Construction Business

[Superjoie]

My dad and his colleagues wants to build a construction company now. He wants me to manage it, starting with registration  and the like. I remember seeing a topic  in entrepreneur magazine but I forgot kung anung month yun. Would anyone here share what steps I need to do for the registration of business?

And it is also a partnership, ano ba ang mga kailangan pag ganung set up?

They will start as sub contractors daw muna.

Thank you!

[whitebishop]

First register the name sa DTI
Second since Partnership sya kailangan din may registration sa SEC
Then your BIR and Business Permit (CityHall)

[Superjoie]

Thanks sis. Will going to register the name this week sa DTI. They also me to handle the logo, anyone who is a logo maker here?

[aquacharly]

Good luck, really.

[dine2730]

magandang business yan kaso patience and kailangan marami kang contacts kundi lugi ka. andaming kailangan asikasuhin at hinihingi ng mga buyers syo.

[momlory]

My hubby is starting this business. First client niya is yung ate niya na nagpatayo ng house. Second client is our townhouse renovation.

So far malaking tulong pag marami kang contacts talaga. Galing si hubby sa crown asia. Ang work niya dun is siya yung nag momonitor ng mga sub contractor sa mga ginagawang bahay. since marami siyang kakilala. Yung ibang projects nila ngayon na hindi na nila macccomodate sa kanya na binibigay hehe.

Sis Aquacharly. Any insights on this business since nagsisimula palang kami. I know you have so much many things to share. Thanks!

[yanmae]

Hi Sisses, ganito business ng inlaws ko nagstart sila labor lang ang hawak nila ngayon labor and construction na. Kung gusto mong i-legalize lahat para makasali ka sa mga biddings mag reregister ka muna sa DTI, tapos sa DTI may ibibigay sayo na license PCAB ang tawag doon dapat may license engineer kayo kasi isa sa mga requirements sa PCAB yun, may mga trainings and seminars pa kayo na aatend-an. Start ka muna sis sa DTI at dun mo na malalaman lahat ng mga iba pang mga kelangan para ma register ang business mo. Napaka gandang business ito kasi napaka ganda din ng kita! Dito yumaman ang inlaws ko.

For me, kung tutok ka sa business na ito walang lugi dito eh kasi yung mga bakal na gagamitin mo at iba pang materyales isasama mo na yun sa pag quote, sa bakal palang na pang frame sa bahay mga excess or scraps pwedeng i junk shop na yan so added kita na rin yun. at saka dapat may alam ka talaga sa pag gawa ng bahay, actually kahit nga mga foreman pwede din mag patayo ng biz na ito kasi alam nila mag basa ng plano. Dito yumaman inlaws ko hehe

Kung start up ka palang sis maganda kung mag sub-con ka nalang muna, pero kung experienced na talaga kayo at complete na ang mga pang documents nyo, go na kayo.

[aquacharly]

^ to clarify,  the above info ....

SUPERJOIE:   To put it in very simple terms (the process has may requirements, very tedious): 

You go either to the DTI or SEC to register your business.

You get your Business Permit, BIR & VAT registrations.  You gotta attend to your SSS, PagIbig, PhilHealth registrations too. 

And then you go to the PCAB to get your contractor's  license. 
There is a checklist of requirements. Basically, you are given a license category &  categories of project types you are licensed to enter contracts for.   
Your license is determined by your company's technical expertise & financial assets & operational history (if any.  What are your current projects & your completed/not completed due to whatever reasons projects. ).   There is a point system, and the total lands you in a license category.  Simply put, a small/low category license qualifies you for small projects. The bigger/higher the license category, the bigger project. A small license can't qualify for a big project. Your license dictates the maximum project cost you can undertake. No limit for Triple AAA licenses, as to project amount; BUT there may be limits to the a Type of projects you can undertake. Not all qualify for buildings or roads/flyovers/ports..ganon.

         As your business grows successfully -- your license gets upgraded, so bigger & more types of projects are opened up to your company.  If your technical & financial assets decrease &/or your operational history go bad -- your license will be downgraded. 

You need a PCAB license if you are gonna stay long  in this business, and intend to grow -- hindi lang yung pa isa isa or dalawang small houses, or forever sub-contracting. 
You need a license  for Govt AND private bidding projects.   (Having a license also makes bank financing more available.)

The contractor's license is renewed every year -- so, your company is evaluated every year. 

How to start? 
1.  You can start as a sub-contractor if your equity is limited.
2.   But you do not have to go that route.  Pwede  ka get a contractor's license agad -- you don't even have to start with a small license.  Even if your new company has zero history - you can qualify for a big license, not the biggest but big enough to get the biggest license category in a year or two.  (Biggest:  TRIPLE A & General Contractor, Large B... Large B is bigger than Large A.)

. How?  Kasi  nga point system, the more points, the better. IF you have  millions to invest: pwes, more points for the financial capacity.  You have money to buy heavy  equipment, fixed assets for the business like depots, etc. ...  all rack up points. Pwes, lots of money means you can hire people, with professional licenses & track records in specific construction projects -- equals more points for the technical assessment.   You get the drift.. 

3.   Puede din, a new/small company can form joint ventures with another company:  that 's another way to start or grow ... but tricky.

Now,
I beg to disagree na "walang lugi" in this business.  Every business has the capacity to make you lose your shirt, or potential to enrich you. 

Actually, as you grow bigger in this business, the more you put your business & assets at risk.   If you are just putting up houses for owners --  it is basically labor contracting.  The owners buy the materials.  Even if it is material and labor -- hindi  masyado ka maisahan  ng owner kasi ititigil mo lang the works.  BUT when you grow big to do mass housing, subdivisions, buildings, roads, ports, bridges, flyovers, reclamation projects at kung ano pa big projects dyan......   You can't just stop works como delayed ang bayad. You gotta keep on going kasi you have your employees, workers to pay.   You have your warehouses, equipment committed na. Mga ganon. Everybody gets paid before you see any profit. Hindi mo  puede say: ah hindi  na kayo nagbabayad   -- Teka bitbitin ko muna unfinished kalye, building bridge, flyover, port, or whatever -- ibabalik  ko to continue pag may pera na kayo pambayad.   Susko.

Quite a number of construction businesses fail due to delayed collections.   

BUT OF COURSE,  businesses, to be successful -- hands on ang owners: either sa production, or close management thereof.
  But this construction business is harder coz you are dependent on so many trades & many people.  If you have say a restaurant business,  and you are a chef.. Ok na.  Yun yung critical.  1 talent.  Pero sa construction, susko.   The technical skills and service/labor you need -- which you can't do yourself, is diverse:  project planning  & estimating (kikita na yan or hanap patay? Lalo na bidding is involved), architectural, engineering (dami yan: structural, mechanical, electrical, sanitary, etc etc etc),  specialties (masonry, electrical, plumbing, painting, etc etc )

What else???
I DO NOT ENCOURAGE cost cutting like using junk materials for structural requirements. Kung type eh junk as recycled details or borloloy  - fine, a matter of taste. But using junk for the structure --  IMO, that is like cheating the owners or home buyers --  unless mismo yung owner nag supply ng junk.  And I really look down (sorry) on contractors who cheat  on specified quantities, or use substandard or under-specs construction materials.   

Construction is a very tiring, tiresome, demanding. & risky business.   You do not only need to manage your resources & manpower, but you must deal with corruption not only from govt people, but even with private sector architects, utility companies and dislocated squatters.  Dagdag mo na  rin ang NPA, Abu Sayaff/MNLF or ewan ko na whatever else exacts "tax" on legit businesses.  oh yes.   

What else?   You must also compete with new companies that have "unlimited credit facilities"  and zero experience that are supported by very powerful people in govt or married to very powerful people in govt  -- they always "win Biddings".  Daw.  We in the industry know, the general public later finds out when a scandal erupts.  Susko nga.


So, back to my 1st post:  Good luck.

If you hack this industry, Life is good.  But don't ever buy into the illusion that it's easy  pickings. 

[yanmae]

Now,
I beg to disagree na "walang lugi" in this business.  Every business has the capacity to make you lose your shirt, or potential to enrich you. 

Actually, as you grow bigger in this business, the more you put your business & assets at risk.   If you are just putting up houses for owners --  it is basically labor contracting.  The owners buy the materials.  Even if it is material and labor -- hindi  masyado ka maisahan  ng owner kasi ititigil mo lang the works.  BUT when you grow big to do mass housing, subdivisions, buildings, roads, ports, bridges, flyovers, reclamation projects at kung ano pa big projects dyan......   You can't just stop works como delayed ang bayad. You gotta keep on going kasi you have your employees, workers to pay.   You have your warehouses, equipment committed na. Mga ganon. Everybody gets paid before you see any profit. Hindi mo  puede say: ah hindi  na kayo nagbabayad   -- Teka bitbitin ko muna unfinished kalye, building bridge, flyover, port, or whatever -- ibabalik  ko to continue pag may pera na kayo pambayad.   Susko.

Quite a number of construction businesses fail due to delayed collections.   

BUT OF COURSE,  businesses, to be successful -- hands on ang owners: either sa production, or close management thereof.
  But this construction business is harder coz you are dependent on so many trades & many people.  If you have say a restaurant business,  and you are a chef.. Ok na.  Yun yung critical.  1 talent.  Pero sa construction, susko.   The technical skills and service/labor you need -- which you can't do yourself, is diverse:  project planning  & estimating (kikita na yan or hanap patay? Lalo na bidding is involved), architectural, engineering (dami yan: structural, mechanical, electrical, sanitary, etc etc etc),  specialties (masonry, electrical, plumbing, painting, etc etc )

^Oo nga pala ito ang kadalasang problema ng mga contractors yung mga delayed collections, tipong natirahan na yung bahay yung developer di parin nagbabayad. Jan ka matatalo kasi tuloy2 ang payroll, kaya dapat may malaki ka ring perang naka back up in case na di kaagad maka bayad si developer sa progress billing mo ehh may pambayad parin sa mga tauhan.

[momlory]

pag ka sub contractor ka ng isang company. Ano usually ang risk na nagcacause ng pagka lugi ng isang ccontractor? Planning to do sub contractor with vistaland. thanks!

[aquacharly]

^hindi ka babayaran on time.
Tapos, to add insult to injury:  maraming deductions sa delayed payments sa yo.

Do not think na como malaking company developer eh ok ok subcontracting mo.
I am not talking about Vista Land -- I have no knowledge of that company.

Cuentuhan kita about a contractor, not a mere sub-con. Eh ang sub-con, IMO - mas dejado kasi mas malayo sa kusina ika nga.
The owner of Uniwide, the cheapo  chain of supermarkets decided to go into land dev in Naic Cavite.
Their urban planner or architects just maximized the number of lots within the project site, without regard for the site topography.  IMO, irresponsible.  So, nang dumating  rainy season, may mga blocks that would literally slide  down or collapse; & lots that were not workable kasi may creeks running underneath pala -- eh di lumalaki pag rainy season..   So kawawa yung buyers, financing companies & the unpaid contractors.  It went to court -- the contractors were categorized as unsecured creditors.  Susko maswerte na kung ma kita pa pisong duling after years of litigation.  Kumita lang yung Uniwide.   

So there, when the project goes downhill, or may glitch -- guess who suffers first, or suffers forever?

If you are entering the construction business as a sub-con, do your homework first.
Investigate mo the contractor you are sub- contracting for.
May kaso or mga demanda?   
Ok ba PCAB license nyan???
Check mo na rin yung project owner or developer. Hindi como  matuno  ang name eh good payor. Susko.  You will be surprised how kapalmukz some of the rich & famous  &/or big companies really are. Lol.

As sub-con, have a contract & project cost.  Notarized contract. Minimum:  Signed Purchase Order  with company letterhead.  Signed ha by the Purchasing Officer or better, by the VP Admin or Operations. 
Ask for a deposit.
Bill weekly.
If hindi ka binayaran on Saturday morning or in time to pay your workers -- suspend your works on Monday, until you are paid  to-date.
Note: hwag ka pa aabantehan, meaning... Do not let them say ok lang delayed payment of your progress billing kasi may advance ka naman.    Hwag ka paisahan.  Kasi sa dulo may retention. If you use up your advance, Ngek lugi ka due to the retention, which can take a year/years to get. 

[empire_maker16]

agree agree ako sa corruption dito sa business na ito! alam ko yan dahil meron din kami construction business tho not that big at hindi pa matagal. Madalas pag government luto ang bidding pero wala ka naman magagawa kaya tahimik ka na lang kaya nasa private na lang kami halos nag cater ng project kasi naman minsan pag nanalo ka sa bidding, aba advance ang komisyon nila? parang ah okay what if hindi kami bayaran agad along the way or yung retention bye bye na... tho sure ka naman babayaran yan dahil government. And then, nagventure kami sa private tama nga minsan yung mga nagpapagawa pa sa amin ng mall ang kakapal ng mukha kahit hindi mo kasalanan at ibang contractor ang my kasalanan since ikaw yung mahihinog na retention gagawan ka ng echoserang dahilan and dumating pa sa point na tinataguan ka pa ng accounting nila at pati mayari kasehodang lahat ng requirements nila binigay mo at ginawa mo maayos. Next, yung pag subcon ka lang grabe ang laking company at take note babae pa mayari ah pero siya pa yung medyo garapalan sa bayad dinadahilan na hindi pa siya binabayaran pero ang alam namin nagbayad na sakanya. And last, mga big and famous contractors and developer nako walang kasing kuripot and sobrang delayed magbayad parang gusto ka ng taguan forever hahaha pero tuloy pa din as long as na kaya pa go pa din kami sa projects.. ngayon naman kahit papaano natuto na kami unti unti na rin nakausad tho my mga bayarin pa din at halos wala minsan kita pero ang importante my sweldo lahat ng tao at madelay man collection namin nakakacollect pa din tho matagal.

but my problem here is paano yung mga retentions namin na pwede na kunin sinasabi ng accounting wala pa daw pondo? ano pwede actions doon?

[yanmae]

^ naku sis years inaabot ang retention. May isang project ang may ari ay isa sa mga top 10 millionaires pero hello, 1 year na wala pa rin yung retention at sobrang hirap maningil, kada progress blling aabutin ng 2 mos. Sabi ng ibang contractors doon inaabot ng 3 years ang retention. Ewan ko mahina yung management ng kumpanyang ito, imposibleng kulang sa pondo dahil ang neto ng may ari ang laki2 kaya ayaw ng umulit kumuha dito dahil lahat ng kinita sa ibang project sa kanila lang napunta. tsk3

[empire_maker16]

nako sinabi mo pa.. kung pwede lang mag drop name ng company dito ang dami ko na sinulat kaso baka bawal saka wag na lang para peace on earth hehe.. kakairita nga eh tapos minsan sasabayan pa na mga tao na matitigas ulo na kapag pinagsabihan mo aalis na.. yung iba ba dito ano lang mine-maintain nyo na tao nya as regular or contractual yung hindi project-based?

[mo|mel]

Hi sisses, any tips po on how to get clients sa ganitong business. nakipag partner kami sa engineer na may maliit na construction company. IT talaga kami pero nabigyan kami ng opportunity sa ganitong business ng husband ko. as of now nahihirapan kami kumuha clients

[jtansanco]

I'll just post something here...

I work for an exporter of builder's hardware in the US. If anyone is interested to purchase Made in USA door/window hardware, I'm your guy. No MOQ.

[EngrCes]

Hi, I'm a newly registered civil engineer and I'm planning to start my own construction firm. But the problem is i don't have any formal experience in construction. Can I ask some advise regarding this matter.. how to start and what are the legal requirements to start the business? thanks any advise is very much appreciated.

[vmosueses]

Hi! I suppose starting a construction enterprise can be a great opportunity for you and your father, and it is wonderful that you take the initiative to manage the registration process. To register your construction business, the first step would be to determine what type of legal structure you want for your commercial enterprise - an individual entrepreneur, a partnership or a corporation. Since you mentioned that this will be a partnership, you will want to draw up and file a partnership agreement with the SEC.

Next, you will need to achieve the necessary permits and licenses crucial to conduct a construction enterprise in your region. These permits and licenses vary from location to place, so it's important to do your lookup and find out what the specific necessities are in your area.

In addition, you will need to register your business with the BIR and acquire a TIN. This will allow you to pay taxes and avoid any prison problems in the future.

As for starting to work as a subcontractor, this is a properly way to express yourself and achieve experience in the industry. Just be positive to enter into clear and honest contracts with your customers to keep away from any misunderstandings or disputes in the future.

In general, beginning a construction business can be a challenging but profitable enterprise. With cautious planning, lookup and execution, you can build a profitable enterprise that meets the needs of your clients and helps you acquire your goals. Read more about How to Starting A Construction Business.