Kenyans in the diaspora are a hardworking lot. We’ll give them that. They’ve literally made the country the third-highest recipient of diaspora remittances in Africa. And yes, a huge chunk of that money comes from guys who are building from the Kenyan diaspora.
Sadly, however, it doesn’t always end well for the diasporans who choose to invest in Kenya’s real estate.
A quick scan through the Kenya diaspora headlines reveals quite a number of sad tales about hard-working diasporans who were conned by their spouses, relatives, and friends back home.
Have a look at this 2020 article, for instance. It sheds light on the increasing cases of Kenya diaspora real estate investors being duped by unscrupulous developers.
Quite unfortunate, I must admit. But, don’t let it discourage you from pursuing your construction project. You can successfully build from the Kenyan diaspora if you follow the right channels.
As such, I invite you to tag along as we explore all the tricks of constructing from the diaspora, as well as the common mistakes you should avoid.
The Don’ts of Building From The Kenyan Diaspora
- Do not have relatives managing your construction project. Sorry to say, but the reasons are obvious.
- Do not proceed with a design and build approach. Having the contractor design and build your project means you’ll be leaving them to quality control themselves. A bit too risky for a diasporan, don’t you think?
- Do not invest in off-plan real estate projects. Developers will try to convince you through their portfolios and low market rates – but don’t fall for it. While we admit that Kenya has a couple of honest developers, the huge risk you’d be taking just doesn’t make this a worthwhile option. Besides, let’s face it – the Kenyan law is a bit lenient on unscrupulous developers.
- Do not proceed without the relevant insurance covers and bonds. Every single consultant you engage during construction should give your lawyer a copy of their professional indemnity insurance policies. The same applies to your contractor – they should duly provide assurance through a Performance Bond, as well as protect the project through relevant insurance covers (including Contractor’s All-Risk Insurance and Defects Liability Insurance)
- Do not make advance payments to your contractors. You should, instead, adopt a form of contract that makes systematic payments via certificates upon the completion of each stage. Check out our article on Contractors Certificates in Kenya for more about that.
- While you can purchase construction materials and then engage a labour contractor, this is not the best approach for someone who’s trying to build from the Kenyan diaspora. You should, instead, save yourself the trouble by applying JBCC’s standard construction contract. That means the contractor will also supply the construction materials based on your architect’s specifications – and then you, on the other hand, will remit payments after material testing and installation.
That said, let’s now explore the 10 steps to realizing your Kenyan construction project from the diaspora…
The 10 Steps To Building From The Kenyan Diaspora
Step 1: Get Yourself a Kenyan Advocate
Before you even begin designing the proposed building, you should appoint a lawyer based in Kenya. Construction is an intricate process that involves many legal procedures and contracts. As such, your advocate’s job will be advising you on the legal matters, plus notarizing all the contract agreements that you sign with consultants and contractors.
Step 2: Contract a Project Manager / Lead Consultant
Once you appoint a lawyer, you should go ahead and get yourself a fully-qualified construction project manager to act as the lead consultant of the project. This can be an architect, engineer, or quantity surveyor who specializes in project management, and understands not only the technical aspects of construction, but also the accompanying legal procedures.
You can think of the project manager as your principal representative in the project. They’ll advise you on all the technical matters, as well as prepare contract documents, vet contractors and sub-contractors, administer contracts, coordinate site meetings, conduct material tests, certify payment requests, liaise with design consultants, supervise the site works, plus issue detailed progress reports.
In short, we call this quality assurance and cost control.
(Here’s the comprehensive guide into the roles of construction project managers in Kenya)
Step 3: Conduct a Feasibility Study
Ok, not so fast. It’s not yet time to design.
At this point, you probably have a rough idea of what you need – but then again – you’re not quite sure of what to expect in the end.
Now, that’s where a feasibility study comes in, particularly if you’re an aspiring Kenya diaspora real estate investor. Commissioning your project manager to conduct a comprehensive feasibility study will give you a good idea of the amount of money you’ll be putting into the project, the corresponding technical and legal requirements, as well as the projected returns you should expect once construction is done (considering all the market forces).
Step 4: Draft a Project Plan / Project Brief for Building from the Kenyan Diaspora
If the project is viable, you can go ahead and ask your project manager to come up with a comprehensive project plan and project brief.
A project plan highlights all the project objectives and goals, then proceeds to provide a breakdown of the accompanying tasks, resources, and timelines. This is pretty much what you’ll use to check on your construction project along the way.
The project brief, on the other hand, provides a summary of all your requirements, and gives the project architect and engineers a design roadmap.
If, for instance, your feasibility study happens to establish that three-bedroomed units are the best performers in the area, the project brief will provide additional details on the precise type of units you’re looking to construct.
Step 5: Appoint Design Consultants and Proceed with the Design
With a well-developed project plan and project brief, you can now appoint design consultants to come up with your building’s drawings and technical specifications. This is the point you engage Kenyan architects, engineers, quantity surveyors, and any other design professional that you might need.
Then using the project brief as a guideline, your architect will prepare an outline design of the entire project, which will subsequently be relayed to you for scrutiny and approval. Once you give your input, the architect will come up with a corresponding scheme design – which will then be shared with your engineers to offer direction on the design of your building’s structural, mechanical, and electrical plans.
(Here’s a breakdown of all the stages of design plus their respective costs.)
Additionally, your architect and structural engineers will submit their scheme designs to the area’s local authorities for building plan approval. This should further be accompanied by NEMA construction approvals, which will be handled by your environmental consultant.
In the meantime, your architect and engineers can proceed to the detailed design stage, within which they’ll develop all the required working drawings and technical specifications. These will then be shared with your quantity surveyor for the drafting of priced and unpriced bills of quantities.
Step 6: Invite Contractors to Tender
Once the design process is done, your project manager can go ahead and invite qualified contractors to tender for the job.
Each tenderer should get copies of:
- The scheme designs.
- Unpriced bill of quantities.
The contractors should then study the designs and fill in their respective unpriced BQ copies with their rates.
But, get this. When they finally submit their bids, don’t be quick to award the lowest bidder. You should, instead, evaluate even their technical qualifications before awarding the contract. Your project manager will help you with that.
(Here’s a more comprehensive breakdown of how to choose the best Kenyan contractors).
Step 7: Appoint a Clerk of Works
While you continue reviewing the prospective contractors and subcontractors, you might want to appoint a clerk of works to act as your full-time site agent.
And what does that mean?
Well, in essence, contractors usually hire construction foremen to rally their workers on site. You, on the other hand, get to appoint a clerk of works to keep tabs on everything they do. They’ll work in tandem with your project manager to ensure the program is followed accordingly, without compromising the quality of the construction project.
Step 8: Commission the Construction Project
After choosing an ideal contractor and appointing a clerk of works, you can finally start building from the Kenyan diaspora.
First things first, though. Before you even commission the construction project, you should sign a well-detailed construction contract with your contractor. That’ll immediately give the possession of the site to the contractor, who’ll then be required to commence with the preliminary works – such as hoarding and construction of the basic site amenities.
What’s more, your contractor should provide the following:
- A performance bond, with a surety of about 10% of the contract value.
- Contractors All Risks Insurance (CARIC) that covers the project against all possible forms of risks and liabilities.
- Their construction works programme, outlining the dates and sequence of all the activities.
Step 9: Pay the Contractor via Certificates
If you choose to use the Standard Form of Contract while building from the Kenyan diaspora, you won’t be required to purchase materials or make advance payments. Instead, the contractor and subcontractors will handle everything.
They’ll supply materials after samples have been approved by the project manager + architect + engineers, and then proceed with the construction works as detailed in the contract drawings.
In the meantime, you’ll be paying your contractor and subcontractors in stages after the works and materials have been appraised by the quantity surveyor, and reviewed by the project manager + architect + engineers.
The project manager will issue the contractor with a payment certificate at each stage, which will then be presented to you for payment processing.
The four primary types of certificates you should expect are:
- Interim Certificates.
- Certificate of Practical Completion.
- Certificate of Making Good Defects.
- Final Certificate.
You can read more about all the construction certificates plus the applicable amounts here.
Step 10: Get all the Required Documents during Project Handover
At the point of practical completion, your project manager should follow up to ensure that you get:
- Insurance covers for any subsequent latent defects from the contractor, sub-contractors, and engaged professionals (including the architect, engineers, and quantity surveyor).
- A building owners’ manual.
- A building user’s guide.
- Equipment test certificates.
- Up-to-date testing and commissioning data.
- All as-built drawings.
- A defects mitigation plan.
Final Word – Building from the Kenyan Diaspora
And that’s all it takes to build from the Kenyan diaspora.
It’s worth noting, though, that the project doesn’t quite end at the point of handover. You’ll only pay the contractor half of the retention fund (as stated in the certificate of practical completion), and then withhold the rest until the end of the defects liability period.
Otherwise, we wish you all the best in building from the Kenyan diaspora. And, as always, feel free to get in touch with us for additional guidance, as well as project management and contract administration services.