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Thread: Solex project

  1. #151
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    Manc, your question made me wonder so I dug out the plans and BoQ for the house we haven't built. These were prepared by a chap who teaches construction at the local college, he is independent. The BoQ doesn't mention tax.

    I asked the gf if there would be tax on top of the BoQ and she looked at me like I was stupid. Of course not, she said.

    Her opinion, in this one thing at least, is relevant. In her day job she works at a local government finance office pulling together draft contracts with all the supporting documentation such as quotations and, for construction like roads and buildings, BoQs. She tells me she has never seen a contract which mentions tax. What is quoted is what gets paid.

    I was a little surprised. Anyway, she is very clear.

  2. #152
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    Quote Originally Posted by manc View Post
    So far the two prospective builders we have met have rejected the idea of VAT being applied.
    new to me too, he will already be making on some items in the BOQ and that always happens but he is taking the piss on the VAT and that for me would kill the trust and that is a deal breaker - if he's trying it on with that what corners will be cut elsewhere when your back is turned.

  3. #153
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    Quote Originally Posted by malmomike77 View Post
    new to me too, he will already be making on some items in the BOQ and that always happens but he is taking the piss on the VAT and that for me would kill the trust and that is a deal breaker - if he's trying it on with that what corners will be cut elsewhere when your back is turned.
    One builder spoke to the gf and suggested a 20% markup for 'the farang'. Then they would split it, 10% cash to her. He tried to tell her that most women did that. She told him no. At least, that is what she told me.

  4. #154
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    Quote Originally Posted by Shutree View Post
    One builder spoke to the gf and suggested a 20% markup for 'the farang'. Then they would split it, 10% cash to her. He tried to tell her that most women did that. She told him no. At least, that is what she told me.

    Not that it has anything to do with building but in regards to the "charge the farang extra and split it" comment the same thing happened with my Missus.
    About 20 years ago, before we were married, we were travelling back to her place from the airport and somewhere along the way I spied a used car yard. While they might not be so rare now that was the first one I had seen in Thailand so I got her to get the driver to turn around and go back to have a look. The salesman suggested to my then girlfriend that he sell me a car and add 50K onto the price which they would split.
    I wondered why she grabbed me and said we are leaving and she was quite angry. She explained to me about it after we had left the yard.

    So it seems that that is one way they try to scam farangs.

  5. #155
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    Re VAT, while Thaiwatsadu, Global House etc include the VAT in their listed price so there should be no extra costs, if you were to do a BOQ based on the prices of somebody like Onestockhome note that they do not include the VAT in their prices for many items, such as rebar and steel.

  6. #156
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    Quote Originally Posted by Shutree View Post
    Manc, your question made me wonder so I dug out the plans and BoQ for the house we haven't built. These were prepared by a chap who teaches construction at the local college, he is independent. The BoQ doesn't mention tax.

    I asked the gf if there would be tax on top of the BoQ and she looked at me like I was stupid. Of course not, she said.

    Her opinion, in this one thing at least, is relevant. In her day job she works at a local government finance office pulling together draft contracts with all the supporting documentation such as quotations and, for construction like roads and buildings, BoQs. She tells me she has never seen a contract which mentions tax. What is quoted is what gets paid.

    I was a little surprised. Anyway, she is very clear.
    Thank you, Shutree. Your gf's opinion on this is indeed relevant and her response is very informative.

  7. #157
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    Quote Originally Posted by malmomike77 View Post
    new to me too, he will already be making on some items in the BOQ and that always happens but he is taking the piss on the VAT and that for me would kill the trust and that is a deal breaker - if he's trying it on with that what corners will be cut elsewhere when your back is turned.
    Thank you malmonmike. And that, in a nutshell, is the crux of this for me.

  8. #158
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    Manit the builder

    Thank you everybody for your thoughts and considerations above.

    Here is a bit of information about the current situation.…

    Manit has been very helpful throughout the planning stages and very keen to be commissioned with the job. He lives locally (same moo bahn) and so is available at the drop of a hat to come and talk to us. Any questions or queries are never an issue, particularly when he is face to face. However, as we began giving him indications that he was going to land the job, the responses became rather less certain.

    First of all he did not provide us a with a full costing for the job; there was no BoQ from Manit. We were disappointed with this, because we provided him with the drawings and gave him a week to come back with a considered cost. He returned a week later with a single sheet of A4 paper, stating the cost; also with the option for certain items to be deducted (tiles, glazing, sanitation equipment) and to be provided by the customer. The price states the floor space of the build as 265 sqm (it is actually around 283 sqm) and has offered a price without tiles or glazing of B3,312,500.
    Total cost: B3,312,500
    Price per sqm: B12,500

    If we deduct some items we come to just over 2.8MB.
    Glazing: B350,000
    Tiles: B85,000
    Sanitary ware B65,000
    Total B2,812,500
    Dividing this price of B2,812,500 by 265 = B10,613.21 per sqm.

    I told him we would need to sit down and discuss actual materials, specs, sizes and quantities, and that this would be incorporated as an appendix to the contract. That was when he said that if we were to do a contract, then he would have to charge VAT.

    It was around the same time I started emphasising that we had specific specs with regard to the roof: BlueScope Zacs, the thickness of the metal sheet, the foam-backing, the thickness of the PU foam. I noticed on the Line app that he ignored half of these questions. Straight away I began thinking about how everything has been "no problem at all" when it has been a verbal agreement, but now when specifics are being spoken about and he is being asked in writing to confirm things, suddenly there is an appreciable evasion.

    The FiL is still quite keen on him doing the build. The FiL quizzed Manit and was satisfied with his responses to questions (regarding the grade of steel used, how long the shuttering would be left on, etc.). Manit has assured the FiL that the FiL can be there when Manit purchases materials, such as steel, bricks, etc.. Manit has also said that the missus and I can also come along to purchase materials (but to watch him purchase what materials? And when we refuse a certain spec and want a higher one?).

    We have spoken to a few builders now and none of them have been as competent as Manit. I am not sure any are as skilled as he is. Every builder is missing a particular trade in his group (be it electric or plumbing or whatever) whereas Manit can do the lot. Other builders are saying the build will last around 8–12 months, whereas Manit and his team reckon it will last no longer than 6 months. The other thing in Manit’s favour is that he is going to pay for certain materials up front and the payment schedule will always mean we pay for work after it has been done, not before. All the other builders we have spoken to have demanded payment up front for each stage of the contract, with no negotiation on this aspect.

    Without a formal written agreement, I have absolutely no protections whatsoever, which should be instant disqualification of Manit as a bidder for the job. The reason we have not completely sacked him just yet is due to the above considerations. Namely: are we actually going to find anybody better? We are still talking to other builders. I have not been emotional and pressed any nuclear button just yet. I am going to wait for a bit and see what happens. Ultimately, I may just have to sit down with Manit and explain that while I do want him to do the build, it would only be under certain conditions and reel them off for him. Take it or leave it.

    At present, the current agreement is that Manit will contact us when the rain has stopped for the dry season and arrange a first date for starting the build.

  9. #159
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    Quote Originally Posted by manc View Post
    At present, the current agreement is that Manit will contact us when the rain has stopped for the dry season and arrange a first date for starting the build.
    Probably he means he'll wait until the rice is harvested. Around here the harvest is 'all hands to the pump' and there will be no one doing anything but rice farming for a while.
    The rain might be nearly done, the rice has a way to go. Just a few very small areas have been cut in the last week. I was walking this morning and stopped to look at a field of black rice, it looked close to ready. The farmer was there and the gf asked him, he said that would probably be cut in December.
    Of course, here is rice central. Other areas might have builders who are really builders.

  10. #160
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    ^^ Manc, good update.

    Reading through you said your FiL seems satisfied, did you ask him to ask Manit what the VAT is for when you know no other builder adds tax?

    Its an awkward position with paucity of other builders who can provide the quality you are seeking. If you can resolve the VAT issue he sounds alright.

    I assume you can roughly work out his profit markup? I would sit down again with your Fil and Mrs Manc and discus the VAT with Manit and thrash it out. I'd also work out with him what his profit is (try at least) and see how this sits in context of the VAT, perhaps this is playing into his costing. Ultimately if you can workout his profit (whether VAT inc or ex) you can take a view on whether inc VAT (if that is what it is) sends his cut to an unacceptable (to you) level. Its the only way i can think of squaring this away.

    The BOM specifics also need nailing, it maybe that he's just not used to getting involved in this level of detail with the customer.

    Lastly you said he's built numerous other properties, can you visit a couple of them and ask the owner about materials and specifically the VAT issue? At least you'll get a second opinion.

  11. #161
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    Quote Originally Posted by Shutree View Post
    Probably he means he'll wait until the rice is harvested. Around here the harvest is 'all hands to the pump' and there will be no one doing anything but rice farming for a while.
    The rain might be nearly done, the rice has a way to go. Just a few very small areas have been cut in the last week. I was walking this morning and stopped to look at a field of black rice, it looked close to ready. The farmer was there and the gf asked him, he said that would probably be cut in December.
    Of course, here is rice central. Other areas might have builders who are really builders.
    Ha! Do you know, I have never heard any of the locals talk of rice farming around here – certainly not for use an excuse for being busy. We are fairly urban here, just outside Chonburi City. Although when making a trip eastwards out to, say, Phanat Nikhom, the rice fields become noticeable. And that isn't too far away.

  12. #162
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    Quote Originally Posted by malmomike77 View Post
    ^^ Manc, good update.

    Reading through you said your FiL seems satisfied, did you ask him to ask Manit what the VAT is for when you know no other builder adds tax?
    Thanks, Malmonmike.

    Right, so the FiL – who is formerly a builder, built the main house on the family land himself and used to work in the building planning section of the OrBorTor – says that it is up to the contractor whether or not they charge for VAT. So, the FiL was not struck by the abnormality of this. And at first, neither was I, to be honest.

    I presume some contractors might have it factored into the price already; some people charge VAT extra if a contract / purchase order is requested. If a company has an office that can be inspected by the tax authorities, then a record of contracts and purchase orders would have to be available at the office for inspection, so the authorities can satisfy themselves that annual accounts submitted by an accounts department / commissioned third-party accounting firm tallies with the duties paid. My company in the UK is subject to the same obligations prescribed by HMRC.

    For this reason, I cannot allow myself to be overly circumspect about protocol which is normal in the real world. “But no other contractors do this?” But does that make it correct? What if Manit is the only guy playing by the book?

    While researching about swimming pools on farang forums, I was struck by the difference in prices quoted by Western swimming pool building contractors and Thai outfits – like double the price. One poster representing one such Western swimming pool contractor was on a forum defending the high prices, and said something to the nature of “if you want a reliable, Western-qualified/trained, tax and VAT-paying business that honours its warranties, … then that’s the price you pay”. And it kind of makes sense.

    Another thing about VAT: I can understand the building contractor charging VAT on labour, but what about goods purchased that already have VAT paid? Maybe somebody can correct me, but that does not seem incorrect either. VAT is not technically a “final consumer” tax. VAT can be charged at every stage of production and distribution, or at every stage where an agent “adds value” (from where it gets its name). So, is it not normal that this can be charged?

    Quote Originally Posted by malmomike77 View Post
    Lastly you said he's built numerous other properties, can you visit a couple of them and ask the owner about materials and specifically the VAT issue? At least you'll get a second opinion
    Manit has built houses, but I think his house-building days were predominantly many years ago. His main work nowadays takes him to Rayong, where I think his company builds factories, halls, extensions and plant of various kinds. That being the case, he is a business-to-business building contractor, which might also explain his charging of VAT and this being standard practice for him.


    Quote Originally Posted by malmomike77 View Post
    Its an awkward position with paucity of other builders who can provide the quality you are seeking. If you can resolve the VAT issue he sounds alright.

    I assume you can roughly work out his profit markup? I would sit down again with your Fil and Mrs Manc and discus the VAT with Manit and thrash it out. I'd also work out with him what his profit is (try at least) and see how this sits in context of the VAT, perhaps this is playing into his costing. Ultimately if you can workout his profit (whether VAT inc or ex) you can take a view on whether inc VAT (if that is what it is) sends his cut to an unacceptable (to you) level. Its the only way i can think of squaring this away.

    The BOM specifics also need nailing, it maybe that he's just not used to getting involved in this level of detail with the customer.
    Thank you, this is excellent advice, and advice I am currently inclined to take. We are speaking to some more builders: one has given a ridiculous quote and did not convince me of his skills and has been binned; another is impressive and came for a second visit to get specifics to supply us with an accurate BoQ with full costings; and another guy with impressive credentials is being met tomorrow. There will probably be more in the pipeline.

    If we get somebody who ticks all the boxes, then we can go back to Manit with greater leverage and explain that his commissioning is subject to greater transparency on his part and the supplying of more specifics so we can see if, say, a 15% profit margin on the build is dramatically exceeded.

    I will feed back with more info once we have it.

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    Quote Originally Posted by manc View Post

    Another thing about VAT: I can understand the building contractor charging VAT on labour, but what about goods purchased that already have VAT paid? Maybe somebody can correct me, but that does not seem incorrect either. VAT is not technically a “final consumer” tax. VAT can be charged at every stage of production and distribution, or at every stage where an agent “adds value” (from where it gets its name). So, is it not normal that this can be charged?
    manc
    From my experience running a business in Australia where they charge GST which is basically the same as VAT it works like this as far as I know.
    You source inputs which you buy and most have a GST component. You turn these into a product to which you have added value above that of the inputs and when you sell it you are charged GST/VAT on the value of the finished product.

    The final GST/VAT you pay is, the GST on the final product minus the GST "credits" of the inputs.

    I do however think that a builder would include VAT in his final bid price without actually saying the cost is VAT.
    Then again there are countries and the US might be one I think where the price on the tag does not include taxes.

    In the end in your case I would be asking him for an estimation of his total final price inclusive of any VAT and then compare that with other builders final total price sometimes it is too easy to get stuck in the detail and not to see the final picture.

  14. #164
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    Quote Originally Posted by manc View Post
    So, is it not normal that this can be charged?
    Manc, he will pay VAT on his purchases (input tax) and charge them on his cost of sales (Labour, Material etc) his output tax, the differential will be what he is liable for to the Govt (i am not familiar with Thai rules here) - so yes if he's charging/paying VAT he'll add it to all his costs.

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    Quote Originally Posted by ootai View Post
    manc
    From my experience running a business in Australia where they charge GST which is basically the same as VAT it works like this as far as I know.
    You source inputs which you buy and most have a GST component. You turn these into a product to which you have added value above that of the inputs and when you sell it you are charged GST/VAT on the value of the finished product.

    The final GST/VAT you pay is, the GST on the final product minus the GST "credits" of the inputs.

    I do however think that a builder would include VAT in his final bid price without actually saying the cost is VAT.
    Then again there are countries and the US might be one I think where the price on the tag does not include taxes.

    In the end in your case I would be asking him for an estimation of his total final price inclusive of any VAT and then compare that with other builders final total price sometimes it is too easy to get stuck in the detail and not to see the final picture.
    Hi ootai, thanks for your considered response. Yes, I was just musing publicly about the details, but you are right: if Manit's price ends up more expensive than somebody else for an identical job – VAT or not – then he is more expensive, and the minutiae is academic.

  16. #166
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    Quote Originally Posted by malmomike77 View Post
    Manc, he will pay VAT on his purchases (input tax) and charge them on his cost of sales (Labour, Material etc) his output tax, the differential will be what he is liable for to the Govt (i am not familiar with Thai rules here) - so yes if he's charging/paying VAT he'll add it to all his costs.
    Thank you for the clarification, Malmonmike! Within the next 7 days or so I think the missus and I will be asking him for a meeting to express our feelings about this and to seek greater clarification.

  17. #167
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    Quote Originally Posted by manc View Post
    Within the next 7 days or so I think the missus and I will be asking him for a meeting to express our feelings about this and to seek greater clarification.
    I suppose ultimately it comes down to you and Mrs Manc feeling happy with the final cost and when all is said and done this is your future house, so perhaps paying a little extra to get a competent builder who is proven may be worth it - you just don't want to be left feeling like you have been ripped off. Hopefully the meeting will resolve this for you.

  18. #168
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    If Khun Manit is indeed more competent than the other builders, what are you more comfortable about overseeing ? His costs and financial arrangements, or the other builders and their construction abilities (or lack of) ? It sounds as if you have a business background so I guess you know more about finances than building techniques ?

  19. #169
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    I'll give K.Pot a call and see if he's free...

  20. #170
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    Seriously, we obviously discussed and agreed pricing with K.Pot and in all the dealings on our build, there were no 'surprise ' additions' for VAT (or anything else), and no...he did not try to add a farang bonus on, to split with PJ

    (he probably realised he would be waking up at the bottom of one of his concrete pours if he did!)

    He's straight down the line in every way. I'm sure there are other builders like that too. He can't be the only one.

  21. #171
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    Quote Originally Posted by mikenot View Post
    It sounds as if you have a business background so I guess you know more about finances than building techniques ?
    I'm merely suggesting that if his option is Manit on grounds of competence then he needs to be comfortable with the contract price and not be left with a feeling he's been taken for a ride. I am not builder but have renovated two houses in the past and built an extension on another.

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