A safe villa construction contract in Bali fixes five things in writing: the scope (drawings plus a priced bill of quantities), a payment schedule tied to completed and inspected work, a retention of about 5% held until defects are fixed, a written warranty with named periods, and delay penalties with a cap. If any of these is missing, the contract protects the builder, not you.
We have been called in to finish villas where a previous builder walked away with the deposit, and almost every one of those projects had the same weak contract. This guide is the checklist we would use if we were the owner — clause by clause, with an example payment schedule and the red flags that should stop you signing.
What a villa construction contract must contain
| Clause | What good looks like | Red flag |
|---|---|---|
| Parties | A registered construction company (NIB for building construction, SBU certificate) signs, with the director named | A trading name, or an individual foreman (mandor) signs |
| Scope | The drawing set is listed by sheet and revision number | “Villa as discussed” or a render as the only reference |
| Bill of quantities | Line items with quantities, unit prices and finish allowances | One lump-sum figure |
| Programme | A milestone chart attached as an appendix | “About eight months” |
| Payments | Stages tied to completed, inspected work | Calendar dates or 50% before ground is broken |
| Retention | 5% held until the defects period ends | No retention |
| Variations | Written change orders, priced and signed before the work | Verbal changes billed at the end |
| Warranty | Named periods per element, response time, exclusions | “Guaranteed quality” with no periods |
| Delays | Daily penalty with a cap; excused delays listed | No penalty, or penalties only for the owner |
| Permits | Who applies for the PBG and SLF, and in whose name | “Owner's responsibility” in the small print |
| Language | Bilingual Indonesian–English | English only |
A contract with all of these clauses is longer than the one-page quotes common in Bali, and it should be. The bill of quantities and the programme are appendices that turn a promise into something you can measure every week.
A payment schedule tied to progress
Pay for work that exists. Each payment should follow a milestone that is completed and verified — by you on a site visit, by a video call from the site, or by an independent inspector — never a date on the calendar. An example schedule for a pool villa:
| Milestone (verified on site) | Payment |
|---|---|
| Contract signed, site mobilised | 10% |
| Foundations and ground slab complete | 15% |
| Columns, beams and upper slab complete | 20% |
| Roof on, walls closed | 15% |
| MEP rough-in done, waterproofing flood-tested, pool shell cast | 15% |
| Finishes, joinery and pool commissioned | 15% |
| Handover with a cleared, signed snag list | 5% |
| Retention, released at the end of the defects period | 5% |
This is an illustration of the principle, not a fixed rule — the split shifts with the villa and the site. What should not change: the first payment covers mobilisation rather than half the villa, the last payments follow the snag list and the defects period, and every stage has a written definition of “complete”. If a builder wants 50% before breaking ground, walk away.
Retention: 5% held until defects are fixed
Retention is the share of the contract — typically 5% — that the owner keeps until the defects period ends, usually six to twelve months after handover. It can be deducted from each progress payment or held from the final invoice. Its purpose is simple: the first rainy season is when leaks, cracks and drainage problems show up, and retention gives the builder a financial reason to come back and fix them. A contractor who refuses any retention is telling you how they plan to handle defects.
Warranty: what should be written down
“Guaranteed quality” is not a warranty. A real warranty names what is covered, for how long, how fast the builder responds and what is excluded. Ours, printed in the construction contract, covers:
- Structure — 5 years: foundations, columns, beams and slabs.
- Roof leaks, waterproofing and workmanship — 12 months: the defects period, with repairs at our cost.
- Pool and MEP equipment — manufacturer terms: warranty cards registered in the owner's name.
- Response: within one working day through the same WhatsApp group used during the build.
- Exclusions listed in the contract: fair wear, unmaintained equipment, changes made by others.
How the handover and warranty work in practice is on our handover and warranty page.
Delay penalties and extensions of time
A programme without consequences is a wish. A fair contract sets a daily penalty for late completion with a cap — a common benchmark in Indonesian construction contracts is one per mille of the contract value per day, capped at 5% — and lists the delays that do not count against the builder: changes you request, your late decisions or payments, permit delays the builder did not cause, and genuine force majeure. It should also say how the programme is updated when one of those happens, so the finish date is always a known figure. Realistic durations for each phase are in how long it takes to build a villa in Bali.
Locking the BoQ and handling variations
The bill of quantities is what makes the price fixed. Every material and quantity is listed and priced before work starts, and finishes the owner has not chosen yet are shown as allowances — a figure per square metre of tile or per bathroom set — so you can see what “standard” actually buys. Changes after signing go through a written change order: description, price, effect on the programme, signed before the work. Unforeseen ground conditions deserve their own clause: how they are measured, priced and approved. Run your own first estimate in the villa construction cost calculator so you know whether a quote is in a realistic range before you compare line items.
Red flags in a Bali villa contract
- A large deposit before any work — the classic Bali story is a big deposit, some site clearing, then excuses until the money is gone.
- A one-page quote or a single lump sum with no bill of quantities.
- Finish allowances so low that every real tile, tap and door becomes an extra.
- No programme, or a programme that is not part of the contract.
- Payments tied to dates instead of completed work.
- No retention and no defects period.
- A warranty described as “full guarantee” without periods or exclusions.
- Permits left to the owner, or construction starting before the PBG is approved.
- A contract only in English with an Indonesian company.
- A contractor who cannot show a live site or put you on a call with its site engineer.
Where the contract fits in the whole build
The contract is step eight of twelve — after the land structure, zoning, due diligence, design and PBG application. The full order is in how to build a villa in Bali: 12 steps. Under our turnkey villa construction contract, design, permits, construction and handover sit in one agreement with one BoQ, one programme and one warranty.