Only 1 in 10 contractors is licensed. What does that mean for your home?

You've spent years earning, saving, and planning for your dream home. Now comes the next big decision: finding someone you can trust to build it.

Before a Filipino family signs a construction contract, though, there is one question that should come before all the others: What actually makes a contractor credible? For most families, the answer comes down to experience, a good reputation, and, ideally, a license.

The numbers, however, paint a different picture. According to the NCR Construction Industry Tripartite Council, less than 10 percent of contractors in the Philippines are licensed by the Philippine Contractors Accreditation Board (PCAB).

More than nine out of every 10 contractors are unlicensed in the Philippines. Statistically, if you hire a contractor randomly, there is a better than 90 percent chance they do not hold a PCAB license, and therefore have not gone through PCAB's licensing and accreditation process.

Not enough to choose from

When PCAB moved its licensing online in June 2020, then-chairman Pericles Dakay said the change would let around 15,000 contractors renew before the deadline. Annual demand at the time ran to roughly 58,000 government infrastructure contracts and 75,000 private construction contracts, about 133,000 in total.

To meet that demand, the Philippine Constructors Association said the country needed at least 20,000 licensed contractors. And yet, not every licensed firm is available to a family building a house. The same pool covers the contractors working on billion-peso infrastructure projects, high-rises, and major commercial developments.

"The demand for residential construction grows year after year while the number of properly licensed contractors has barely moved," said Ar. Alexus Lopez, Founding Vault Architect at BuildProof PH. "Families looking to build are competing for a very limited pool of professionals, and most do not realize how limited that pool is."

Fake credentials are a related risk. Republic Act No. 11711, signed in 2022, amended the Contractors' License Law and set penalties for presenting or filing the license certificate of another person, giving false evidence to PCAB, impersonating a licensed contractor, or using an expired or revoked license.

Under the original 1965 law, these offenses carried penalties of just P500 to P5,000. Today, they can mean fines of P500,000 to P1 million and one to six years in prison.

The familiarity trap

One publicly documented case shows how easily familiarity can take the place of verification.

An OFW working as an English teacher in Japan entrusted his home construction project to an engineer connected to his family. The engineer was a friend of his siblings, and the families were close. His parents had even been godparents at the engineer's wedding.

The engineer submitted a Bill of Quantities with inflated square-meter measurements and substituted specified materials without consultation. By the time the homeowner began cross-checking the figures from Japan, 70 percent of the project budget had already been transferred.

The people we trust most are often the people we are least likely to verify, and that is precisely where the risk lies.

A trustworthy contractor, then, is not someone you never have to question but someone who is more than willing to give you clarity. They should be able to explain their costs, justify their quantities, document their progress, and account for changes along the way.

A license is a starting point, not a finish line

Even finding a licensed contractor does not guarantee the outcome you are hoping for. A PCAB license confirms that a contractor has met minimum requirements for financial capacity, equipment, and technical staff. It does not tell you how they have performed on past projects or how they will handle yours.

That is why verification needs to go beyond the license: reviewing completed projects, speaking directly with previous homeowners, having the work independently inspected, and getting a qualified professional to review the Bill of Quantities before major payments are made.

A license matters, but it is only one piece of the puzzle. With or without one, homeowners should have enough information to judge the contractor and the work for themselves.

"Filipino families are among the hardest-working, most resourceful people in the world," said Lopez. "They deserve a construction industry that matches that dedication. Our countrymen deserve better than those odds."