Pitfalls of Building a House in the Philippines

A Story of an Expat’s Experience and Lessons Learned

Building your own house can be rewarding for some and stressful for others, but it’s always challenging. That’s especially so when you are building a house in a country where you may not be familiar with local building practices, and even more so in developing countries. This article is about our experience in building a new house in the Philippines and some of the pitfalls we encountered as Australian expatriates setting up a home in another country.

Filipinos may not have made the same mistakes as we did because they would have been more familiar with how the construction industry works in the Philippines and what to expect, but for us there were many things that we had to learn as our project progressed. Therefore, this article will be most useful to expatriates looking to build a house in the Philippines – or indeed any other developing country – rather than local home builders.

We live in the Philippines because we love the tropical climate here. We bought a 3,000 sq m block of land in a gated community in the hills overlooking the city and proceeded to find an architect to draw up plans for our house. The sale process was straightforward but many of the promises that the land developer made about facilities to be provided in the community were never delivered.

That’s common in developing countries. Developers promise you the earth but don’t deliver. Unlike in many western countries, there are no consumer protection laws that enable buyers to take legal action against developers for not delivering the facilities that they include in their slick glossy sales brochures. It’s a case of ‘buyer beware’.

But this article is not about the problems that we experienced (and continued to experience) with the developer. That’s for another article, for another time. This article is about the process of building the house from the engagement of the architect through to the completion of the house and the problems we encountered along the way. It should be helpful for anyone building or planning to build a house in the Philippines, and may also be useful for expats building in other developing countries where they may not be completely familiar with local practices.

Role of Architect

In most western countries the role of the architect is to design the house based on the requirements of the client, draw up plans, supervise the tender process (or assist in negotiating prices with builders if not going to tender) and then directly supervise the building project. For that service they usually charge between 8 and 15 percent of the value of the building project.

In the Philippines, the larger and more reputable firms of architects charge about the same, but fit-out costs are generally excluded when calculating their fees, so on the whole the cost of architects in the Philippines is cheaper than in western countries. Smaller firms and architects operating on their own are usually towards the lower end of that scale, and sometimes less.

However, for those fees you’ll only get limited supervision of the project – usually not more than one site visit a month. The practice in the Philippines is for homeowners to hire a separate project manager who will monitor the work of the builder and visit the site more often.

The cost of the project manager will depend on the experience of the project manager and how often they visit the site. Some home owners employ project managers full-time for the duration of the project so they are on site for most of the time and can undertake the time-consuming task of procuring materials for the fit-out such as tiles and plumbing and electrical fittings.

We ended up engaging a well-known architect because we liked the look of their designs on their website. We discovered later that there were other architects who could have done the job for a lower cost, but not so many architects in the Philippines promote themselves on the web. They get most of their business from word-of-mouth recommendations. At the time we made the appointment we were still living in Malaysia, so did not have the benefit of seeking local recommendations.

We ended up paying a negotiated fixed fee that worked out to around 12 percent of the base cost of the house, excluding fit-out costs, but included interior design advice, so we did not feel we were overcharged given the going rates in the Philippines.

We did not have any problem with the architect in terms of their overall design or quality of their plans (both were excellent and to ‘western’ standards) but we did have big problems with the architect ignoring our stated budget limitations. The first design concept that they submitted to us was much ‘grander’ than we were looking for, and it was clear that we could never build that within the budget we had available. It seemed to us that they had designed a house to win design awards and were perhaps testing us to see how much extra budget they could squeeze out of us.

The second design concept was more modest but, as we discovered when we went to tender, cost a lot more than the architect estimated. In fact, the basic shell of the house before fit-out cost as much as we had originally planned to spend on the house including fit-out. However, we decided to proceed on the basis of that second design because we liked what the architect had come up with.

Aside from the architect ignoring our budget constraints, one other problem we had was that they weren’t that interested in making the house more sustainable by introducing ‘green’ building solutions such as using the greywater waste for garden irrigation and including a solar powered hot water supply.

Regarding the greywater request, they just ignored it (possibly because it is not common practice in the Philippines and perhaps nobody had previously asked for it) and regarding the solar powered hot water, they said it wasn’t economical. We subsequently realized after moving into the house how wrong the architect was on that point because the Philippines has the most expensive power costs in Asia, and the six individual hot water heaters that they specified for the bathrooms and kitchens easily chewed up more in power costs than the cost of amortization and maintenance of a solar hot water tank on the roof. I suspect they didn’t want a water tank spoiling the nice lines of the roof.

The Tender Process

The next big step in the project was the tender. The architect recommended two builders known to them, but friends told us that in the Philippines architects sometimes seek a substantial commission from the successful tenderer if they are one of the builders recommended by the architect. We didn’t know how true that was, or whether our architect would engage in such a practice, so we looked for another builder of our own to ensure the tender process was ‘honest’.

We discovered a builder from out of town that had recently finished building a clubhouse and swimming pool in the gated community for the land developer, and the quality of their work looked reasonably good, so we invited that builder to tender as well. As it turned out, the price submitted by that builder was half the prices tendered by the two builders recommended by the architect.

Now I’m not suggesting that the price difference would have been because of a commission to the architect. From the quality of the finishes that we saw in two houses that had been built by the other two builders, it was clear they were doing construction to a much higher standard, but not to a point that would justify us paying double the price.

In any event, the price submitted by the builder that we had invited was already as high as our originally planned budget ceiling, so we had no alternative but to go for the cheapest quote. What we didn’t know at that stage – and this is the biggest lesson to be learned from our experience – was that the fit-out was going to cost more than the basic shell of the house.

The Over-Budget Fit-Out

In most western countries, when a builder tenders for the construction of a new house, it will include roof, windows, doors, and the tender price will usually include an allowance for floorcoverings, kitchen and bathroom fit-outs, plumbing and electrical fittings. Not so in the Philippines. Here tender prices are for the construction of the basic shell of the house and just the labor costs of installing the fit-out items,

We knew at the time the tender was accepted and we entered into a contract with the builder that we would have to buy roof tiles and insulation, window frames and windows, doors, floor tiles, bathroom and kitchen fittings, air-conditioners, but the architect did not provide an estimate of the total cost.

The architect said they would provide recommendations on what to buy, and we naively thought we could manage to cover the cost of the fit-out comfortably from our savings. We had in mind that the fit-out would cost maybe an additional 30-40 percent on top of the tender price. When the house was eventually finished and we added up all the receipts for the “owner-supplied materials” as they are called in the Philippines, the cost was over 100 percent more.

Had we known that the cost of the owner-supplied materials were going to be as high as that, we would never have proceeded with the tender in the first place. We would have gone back to the drawing board and looked for a cheaper solution. Of course, some may say that was our own fault for not pricing the owner-supplied materials list before letting the tender, but that was no easy task.

The list of owner-supplied materials was long but not detailed. Many of the items had no specifications, and we were advised that the architect would provide specifications as and when required. They did that, but we soon discovered that they were specifying the highest quality items from the most expensive suppliers in the city.

I don’t know whether that was because they were taking commissions from those suppliers, or whether it was the “all foreigners must be rich syndrome”, or whether they were still trying to make our home look like an architectural showcase. It was clear that following their recommendation for the owner-supplied materials was going to eat up all of our savings.

It was the floor tiles that brought the problem home to us. We paid 3-4 times the price of Chinese tiles for imported Italian and Spanish tiles, but after laying them it was clear some of the tiles were warped. The supplier tried to blame the builder’s tiler, but it was clear they were sub-standard. We had to take some of them up and lay them again.

Some of the bathroom wall tiles looked like they were stained. The architect’s interior designer insisted that they were not, and that the apparent stains were part of the design that gave the bathroom a ‘contemporary’ look. A couple of years later the tiles fell off the wall and we replaced them with Chinese tiles at a quarter of the price that look much better.

I didn’t really want Chinese products in the house, but at that stage we had run out of budget to replace them with Italian or Spanish tiles. In general I try to avoid Chinese-made products because I’ve never had good experiences with them (my iPhone is the only exception) but as our savings started disappearing, we had to turn more and more to Chinese products to keep the costs down.

As nearly all the items that the architect was specifying for the fit-out were imported, they were generally between twice and four times the cost of equivalent Chinese products. The locksets that were specified, for example, were USA-made, but the cost in the Philippines is double what they cost in the US because importers add on freight, customs duty and profit margin.

Imported products in the Philippines generally cost about double what they do in their country of origin because there is customs duty and a 12 percent value added tax applied to everything that is imported. The customs duty payable varies according to what the product is, but most items that homeowners will be buying to fit-out a house fall between the 20 and 40 percent duty levels.

Add to that a profit margin for the importer or distributor, and it’s easy to see how a 100 percent increase in price is achieved. Imported products are bought mainly by the wealthier sectors of Philippine society, so importers don’t hesitate to add a substantial mark-up. The idea that building a house in a developing country is cheaper than in western countries quickly becomes a fallacy – unless you build to local standards (more on that later).

Labor costs are lower in developing countries, so the shell of the house usually costs less (even allowing for the higher cost of using reinforced concrete as protection against typhoons and earthquakes) but as the cost of materials for fit-out is higher, the overall cost is often not much different.

Quality of Build

It will come as no surprise to those who are considering building in a developing country like the Philippines that the quality of construction and finishes is poorer than what they’ve been used to back in their home country. We were under no misapprehension about that, but we still ended up being surprised about the things that went wrong – usually because of a lack of supervision by the builder or a lack of commonsense on the part of sub-contractors and workers.

That doesn’t mean that building finishes close to western standards can’t be achieved in the Philippines. They can, but you would need to find a builder who employs top class tradesmen and the building will cost a lot more. Had we gone with one of the two builders that tendered twice the price of our builder, we would likely have ended up with something close to western standards.

Many Filipino tradesmen are very skilled at what they do, but those good ones in the building trade mostly work overseas where they can earn a lot more money. Many of the so-called tradesmen working for local builders have never had any proper training. They’ve taught themselves or at best done a week-long course somewhere to get a trade certificate.

They know how to build a small house out of bamboo that will last five years, but it’s a different story when it comes to building a western style home. That’s not to say our builder did a bad job. In some areas the finish was very good and many visitors to our house have commented that the finishes are much better than what they normally see in Philippine homes.

However, some things did go seriously wrong. The first was the water supply. After installing all the water supply pipes drainage pipes, the floors were concreted, and ceilings installed. Within a few days of the concrete setting and drying out, we started to notice damp patches in the concrete. It turned out that the joints in the water supply pipes were leaking.

Upon questioning the plumber, he admitted that his glue gun wasn’t working properly, yet he had completed all his installations knowing that and without telling anyone. On top of that he admitted he hadn’t pressure tested the pipes before the concrete was laid. And both our project manager and builder ‘forgot’ to confirm that the pipes had been pressured tested. Many of the concrete floors had to be jack-hammered up and the pipes repaired, and the concrete laid again.

In the ensuing months we experienced several ceilings leaking water from the plumbing to the upstairs kitchen and bathroom. Again, it was because the joints in the pipes weren’t glued properly, so ceilings had to be taken down, the pipes repaired and the ceilings replaced. This went on for about five months until all the joints were eventually repaired.

The next problem we experienced was electrical circuits short-circuiting and lights catching fire on our view deck. That was because the electrical cables hadn’t been properly sealed in weatherproof conduits, so new channels had to be chipped into the concrete beams to enable the electrical supply cables to be replaced.

The third problem was a big one that become apparent during the rainy season that started just after we moved into the house. All the flat roofs were leaking. The waterproofing compound specified for those roofs obviously hadn’t been applied properly or the wrong product used.

Fortunately, most of the house has pitched roofs, and the flat roofs were only over a storeroom, the entry foyer and one bedroom. But the water leaks all had to be repaired, ceilings replaced, and new waterproofing compound installed.

As we were already living in the house when the builder undertook the first round of repairs, I was horrified to see his laborers spreading new waterproofing compound over the roofs without even sweeping them, let along cleaning them. I told the building workers at the time that the compound would fail within a year if they didn’t prepare the surface properly, but I was ignored. I was told later that the workers didn’t understand what I was saying because they didn’t speak English.

A year later in the next rainy season, all three roofs leaked again, and the ceilings were replaced a second time because they hadn’t prepared the surfaces properly before applying the waterproofing compound.

About four years after we moved into the house, we noticed all the tiles in the bathrooms were becoming loose. We hadn’t had any earthquakes since the house was built, so that was worrying. Normally tiles should stay on a concrete wall for at least 20-50 years. Then within the period of one week, most of the tiles in two of the bathrooms dropped off the wall and crashed to the ground. Most were broken.

We had to retile all the bathrooms after that. In some cases, matching tiles were no longer available, so we ended up with mismatched walls in one of the bathrooms. The builder claimed that had never happened before and was at a loss to explain how it happened. An Australian builder friend who visited us soon after said the tile adhesive had been laid too thick and the tiles hadn’t been bedded into the adhesive properly.

There was a myriad of other problems, although thankfully not as serious as those already mentioned. The septic tank was built in the wrong place, so we ended up with a septic tank cover in the middle of a pathway. The outdoor patio tiles were used on an internal stairway and the patio tiles were laid on the stairway despite the boxes being clearly labelled as to where they were to go.

Bathroom fittings were installed sloppily. Towel rails that came with six screws were installed with only one screw on each end and the rail wasn’t placed straight. The same with toilet roll holders and shower tap sets. The workers installing them didn’t have rulers or spirit levels. Everything was done “by the eye”. Crooked eyes unfortunately. I took nearly all of the bathroom fittings off the walls and reinstalled them myself over a period of a couple of months.

Workers will take short-cuts whenever they can, and if something can’t be seen, or they are doing work without the supervision of the foreman or project manager, you can be sure there will be short-cuts. One example was the installation of our main electricity feeder lines to the house. According to the plans, they were supposed to be contained in conduits in a sand bed in a trench half a meter deep.

In the year after we moved into the house, we were building stormwater drains in the garden to collect the run-off from the roof. Whilst we were excavating for those drains, we discovered that the conduits for the feeder lines were barely six inches below the surface. This wasn’t a big issue because the drains were only as deep as that, but it’s an example of the short-cuts that workers will take when nobody is watching.

The builder wasn’t incompetent. He knew how to build houses. It was just that his workers weren’t properly supervised and lacked experience. At the start of the project he had a foreman on site all day, so there were no problems when the foundations were being built and the reinforced concrete walls and floors were being installed. It was only after the foreman left and they replaced him with someone else. The second foreman was lazy and spent most of his time in his hut. Eventually he went and they finished the project with no daily supervision.

We also had a problem with materials, appliances and tools going missing. This apparently is a common problem on all Philippine building projects, which is why many of them are fully fenced whilst under construction with a gate manned by a security guard, searching all the workers whenever they leave the site.

The only other issue on which I would be critical of the builder was the lack of regard for their workers’ health and safety. But that’s not an issue confined to our builder. Most builders in the Philippines don’t take safety issues seriously. Or if they do, it’s well below western standards. I’m surprised nobody got electrocuted while building our house because there were live wires all over the place, but I guess electricians in the Philippines get used to working like that.

There was one issue that did irritate me and that was the unwillingness of the builder to provide his workers with ladders. We were building a two-storey house on three levels but the workers had to make their own ladders out of bamboo and reinforcing steel. Inside they erected the ceilings by standing on planks balanced on empty 44 gallon fuel drums. The painters did the same.

In the end I lent them my step ladder and extension ladder for much of the work because I was concerned for their safety. But what started out as new ladders ended up looking the worse for wear as they couldn’t avoid dripping paint, plaster and other gunk on them. But that was a small price to pay to prevent them being injured.

We had a split system air-conditioning unit ‘disappear’ as well as an expensive Grohe tap set. I lost hammers, spirit levels, pliers and garden tools. They may not have all been stolen by our own builder’s workers. I’m sure some were taken by workers from a project two lots away. But you can’t leave building materials lying around as you can in western countries.

The builder used to leave two workers on site every night to watch over his materials. They would sleep on cardboard boxes on the garage floor – a standard practice on Philippine building sites.

Construction timetable

We built the house in two stages so that we could move into the main house as soon as practicable in order to minimize paying rent on the place where we were staying whilst the house was being constructed.  The main house was to be constructed first and then the garage, a storeroom and a separate office in stage 2.

The construction agreement provided for the main house to be completed in 52 weeks, but after a year the main house was only half complete. The delays were caused by two factors: Firstly the builder’s workers would disappear for weeks at a time – usually because they were pulled away to work on another project and sometimes because of holidays and fiestas – and secondly because of delays in the delivery of construction or fit-out materials.

The latter issue was a problem throughout the project. In the Philippines it is common to go to a supplier’s showroom and choose materials or fit-out items, only to be told that there is no stock of the items on display. Either they have to be ordered or you have to wait for new stock to arrive. More often than not, nobody could tell you when that would be.

The second stage of our building project was held up for nearly a year because the color of the roof tiles that we needed was out of stock. We couldn’t change the color because they needed to match the tiles on the main house. The only way to ensure that a supplier would order in new stock would be to request a special order and pay a 50 percent deposit.

Most fit-out suppliers and installers in the Philippines are under-capitalized businesses and nearly always require a 50 percent deposit upon ordering. Most then require another 40 or 50 percent prior to delivery/installation, so in most cases you’ve fully paid for items before they are even delivered.

There’s “no payment upon completion” arrangements as is common in many western countries. Even a supplier of a single air-conditioning unit wanted a 50 percent deposit before they would deliver it. This creates a risk that businesses go broke after paying deposits, and this happens quite frequently in the Philippines. Fortunately, that happened only once to us when our first supplier of shower screens shut up shop after we had paid our deposits.

We eventually moved in after one year and three months when two bedrooms had been finished, but the house was still a long way from being completed. We had no alternative but to move in early because the house we were renting was in the process of being sold, and we had given notice to terminate our lease on the assumption that our own house would be completed after 12 months.

For more than a year the rest of the house was built around us. The builder’s workers eventually moved off-site two years and four months after starting construction. Given we had blown out budget on the fit-out costs, we delayed the start of the second stage (which cost us a 100,000 pesos penalty payment) and both stages of the project were eventually finished five years after we started.

Lessons learned

As I said earlier in this article, the biggest lesson that we learned from this was that we should have priced the fit-out before starting construction. That would have been a big task and would have required us to employ a qualified builder or engineer for a month to advise on specifications, and then a lot of visits to hardware stores and other places to price individual items. That whole process would likely have taken 2-3 months, but at least we would have known what it was going to cost us before we started.

When you have your plans and building permit in hand, it’s hard to resist going to tender and getting started on the project because everyone wants to get into their own new house – especially if they are renting before as we were.

In order to keep costs down we employed a project manager only part-time, He visited site only once a week. That proved to be ineffective. If your project is big enough to justify going to tender, then you need a full-time project manager on site. That adds a lot to the cost, but it’s the only way to avoid all the problems we had with the build quality.

If the project is not big enough to go to tender, then you are probably going to have to accept that the house will only be built to local standards in terms of its finishes, unless you have had previous building experience and are able to supervise its construction yourself. In that case, employing an architect to draw up the plans and then employing sub-contractors yourself would be the way to go.

For more basic designs that don’t justify the added cost of an architect, you can seek out a builder who has a set of standard designs and either choose one of those or negotiate some changes on those standard designs that the builder thinks he can handle. A lot of houses in the 5-10 million peso price range are built like that. (Below 5 million your only option will be project homes off the plan).

In the 10-15 million price range it’s usually best to employ an architect just to draw up plans (that’s usually about half the price of a ‘full service’ quote) and then negotiate prices with potential builders (perhaps based on recommendations from friends) and find a competent project manager to oversee the building work.

Around 15 million (base price excluding fit-out) is usually the price point where it is advisable to employ a full-service architect and go to tender to get the best price.

If we could build our house again from scratch, we would probably save 10 percent on the cost and improve the quality by 10 percent, knowing now what we didn’t know before. We would also allow at least an additional three months in the planning processes before breaking ground on site.

Would we use the same architect and builder? Yes, we probably would now that we know what things are most likely to go wrong — and as long as we could find a competent full-time project manager. But we wouldn’t use the architect for the interior design (that would help to pay for the project manager) and we would insist that the builder have a competent foreman on site throughout the project.

Postscript: If you are looking to build without engaging an architect or contractor, then check out this article by a retired Dutch geologist who built his own house in Abra province, Philippines, in 2010 for 10 million pesos (that’s under US$200,000).

All images:  © David Astley