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From the ground up

New Home Builders Association aims to increase public understanding of the profession

By Kanana Katharangsiporn

When thinking about building a new home, who do you think of first? If the first name that pops into your head is Land & Houses, you need to think again. L&H is a property developer, not a contractor.

This is the reason why construction contractors joined together earlier this year to create the Home Builders Association. With the aim of educating consumer about what they do, improving the public's understanding of the role of homebuilders and trying to differentiate their industry from that of full-scale property developers.

According to association secretary Sitiporn Suwanasut, who also serves as managing director of Patum Design & Develop Co, consumer understanding of the home construction market is clearer than in the past. As a result, the association plans to create better networks linking various trade professionals, by including fully licensed and certified engineers and architects.

"Consumer behaviour has changed from impulse buying to carefully researched decision-making. As a consequence, we have to disclose more detailed information," he said.

Professional homebuilders must be licensed for both engineering and architectural work, as building a home out of reinforced concrete to last at least 50 years requires substantial expertise.


Mr Sitiporn said the services of qualified engineers and architects were much more important in construction today, since nearly every house being built today used more concrete than wood, which was a much more forgiving material in the event of mistakes or poor workmanship.

He added that quality homebuilders should have a large portfolio of finished work available to prove their expertise. He urged consumers to avoid hiring fly-by-night contractors with only three staff and experience building only shophouses.

"During the crisis, these kinds of contractors went broke overnight and left many jobs unfinished. We don't want them to come back again and damage the reputation of the home building business. But now that the crisis has passed, some of them are up to their old habits," said Mr Sitiporn.

After a consumer chooses a contractor, often the next step is to consult with an architect. A clear-cut agreement between the customer and the builder regarding constriction materials and blueprints helps avoid expensive problems in the future once the work gets under way.


Consumers should also consider after-sales service or guarantees. Normally, most contractors offer a 20-year warranty for roof structures, three years for home details and two years for structural integrity. Along with the issue of whether to pay cash advances as each phase of the work is completed, expenses such as electricity and water costs should be discussed before the contract is signed.

Patum Design & Develop, which expects sales of 300 million baht from 120 contracts by the end of 2004, sees strong potential benefits from joining the association. The company's revenue amounted to 220 million baht from 100 contracts last year, Mr Sitiporn said.

Prices for three-storey homes built by Patum Design & Develop start from 9,000 to 15,000 baht per square metre, depending on materials and design.

Association chairman Pramote Thiraku said consumers wanting to design a home according to their own specifications should shop around, and visit at least six home builders in order to compare skill, design, and workmanship before making a decision.

A visit to the builder's jobsite is a must, because it allows a customer to see with her own eyes the quality of the firm's construction work, as well as the materials used. Only then should customers even consider talking about pricing and other specifications. Don't hesitate to ask past customers about their experiences with the company, he urged.

Cost overruns can be eliminated by agreeing on a set price before the work begins. Price adjustments may be required, however, if the customer sees a need for new or different materials.

"Customers should show us all their needs in advance to avoid additional costs being tacked on later. They should spend a lot of time making a list of all the details they want in their dream home. Talking to our engineering and architectural consultants can help customers achieve the extreme attention to detail regarding home design and materials that is needed to avoid surprises once construction is already under way," said Mr Pramote.

Currently, up to 40% of homes on the market are priced at between one to three million baht, with another 20% at up to five million baht and 15% more costing around five to 10 million baht. Another 5% weigh in at 10 million to 30 million baht, with a tiny percentage in the elite class commanding prices in excess of 30 million baht, he said.

Apart from forming an association and introducing builders to the public, the association expects to increase market share for independent contractors to six billion baht by the end of 2004, up from five billion baht in 2003.

"Some contractors take on too much risk because they suffer the disadvantage of not being well-known. Some of them were forced to default on contracts because they could not control costs, or manage their cash flow and procurement needs," he said.

Suratchai Kuenghakit, managing director of The Emperor House Co, a builder of elite luxury homes, said that most customers considered home design their first priority. Next they considered a firm's construction team, after-sales service, pricing and timing.

Home builders should try to occupy a clear position within their segment, he said. About 80% of the 130 contracting firms still in business after 1997 crisis _ when there were over 200 contractors _ were professional outfits with their own strengths and specific market position.

Mr Suratchai said many customers tried to keep their cards close to their chest, and were reluctant to disclose the true limit of their construction budget in the fear that a contractor may try to inflate costs. Such fears were misplaced, he said, and often led to additional expense which came from poor communication between the customer and the builder.

For luxury homes priced at over 30 million baht, interior work was always a major problem, since the choice of one specific material over another can drive costs as high as 100-120% over budget.


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