How to Avoid ‘Naughty’ Contractors When Building a Villa in Bali
Building a villa in Bali can be an exciting adventure. However, just like making other forms of investment, building in a foreign country comes with its challenges. At Usaha Expat, we recently encountered a case where our client was building a home, only to discover that their contractor had taken away all their money, and their home was far from complete.
What a nightmare! 👿
You certainly don’t want this happening to you, do you? To help you avoid such unfortunate events when building a villa in Bali, here are a few tips from us:
While saving money is always appealing, be cautious of contractors offering prices significantly lower than others. Extremely low rates often signal poor-quality materials, rushed work, or hidden costs that could surface later.
Establish a detailed contract with a notary outlining the scope of work, payment terms, timelines, and other relevant details. In addition, request a detailed RAB (Rencana Anggaran Biaya) that breaks down the entire cost of your project, including materials, labour, and specific features like flooring, roofing, and walls.
Divide payments based on project progress instead of paying the total amount upfront. This motivates the contractor to meet deadlines and reduces the risk of unfinished work.
Engaging a legal professional with expertise in Indonesian law, like Usaha Expat, can be invaluable when entering significant agreements. They can provide guidance on best practices, conduct due diligence, and identify potential challenges to avoid during the construction process.
Consider hiring a project manager to act as your representative and a construction engineer to ensure the construction quality follows quality and safety standards. Not only will they help keep the project on track, but they will also ensure that deadlines are met and the project stays within budget. Furthermore, the cost of hiring a project manager typically ranges from 2.5% to 4% of the total building price, depending on the level of service required. Therefore, it is essential to ensure that the professionals you hire can communicate in English to prevent any potential miscommunication issues.
Being meticulous to maintain clear communication among all parties is okay! Any additions, reductions, or design changes should be documented in an addendum to the agreement, and communicated, as these can impact the project schedule. Always tell the contractor to communicate promptly with you or the project manager if there are any obstacles hindering the contractor’s work!
Maintain records of all communications, agreements, and transactions throughout the project so you can have all the evidence to support your claims if anything happens during the work.
When building a villa in Bali, the last thing you want is to get halfway through construction only to realize that your contractor has vanished with your money or that the building does not meet the minimum quality standards. This can lead to increased maintenance costs in the future, as well as potential problems when selling your properties, and it can harm your business’s reputation.
Unfortunately, it happens more often than you’d think—for instance in the case we recently handled. So, take your time and follow our tips. More importantly, don’t forget to put everything in writing. A solid contract and payment milestones will give you peace of mind and keep everyone on track. If things feel overwhelming, we’ve got your back!
Trust us — getting professional advice early on can save you a world of stress later.
