear expectations of what that budget can get you as well. You know, again, as we said, they're in that program to find rooms and social areas. So once you have kind of that program and clear budget, you can go out and interview architects.

Okay. How do you find architects in Costa Rica? You can take a look on Instagram.

You can ask around for people that have done, you know, have done projects before you can go online and write in Costa Rican architects. And there are very many different wide types of architects that charge different fees. Usually it's a percentage of, but sometimes we found it to be lower fixed fees.

We found it to be incredibly high fees. It just depends, you know, on the architect that you end up using, but you typically going to find those fees are going to be between five to 6% of your project. So, I mean, if you're building a $500,000 house, you're probably going to find these design fees and construction documents, which come next, they're going to be around about the 5% to 6% price.

Again, as I said, there are extremes in other areas, but typically I find that when the it's very, very cheap, you're not really getting a great architect. It's more kind of more, I would say, engineering than architecture guys. It's more of a science than an artist.

No offense to Eric, who's an engineer there. It's just, you know, we stay in our lanes, right, Eric? Yep.

You're right. You know, but I think it's really important when you're going through that design phase with your architects, because you can get taken away very easy. And I mean, we've seen it a lot of times where, I don't know, someone had a million dollar budget.

You know, they went through the whole design process and then it comes out to be $2 million and they're absolutely mortified when it comes out through that. But they've already gone through this whole process of getting construction documents done. You know, they're probably six months in at that point, maybe seven months.

And then they get it back that it's $2 million and they have to go back to the beginning race and start again. And there will probably be fees for that from the architect. So I think it's really, really important, guys, that every single update that you do is ask for a budget update also as well.

I mean, we do it on all the projects that we work on. Every single time we're giving complete updates throughout the whole design process so that clients are very clear of where this budget is going so that there are no shocks when we do come back from leaving. And also, you know, one thing to bear in mind with your budget, guys, there are hidden costs, stuff like infrastructure work, which nobody ever budgets for, you know, landscaping, furniture.

So make sure that you've considered kind of all of those costs when also working on that budget as well. Once you're through the design process, you kind of then jump into construction documents, and this is where I'll hand over to Eric.

[Erick Corrales]

Thank you, Richard. Well, basically, you know, during the construction documents process is you will have all the drawings, like a complete set of drawings that will allow you to do all the construction. Basically, it starts with the architectural, that it's mainly, you know, the first part is sketches, and then it goes into the more detailed drawings of the architects.

Then once the architectural drawings are done and approved by the clients, they will hand that out to the different professionals, like structural engineer and electromechanical engineer. Normally, there's a review of those drawings that are done during the process, you know, of the design in order to make sure that everything is aligned, you know, and there's nothing critical that is coming up or is, you know, showing up on the drawings. And, of course, depending on the project that you will develop, you will need also infrastructure design, that it's very critical because it's mainly, you know, for big projects, there's a lot of money involved in air movement, you know, in roads, in driveways, big driveways, so that could become a big part of the cost there.

So, it is very important, you know, once, like, all the architectural drawings are done, you know, to start working or defining the finishes of the houses. That's a very important part of the construction cost, you know. I will say that it's more than 40, 50 percent and could be even more depending on the type of finish that, you know, you will, as a client, decide for your project.

So, it is important, very important to, you know, sit down with your architect and start defining or define all the finishes that you will like. Basically, during the construction document phase, there's, like, two deliveries, 50 percent and 100 percent. Normally, you know, if you have a project manager that is taking care of your project, normally with the 50 percent delivery, you are able to start the bidding process.

But not only that, but also, you know, your project manager should be able to be aware of the estimation. So, it could be doing estimations during this phase of drawings so that the project is always, like, under, you know, the initial estimations or can aware you of, if anything, it's, like, going out of that budget. If not, like, they normally, after 100 percent of construction drawings, the architects will hand that out to the companies, construction companies, that they will normally work and they will get a quote at the end.

You know, if you have a project manager in charge, they should go out and bid at least with five different companies and then, you know, be able to get more detailed quotes. And basically, that's, like, the construction documents phase. You know, like, after you have, like, everything ready, then you just, like, hand everything out for bidding and then it's where you start with your bidding analysis, basically.

[Richard Bexon]

I think it's a very quiet time for the client, right? Because they've gone through that design phase and as soon as they're out of that and in the construction documents, it's a very quiet, like, there's not much interaction there between, you know, the architects and also the client. Well, I mean, finishes, of course, but, like, they're not reviewing architectural designs and structural, electromechanical and infrastructure designs.

Like, it's usually, you know, as it says there, two months, but it could be, like, six weeks, you know, of production of those documents and then two weeks to review where the client's not really involved unless they're probably engineers and want to see them themselves.

[Erick Corrales]

Exactly, exactly. But as you say, it's a very quiet part. You know, it will say that it's very busy for the clients at the beginning, you know, the first month, month and a half, and then after that, it's, like, a silent period until you get, basically, your quotes back, you know?

Yeah. So, it's some months of silence during the process.

[Richard Bexon]

You know, typically, by this stage, you're probably, I mean, by the time your construction docs, you know, are done, you're five months kind of into your project now. What we're going to jump into here is just a little bit of bidding here. And again, you know, this is kind of like a two-month process here from start to finish.

It can be shorter, it can be longer, depending on just really how the budget kind of comes back and then how you value engineering. But I'll let Eric talk about this.

[Erick Corrales]

Yep. Well, you know, during the bidding process, there's two different contracts that could take place. One is CostPlus, and the other one is KingHan.

You know, basically, the difference, CostPlus is an administration fee that normally, it should be a fixed price, a fixed administration fee, and the client covers, like, the rest of the cost of the project. So, basically, it could be like a two-week or every month, it will get a report of all the expenses of the project, and then the client will reimburse those expenses. And basically, it allows the client to be part of the construction a little bit more, but also, you know, if there's any saving during the construction process due to negotiations, the client will have those savings as part of the cost of the construction.

For, you know, clients that say, look, I don't like that to be, you know, I like something that it's more a fixed number that I know, you know, this is the amount that it's going to cost me, so that should be a KingHan contract, where basically, you define everything from the beginning, and you basically determine an amount for the whole construction. Normally, it doesn't include appliances and furniture, but everything else, it will be included in a KingHan contract. What is the biggest difference there is that then the risk goes completely towards the, you know, the construction company.

So, normally, there's, I will say, a 10-15% increase in the cost, you know, normally, because of that risk that the company, you know, cannot come back or should not come back to request it for any more money, you know, in order to finish a project. Right now, as how everything is, you know, being in Costa Rica, due to the exchange rate, my recommendation will be a cost plus, because there's a lot of variables right now, and exchange rate, it's not great at this moment to have like a KingHan contract.

[Richard Bexon]

Well, I think one of the things that we saw with some of our contracts that were KingHan, Eric, was the fact that they actually moved to cost plus, meaning that when the exchange rate went from 680 down to 600, the construction companies were like, look, dude, I can't do this at a key, I can't do this as a key in hand now, like we need to move to cost plus. So, it's kind of like you might have a key in hand, but there is a risk that you move to a cost plus anyway. And I think with what we're seeing at the exchange rate, you know, I mean, it's a 520 today, if you can believe it, you know, whereas, you know, a couple of months back, we were down at like 490 of like, it's starting to creep up here, that it does look like, I mean, we're doing all of our projects, personal projects in cost plus at the moment, because we believe like, that's the, you know, the best way going forward in order to be able to do this. And also we save, you know, 10 to 15%, you know, we'll take the risk rather than the actual construction company taking that risk.

And really, as you said there, they don't take the risk, because if there is a huge exchange rate change, they come back anyway and negotiate. Basically, that's how it works, you know.

[Erick Corrales]

Yeah. Well, normally during the bidding process, you know, the idea would be to select minimum three companies. My suggestion is always to have five companies so that it can give you like, you know, a better picture of what the cost of the construction will be.

So normally, you select like five best companies that you have worked with or that someone could recommend you and you basically send all the bids plus a bidding document that it's like a special document that states like all of the different, how to say it, it's basically a document, you know, that identified all the different characteristics or specific details that are requested during for the bidding or for the quotes.

You send out the construction document basically and at the end, what you do is you analyze the bids. You know, if it's a, if you have a project manager that takes care of the construction, well, the idea would be to analyze like line by line comparing all the different quotes of the different bidders there. And in that bidding document that I was mentioning, the idea, like you send out the detail, you know, the detail of the construction as how you want it to be to get your bids back and we'll see an example of it soon.

And of course, something that is very important, you know, when you get your bids back, you know, your offers back, it's of course doing value engineering because most of the time you'll find out, you know, that there are some issues that could be, not issues, there are some some things that could be done in a better way that could save money, you know, like, I don't know, a structure, for example, you know, in the structures, you could do the, you could do your construction, you know, on the, on a regular way, you know, using like normal concrete blocks, or maybe you can go into, depending on the project, you can do a metal framing or you, there's, now there are some like modular construction systems, one is super bloke or I'm a bloke, you know, where basically they do have like these modular concrete blocks that they will, it's more like a Lego.

You know, where they give you like everything that you need, reinforced blocks, you know, like all the system and you just basically, and they give you like drawings in order to assemble it. And it's like a lot faster than the regular construction system. Of course, in Windows, you know, there's, it's very important to Windows and Doors both.

It's the same, you know, to keep them between the like normal sizes, you know, and height and width, nothing that has to be like a spec construction. Everything that something is done on spec, you know, according to any particular specification, of course, that's going to increase the cost. So just like, for example, in a project that we had, basically by having a sliding doors that they were two feet higher than the normal height, that increases the cost, basically in a 30% of the cost of the Windows.

So things like that, it's like very important just to review in that value engineering process. And of course, like in finishes, you know, there's, there's like a lot of different things. You could have like a very expensive style, or you could have like a good tile, like a very good tile, you know, that it's going to give you like the same finish.

Polished concrete, you know, depending on the tile that you are selecting, you could use polished concrete, that it works very good, you know, and the cost is not as high. But so it's a matter of just like looking in detail. Yeah, I mean, just to add to that, I mean, Eric, we're yet to find an architect that goes that deep or a company that goes this deep as, you know, we normally do.

Because again, you know, I mean, if you have project managers, they're owner's reps, they're on your side, and they're trying to basically, you know, I would say, optimize your project as quick as much as possible. I mean, we've seen, you know, architects use wood before, you know, that like, that looks like, God, what is the name? Almond wood throughout a house.

Yeah, we saw that when we bought on, we reviewed a project once, and we asked the client, hey, did you choose almond wood? And they're like, no, but almond wood is one of the most expensive woods here in Costa Rica. You know, and we were like, look, he was like, I did not know that, you know, and doors.

And there were just so many things that, you know, even, you know, the architect is involved in the design process. But then from that is the engineers aren't involved in that process, the majority of the time, right, Eric? They're just given the actual architectural drawings.

And then from there, they design them. So a lot of the time, they don't have the context on what they're actually, you know, designing, because they've not been in throughout that whole process. And are not aware of the budget either, either as well.

Correct. You know, and we've seen it in structural stuff. We've seen electrical stuff that like, you know, it's just, it's very important, this part of the process, because once you make the decision here, everything going forward comes from, you know, from those documents and those documents, then, you know, then go into bidding, et cetera.

So you just need to really make sure that you value engineer the whole project, really, really from the beginning. Yeah, exactly. So it's very important.

Okay, so this is basically a sample, you know, a very small sample. Of course, this is a very long analysis, but this is like a line by line analysis where basically you have like the different activities of the construction. So you have a, basically you, what you do is just, you just like have, like you lay out all the bits, the five different bits and like that, it allows you, you know, to identify which are the activities that are higher in the different bits, or sometimes, you know, that are very low that you can actually tell, you know, that it's not gonna be enough money to do an activity.

And a lot of times, you know, we go back to review those bits and we ask, you know, the different bidders, like, hey, look, this is something that it's, you know, it's not, it's not okay. You know, this amount is what we call, well, in Spanish, it's like a risky, that's how we call it, like a risky amount, you know, that we already know that it's not gonna be enough to do an activity or a construction. And normally, you know, they come back, you know, saying like, look, thanks for the buy.

You know, we made a mistake. We quoted more than he had it to be quoted, or we quoted less than he had it to be quoted. You know, like they made a mistake on their calculation.

So this line-by-line analysis, you know, like really give you a clear picture and an understanding, you know, of the whole budget. And also when you review this with the clients, you know, it gives them confidence to, that it, you know, of where their money is gonna be, you know, and where they are spending more. Normally it's in the finishes process, but this is mainly the analysis that should be done on any bidding process.

Okay, after, well, or during the, you know, bidding process in order to do that parallel process and not losing time, you know, like normally you go into the permitting process where basically everything is submitted to the CEFIA, the College of Engineers here in Costa Rica, that is like the first organization or the first institution that, you know, that checks all the construction drawings to make sure, you know, that you have like, well, everything that is there, you know, that a plan or that a plan that is approved by the municipality, the catastrophe that is approved by the municipality, what we call a plan of the south and water letter that it's very important. It's becoming critical here in Costa Rica. There's a lot of different projects at this moment that are stopped because they didn't have the correct water letter.

And that's something that it's crucial, you know, right now, nothing moves if there's not water in the project. So just they make sure that the water letter, it's a correct one. The uso de suelo, you know, that is basically the land usage, what you can do or not in your lot, in your property, you know, there's different activities that you are allowed or not activities, construction that you are allowed to do in the property.

So that's very important also to make sure that what you want to do, it's aligned to the uso de suelo, it's not, you're not going to be able to do it. Then that the taxes are already paid and, you know, updated so that we don't have any delays there. And of course that you have a complete set of construction documents.

Once everything that's presented at the CFIA, like they will approve it. They do a first, they will give you like a first value. They are the ones that set up the construction value.

For all the taxes that you're going to have to pay. Normally when you submit to the college of engineers, you propose a construction cost, but they will review it. And if they think it's a lower cost, they could increase it.

Normally it's, you know, the amount that the professional, you know, sets, you know, when they submit the documents, that's normally approved by the college of engineer. So the cost of that valuation of the college of engineer, it's a 3% takes them, then it will take them between a month, month and a half maximum in order to approve that. And once it's approved by the CF, you know, by the college of engineer, it goes into the municipality, but it started like a whole new revision by the municipality.

They will not review, or they will review the construction going, not as detailed as the college of engineers, mostly they will review that, you know, that the project complies with their regulations of the use of the land that they have. And while there, you have to pay a 1% fee of the municipality, then there's when you get your construction permit. And of course they will request the insurance, the labor insurance, but it's a must in Costa Rica.

You will need to pay a labor insurance for the workers that are going to be on the construction. That's around 3.5%. And with all of that, you'll get your final construction permit that you're able to start. And municipality takes normally, I would say that a month, depending on the municipality to be months and a half.

I mean, I think it, by the time that you're done with permitting, you know, the permitting runs kind of, you know, above also the, you know, the bidding and also this contracting as well. So really the idea here is the way that typically it works, you have both of them running in parallel. So once you have your permitting, you've already finished this section, which is the contracting, and then you're ready to basically hit the ground running.

So the contract takes about a month. Sometimes it can be a little bit shorter guys. You know, typically it's a contract that a lawyer has prepared.

You know, they may have iterative contracts that they've been improving all the time. Also, you need to really define in that contract as well, the payment schedule. You know, I've heard the horror stories of, hey, we gave the, we gave the construction company 50% upfront.

Like don't do that. Like the most you should probably be giving is what? 15% Eric to get started.

Yeah. 15%. Normally it's a 15% and that 15% or that initial payment is deducted from every payment that we give to the company.

That should be the way to do it, you know, to protect yourself. Yeah. I mean, just never pay, like you should be paying this in milestones every two weeks or every month, depending on why your project guys, but never pay big chunks of money upfront.

I mean, it's just a lot of the time, you do not know what the financial situation of these construction companies are. A lot of the time we ask them to set up a separate bank account for this as well, so that we can see the money coming in and also going out. So we can also kind of audit that a little bit as well.

But again, that's kind of just a little bit of a difference, you know, that we provide, but then also we also have a bit of a holdback within the contracts as well. It's not always there. We like a holdback that usually paid on the final month there as well.

I mean, Eric, is that typically around 5% of payments every month? Yes, correct. That's normally a 5% that it's retained until basically one month after the signup of the project.

You know, when the client receives the construction, you know, a hundred percent satisfied if it's everything's being fixed to tell us how they want it. After that moment, one month after that date, the money that retains from it, you know, being delivered to the construction company. We had a quick question come in here.

I'm just gonna take a pause here from Jake Duncan. How do they gauge the labor insurance? Is it just a flat fee of the estimated amount of the bill?

Yeah, I mean, that's basically it. It's the amount that I think that Sophia have put on the bill. And that's typically a lot cheaper than the actual final price of it.

And then it's 3.5% of that amount that Sophia, the College of Engineers place on it. So it's not a flat fee, it's a percentage of the estimated amount of the bill. So 3.5%. Great. So, I mean, typically again, also one of the things is penalties for lateness as well. Guys, that's kind of something that's negotiated, you know, depending on how big the bill is. You know, if they say it's gonna take nine months to build, you say, you know, typically we have for every day after that it's a penalty of 250, $500, $1,000, depending on how big the bill is, up to 30 days, basically.

So it's kind of also capped as well. But that's also a good one to have. The reason being is a lot of the time you may be planning to come down and you book everything and it's not ready.

So you kind of then use that money as well to also stay in certain places. I mean, everything is very negotiable. I think when it comes to some of these things within the contract, but I think it's very important to also have a penalty scores within this as well, guys.

Also with currency variations, you know, it's very usually typically, you know, smart if you're going to have a fixed price contract that if there is a swing in the actual currency, you know, of that exchange rate of plus five or plus 10%, plus or minus, that you guys come back and you actually talk about it as well. Because you never want this to be a win-lose situation or a lose-win. Like it needs to always be, as I say, a win-win or a lose-lose.

You know, it just can't be one party winning and the other one losing here. So we always make sure that there's just in our, especially our fixed price contracts, that if there is a change in the exchange rate for the better or for the worst, that we come back down and we basically, we talk about it. And then also is there's usually a bit, as I said, a bit of backwards and forwards about accepting terms.

But I always say that like, if a construction company is not willing to, number one, have a decent payment schedule, not have a hold back, not be open to penalties. You know, I'm like, something's wrong here already from the beginning, guys. Like, you know, you should, it's just your spider senses should go off and you should say, look, something's not right here.

Like any, I would say, established construction company is going to be okay with this because this is how it works in the industry. But I think what we've seen here is that because there's been so much demand, you've had like foremen set their own construction company up that don't know how to administer, you know, the funds coming in, et cetera. And then from that is when they won't accept these types of contracts here.

Or, you know, it's just that they just don't like that. They don't want to take these risks and they don't like being put into like a corner on some of these, like, I have to build it in a certain period of time. I'm going to have a 5% hold back.

Like, as I said, any decent construction company is going to be okay with these terms that we've mentioned there. So as I said, that contracting takes about a month. It could be two weeks, but now basically once you've got that contract signed, you've got your permitting.

Now we're into construction, which again, here is the final slide here when it comes to the actual process guide. Okay, basically your own construction. Just, you can hear me well, yes?

Yep. Yep. Okay, perfect.

Well, during construction, you know, it's very important just to review quality of work. And that's why we need to have inspections. Normally the inspections are done, you know, by the professional that did the design of the construction documents, you know, architects, engineers.

And they are not part of the construction company. The construction company does, it's important that when you select a construction company, that it does have an engineer, an architect, a professional, you know, that it's responsible for the construction itself. But it's called the technical direction, you know.

So that professional has to guarantee you as a client, you know, that everything is done in order. And it's done according to the construction documents. But in order to guarantee that, that's where the inspection comes from the architects or engineers that did the design.

Normally it takes, you know, I would say four to five visits for the structural engineers. And then four to five visits for electromechanical engineers. The architects are the ones that does the noise inspections because they, well, it's more critical at the end of these finishes and all of that part.

So they normally do, I would say a bit more than 10 inspections. Of course, if you have, you know, if you have a project manager, the project manager should do weekly visits just to make sure that everything's in order. And project manager is the one that should be approving the request for disbursement of this construction, okay?

So what it says here, you know, review payment of milestone, that it's important to be determined since the beginning. If the payments are going to be by milestone, normally, you know, most of the contracts now are done by construction progress. So every month there's a report that is presented with the progress of the construction.

And based on that progress is the amount of money that is disbursed to the construction company. And of course, you know, it's very important to just manage the timeline so that the project stays in the time estimated for the construction, you know? And it's very important to be in those inspections, you know, and to the construction just to review the timeline and just to make sure that everything is going in order to that program, just not to have any surprise at the end.

And of course, like in most of the projects, you know, there's going to be change order. It's very important just to manage them and to be clear since the beginning how those change orders are going to be managed, basically. And of course, well, consider a project manager, you know, or an owner representative, especially, you know, if you are not in the country, you're not able to visit the project, you know, constantly, it is important, very important to have someone, you know, that guarantee you and cover your back.

Well, I think one of the things that we found, you know, Eric, because we've worked on projects, you know, that have from the beginning, ones that have just gone into construction, ones that are in the middle of construction, ones that have stopped construction because there's no funds left. Like we've been involved in all that. I think our learning here is that typically the architects and engineers don't know building and building quality, if that makes sense.

Meaning that like some of them do, don't get me wrong. But I would say I'm yet to find, you know, someone that's like a lot of those architects that have been on the site every single day and understand to use spaces and rebarring, you know, or the best methods for construction, if that makes sense. I mean, when we do inspections, we find a lot of that.

And when we question the architects or engineers, they're baffled sometimes that like they don't have that knowledge. I'm not saying in all circumstances, but in some circumstances, we've definitely found that. Yeah.

Yeah. We have found some. Yeah, you're right.

Yeah. So, I mean. And that's important, you know.

Sorry, sorry. No, you go ahead. No, no.

And that's, and that's important, you know, just to have someone that has a good experience in construction, you know, just to be able to find those small details that sometimes, you know, can become big issues at the end of the construction. Yeah. Well, guys, that's basically a summary there of the whole construction process, as you guys can see.

I think we've covered all of that from design to construction, docs permitting, and then in parallel, bidding value engineering to the contract to construction and then basically delivered. I would say again there, if everything goes well, you know, 17 to 20 months, 21 months after you've bought your property, you'll basically then be, have a house to move in. To understand kind of the fees here, we've kind of mentioned them at a variety of different areas here.

Your architectural fee is going to be around about 5% of your total project guys. Your permitting is going to be around about 5% as well. Also, I'm going to say inspections, 5% guys, you know, once you start calculating them.

So it's going to be a total of around 15% of your project. So if it's a $500,000 project, $75,000 of that basically is going to be paid in fees for these things. One of the things that we do suggest is to fix inspections, you know, with basically with fixed prices, meaning that like, instead of it being a percentage of, say, hey, architect, how much is it per visit?

You know, okay, it's $750. Okay, engineer, how much is it per visit? Okay, it's 650.

You know, just so that you know how many visits are required and an actual total amount rather than it being a percentage. Nobody really likes percentages a lot of the time. So if you know how much all of those visits are going to cost you from the beginning, you know, I think it's very, very helpful.

So in summary here, guys, our top five recommendations when building and constructing in Costa Rica. Choose an architect you enjoy working with. As you can see there, guys, it's a long process.

It's going to be a two-year process. So you better like the architect that you're working with. I mean, we've actually had cases where a couple of months in, the client has decided to change architects, which is fine.

As long as you're not, you go further on down the line. Like once you're at a construction, you don't change your architect. Like they are responsible for that design.

So, you know, you don't do that. But I think it's really important to get to know your architects and spend some time with them. Because again, you're going to spend two years working with them.

Budget, budget, budget, guys, as I said here. Typically, architects are creating art pieces. Without huge considerations.

And they're not going to tell you that when you make a decision in the design, that it now is up to your budget. You usually find that a lot of the time when it comes back to bidding. And we've got many, many cases of that.

But I would constantly ask for budget updates as you go through stages in the design process. Review bids in depth. Typically, this doesn't happen, guys.

Usually, typically the architect may have a construction company. They may only put it out to one to get a quote, you know, maybe two at the most. But I think it's really important to do this, go through this bidding process in depth.

As Eric mentioned there, you know, if you guys do hire an owner's rep or project management team, they'll go out to five different companies for you and also value engineer it. And the things that you end up paying a project manager will probably even be covered in that bidding and also value engineering as well. They'll save you that plus more going through that process because they're just looking out for your interest throughout that whole process as well.

They're kind of like an auditor of the work that's being done. So I sit there, you know, with basically value engineering. Create a great construction contract because that's really going to be the basis for everything during construction, guys.

As we've mentioned there, make sure it has penalties. Make sure that it has clauses on exchange rate. Make sure it has a hold back.

And also that you have a definitive time and number of months that it's going to be, basically, the contract is going to be full. And also make sure that the construction work is being reviewed as well, guys, throughout every single stage. A lot of the stuff can be hidden, you know, from, I mean, Eric, we've had water tanks before where the foundation wasn't done correctly and it's collapsed.

You know, there's been a variety of different things before and that's stuff that you don't see until it's finished and you're using the house and then kind of it collapses. You know, and yes, there is a guarantee on construction here, you know, of five years. And typically a lot, some of the stuff, you know, kind of the more fictitious and fitting stuff will have a year.

And that's why it's so important to have a great construction company because you want to make sure that it's going to be there in five years to still help you out if there is any structural issues there as well, guys. So, and with that, I wrap up the seminar on construction and building here in Costa Rica. I hope it's been useful, guys.

Do we have any questions? I'll wait here, 30 seconds here to see if we have any questions. I see Tanya has a question here.

Let me just see if I can allow Tanya to talk. There you go. Tanya, I think you might need to unmute yourself.

[Richard Bexon]

Is there any chance of getting a recording sent to us?

[Erick Corrales]

Yes, yes, of course. It'll be posted on YouTube, Tanya, as well. So we'll provide it out.

Jake will actually do a follow-up with everyone after it as well and we'll provide the link in there for you.

[Richard Bexon]

Excellent, thank you.

[Erick Corrales]

You're welcome. Oh, it must have been a good job, Eric, because I don't hear any other questions here. So, great.

Oh, we do have here. Oh, we do. Jake says, pros and cons of using 18 gauge metal galvanized studs.

I've only found one company in Costa Rica called Biltech and I think the speed is attractive. I know that we've met with Biltech. I mean, yeah, I mean, pros and cons of using it.

I mean, supposedly, I mean, what would you say, Eric? Well, I mean, I think one of the things that I found when talking with them, it had to be very structured, the build. Like you couldn't have, you know, like wide doors that open.

Like it had to be, you know, and the support beams that were being used downstairs is also, you know, needed to be used upstairs as well. Like there needs to be a lot of mirroring things. Yeah, it's more for, it's a very tight construction or tight design, you know, it's like, it doesn't allow you, as you said, you know, it doesn't allow you to be very creative, but yeah, but it works.

It's quick and it's quick as well. I mean, I think for commercial, it sounded great. You know, when we were looking at doing the office buildings, Eric, you know, it sounded great.

It was very, very quick. I mean, they basically call the cement, you know, foundation and then it's just straight on. I know it's very similar to the Bali designs as well.

I think it requires a little bit more maintenance than building in concrete as well. You know, just because of over the years, I mean, concrete is going to last years. You just need to maintain good, you know, care of the actual building.

A little bit more. And it has to be well done since the beginning. You know, there's no, if it's, if it doesn't, if it's not done well enough, you'll start having a lot of headaches very soon.

So just make sure, you know, that it's very well done since the beginning. Yeah. And I mean, look, the build tech one, I think it's very similar to just building in steel structure anyway, which a lot of construction companies can work in as well.

And it just depends. I mean, I think once you start going up multiple stories, I know build tech can certainly do it as well. It's just, and it's seismically safe as well.

I mean, in the US, I think a lot of people use the steel structure, especially hotels use a lot of the steel structure because I know build tech had spent quite a bit of time working on those Kinta hotels. And they've done, they did some roof structures, I think on the wall for Astoria. So yeah, I think it's a good option.

It just depends what you're looking to build. Well, fantastic. I don't see any other questions in here, guys.

So thank you very much for everyone. If anyone would like to get in contact with us and discuss construction in Costa Rica, feel free to. Jake also will do a follow-up to everyone that signed up here.

I will also put this on YouTube, Tanya. So we'll do that later on today. I will share that link with you, but really appreciate everyone's time.

And I hope you have a, I hope wherever you are, it's not as wet as it is here at a ready at the moment. So, yep. Thank you very much.

Thanks very much, guys.

[Richard Bexon]

Bye.