Successful developers invest time, effort and money to understand the fundamentals of the business; Processes, People, Product and (Market) Place. These fundamentals form a solid foundation in which to build a low risk, high reward property development business that can have a positive impact on many.
In last month’s article we went through the basics of funding structure, cash flow and raising finance for your projects. This month we move on to the best part of development (in our opinion); the construction phase.
For many the construction phase is the most exciting part of the process: seeing dreams become reality. During this section, we will be running through the construction phases, procurement and management of the process, and the benefits of new-build development over conversions. There are three phases to the construction process:
The construction process starts way before you have workers on site to break ground for the first time. Pre-construction is arguably the most important construction phase as the better prepared you are, the more chance you have of bringing the project in on time and on budget. Activities in pre-construction include design team management, utility management, consents and permissions, scope of works and pricing, tendering and contractor selection, pre-contract administration and programming.
Pre-construction is usually a role taken on by a project manager (PM). Utility management can have a domino effect on your timeframes. By not engaging with utility providers early enough in the process, you may have to put other tasks on hold, causing early delays. Utilities can also hit your pocket hard if you haven’t allowed enough money for them in your financial appraisal. To mitigate as much risk as possible, find out the providers in the area and engage with them early in the process to obtain information and budgets.