^ 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.
