Construction How To

So you want to build a house.  There are a number of things you need to know.

The following assumes you want to be involved in the project beyond explaining your design to an architect.  Most of the details that follow can be handled by a contractor and/or an architect but it is your responsibility as the owner of the property to ensure that IMSS and all other regulations have been complied with.

You will need to:

Become a Patrón or Patróna (employer).
Get a building permit.
Pay IMSS
Hire a crew.
Get a bank account.
Get an accountant.

Assuming you are the owner of the property being renovated or newly built you have certain responsibilities.  You will need to employ people.  To do that you will need to register as an employer.  You will need a bank account.  To get that you will need an FM3 (See FM3 How To).  You must get a building permit.  To do that you will need plans.  etc. etc.  It is a bit complicated but lots of people do it.  You can too.

My Experience:

Starting with very little Spanish I hired a crew of 4 Mexicans who did not speak English.  We used an interpreter to bang out a simple fixed price contract.  By means of drawings and hand gestures we proceeded to build.  They taught me Spanish.  Little by little I learned the various construction techniques.  There were surprises but in the end the project was very successful.  The surprises resulted from my inadequate knowledge of the language and how things are done in Mexico.  I don’t necessarily recommend that approach but use it to highlight the fact that there are a lot of ways to approach the problem.   A number of friends with very limited language skills have had success using the same basic approach.  The builder who does not speak English usually understands enough English or hand gestures/drawings to understand what you want.

Fixed price or cost plus.

You can do a fixed price contract but you need to have a good idea what you want and you have to be able to communicate that to your crew or contractor.  A detailed set of drawings is necessary to be fair to everyone.  You also need to cover the cost of changes you make to the original specifications if they cause extra work for the builder.  Here is a simple contract in English (Construction Contract).  To be legal in Mexico it would have to be written in Spanish but legality is not the point.  The idea is to have the details nailed down.  You do not want to wind up in the Mexican legal system so if you do not have references that  suggest you can trust the builder totally you have found the wrong builder.  There are lots of horror stories.  Rely on references and see the work the builder has done. For larger projects you may want to have your lawyer draft the agreement.

On a cost plus contract you have more flexibility but there are a lot more details you need to cover off.  The builder will usually take his own wage plus 15% of all the wages paid including his own.  This is, of course, to be negotiated.  He may also be getting a discount (some might call it a kick back) from the material supplier.  You should discuss openly and negotiate.

Estimating your project

A good rule of thumb for estimating your cost is 500 to 600 pesos per square foot (2008).  5400 to 6500 pesos per square meters.  Start with that number and apply it to any new construction under roof.   To renovate an old house the cost is often similar with the only saving being that you don’t have to pay for getting rid of the old house.   Newer homes you should apply about half of that to renovated areas that are not kitchens or bathrooms.  For renovated kitchens and bathrooms apply the full amount.  These are very broad rules of thumb.  Of course only your builder can tell what it will actually cost but this puts you in the ball park.

Be wary of a builder who quotes substantially below the rough number you come up with.  He may not have understood your requirements or he is simply bidding low to get the job.  Once started with one builder it is very difficult to get yourself out of a bad deal when the additional costs and “misunderstanding” start to surface.  The builder who takes over a botched project will likely blame any deficiencies (even if they are his) on the previous builder.

The lowest bid is usually not a good idea especially if it is substantially below the other bids.

IMSS (Workers compensation and social security)

You will need to become a Patrón.  Only an accountant can register you and he will charge you about 1,000 pesos to do so.  After that you can arrange to pay the bills yourself or have him do it for you (about 1,000 pesos per month).  The bills come by mail.  If they fail to come you can have your accountant print out the bill and go to the bank and pay it. Its actually a disk you take to the bank.  If you have more than 4 workers you will need the accountant to make a disk each month for a cost of about 50 pesos.  He will also need to make changes to your account each time a worker enters or exits the project ( about 50 pesos per transaction).  I tried to figure out the web site which is supposed to allow you to do this but it was beyond me so I let my account do it.

Keep all the bills.  You will need them for your final inspection ( finiquito see below).

The cost of IMSS is in addition to the construction contract and will cost you about 10% of the cost of the project.

You can contract to have the builder pay this from his account (if he has one) but you are ultimately responsible if he fails to do so.  It is a hassle but if you are the patrón you know it is getting paid assuming your accountant is honest.

The law requires that you do this for any construction project regardless of it’s size.  In reality the process is so complex that the overhead is not practical for small projects.  Hence, many people do projects without it.  Especially small ones.  They also do them without building permits.  The building permit is what alerts the IMSS office to check if you are compliant.  I strongly recommend you comply.  Once you are registered it is easy.

I am told that if someone gets hurt on your job and they want to pursue you in the courts they can ultimately wind up owning your house.  The penalties for non compliance are substantial.   I am also told that if you have enemies in the neighbourhood then they may contact either IMSS or the municipality.

You should give a copy of your registration to your builder so he can show it to any inspector who arrives at your job site.

Building Permit and land use permit.

A building permit is required for all construction projects.  Building permits are issued in Compostela by the office of development.  Read more about that here.

Finiquito:

At the end of the project you are required to make application to terminate the project. Read more about that here.

Disclaimer:

These details are assuming you are doing your own drawings, permits etc.  If you hire an architect to oversee the project he will take a fee which is usually a percentage and take care of a lot of the details.  The author has no credentials that would suggest the advise given is reliable.  It is simply a sharing of one person’s experience and should be used as such.