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Considering a Construction Project in Nicaragua?

After over twenty years of construction projects in Nicaragua ranging from homes to hotels I have found that it can take time for new residents or investors to unlearn myths about tropical construction. The following is not an attempt to dissuade anyone from construction in Nicaragua. It is a great place to live, work and invest; now more than ever. The ground floor opportunities are here for those with the moxy to jump in. Plan with the realities in mind and don’t be distracted by common misconceptions like the following:

Labor is cheap. Everyone  has heard about people working for very little in Latin America. Wages are low in comparison to the developed world but the true cost of labor can actually be higher than expected if you take into account all the inputs. Minimum wages and required benefits add costs to legally compliant businesses. A hidden soft cost is supervision. Nicaraguan skilled labor is often well qualified in the techniques of building trades, but the overall quality of labor is poor. The Nicaraguan workforce typically has a general lack of work ethic, an inability to cope with contingencies, and a limited comprehension of plans  or written instructions. These limitations all mean that ownership must budget for more supervision cost than would normally be the case in the US or Europe.

There are no building codes. The fact is there are building codes and numerous environmental regulations in place that impact construction. Enforcement is very uneven across agencies and municipalities. It is best to work with a builder that has local relationships and can help  assess the best path through the labyrinth. It is still sometimes better to ask forgiveness than permission. Sometimes.

Construction is simple in the tropics. The postcard image of a thatch roof hut on a beach could lead one to believe that buildings are simple here. In fact, the tropics are a very demanding environment in which to build durable and comfortable structures. Earthquakes, termites  other insects, heat and humidity. We need to import many materials and be vigilant for the best prices for angle iron on a regular basis just to stay afloat in this rapidly changing enviroment. With such fragile infrastructure, and many other factors making construction challenging, its clear to see why that postcard is the way it is

You can’t  trust anyone. There are reliable, competent builders, engineers and tradesmen. Many of my subcontractors and professional contacts in Nicaragua I would say are equal to any of their peers in the USA. However, loyalty is often very personal so the best won’t work with just anyone, only those with whom they have a long term relationship.

Due diligence does not apply. This misconception would never be consciously voiced by any new investor in Nicaragua. But for whatever reason, I have seen several who see the developing world conditions as an excuse for not budgeting time and resources for the hard work of checking references, engineering studies, peer reviews, performance bonding, contract review and change order management. Many of these processes look a bit different here but if implemented properly will safeguard your investment.

Ing.Marcus Pearson

Project Developer

[email protected]

636 542 2616 USA

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