I was asked recently by a friend what is the biggest challenge to the project so far.
I explained that finding suitable construction partners in any location is by far the biggest challenge and for one common reason.
Most off plan projects require clients to pay a deposit, and the development company uses that finance to start of each project. Then if the developer goes bust, the project stops, and it’s an absolute mess obviously that might never get sorted out.
As an example, at a recent meeting with a construction development company, I explained that they would need to complete each construction phase before they received payment, and the director laughed a little and said that was not how the construction industry operated.
I asked him why our members should trust him, if his own bank wouldn’t trust him to finance the first stage of the project with guaranteed payment, subject to quality control conditions.
I thanked him for his time and left the meeting. Simple as.
Our contract designs are as important as the villa and village designs themselves. They have been created to be 100% transparent and fair to all parties, including the construction development partners, but they too have to have as much skin in the game, as well as having the financial strength to operate our way.
Because of all of the construction material and labour research we completed, we know how to structure a contract in such a way that we are paying the construction company partners enough to cover the cost of each stage after they have completed it, so that they don’t receive their project profit margin until the very last day when the project is handed over completed. At the same time, they are absolutely guaranteed that final payment subject to quality control, again because of the legal contract design.
Barry
