Brendon has over 18 years’ experience practicing in the field of environment and water resources. His vast experience in local and regional scale projects includes water balance modelling, hydrologic modelling, 1D/2D hydraulic modelling, flood mapping in GIS, conceptual / detailed design, environmental management and permitting, erosion and sediment control, water quality modelling, drainage assessment and … Continue reading PEAKURBAN welcomes Brendon Bolt to the Water & Environment Team.
Engineering value in a tough market – the site acquisition challenge
Posted at 6 Jun 17, 13:15
By Andrew Ngo, Principal Engineer at PEAKURBAN
2017 so far has been an intensely competitive year when it comes to buying development sites. Despite this, over the last couple of months we’ve helped four clients successfully acquire new projects – three residential development sites (1,830 lots) and one retirement project (145 sites). So, what have we learnt from our experiences?
No easy sites left
We agree with many of our clients that there are no easy sites left in Southeast Queensland and that it’s becoming increasingly difficult to find opportunities that work. There’s not much land that isn’t already tied up; sites either have significant infrastructure servicing constraints (cost and time) or the high cost to deliver them means they can’t get to the vendors purchase price and the deal falls over.
To discount a site because it’s ‘too hard’ is easy enough to do however that won’t help anyone. How these challenges are tackled is what counts and in our experience, nothing short of a heavy ‘solutions focused’ approach is essential in getting them over the line.
Whist no means exhaustive, we’ve found that a few key areas have been important to focus on in extracting the value and assist in getting the deal over the line.
1) Efficient layout. Maximising Developable Area:
In our experience, the most effective way to add value to a project is to start with an efficient layout and find opportunities to gain developable area for increased revenue:
- Limit land take by optimising the road layout i.e. minimise cul-de-sacs, one sided roads, and four way intersections;
- Reduce verge width dedications where roads front adjoining land or open spaces/parks;
- Optimise areas dedicated for open space and stormwater management as well as co-locating services within parks and drainage reserves;
- On flat sites, consider streetscape biopods rather than end of line WSUD basins to reduce land take and minimise earthworks costs (lower fill volumes);
- Ensure that premium saleable land is not under-utilised (take advantage of “premium site features” to help with higher revenues); and
- Ensure that staging reflects the most efficient delivery strategy and minimises upfront cash requirements.
2) Negotiating with the Authorities to agree what is trunk/offsettable works
Thoroughly understanding the relationship between infrastructure charges, offsets and works can significantly improve project cashflow, development profit and IRR.
- Assess infrastructure requirements and negotiate a performance outcome vs ultimate upfront spend i.e. defer upfront capital costs and stage the infrastructure based on agreed (but still creditable standards;
- Optimise infrastructure costs by understanding the relevant policies and capturing all available offsets including the ability to enter an IA and cross credit between networks;
- Understand conversion applications and how these are used to convert non-trunk infrastructure to trunk infrastructure and be eligible for an offset;
- Negotiate the scope and extent of trunk works to the amount of charges payable (so you avoid refunds/or being out of pocket); and
- Negotiate to bond infrastructure charges (using insurance bonds) to better cashflow high cost trunk infrastructure items.
3) Reducing Construction Costs
Understanding site opportunities and constraints can contribute to significantly reduced construction costs.
- Co-locate services where possible so that trenching and backfill costs are minimised;
- Orientate roads perpendicular to contours so that they grade with natural topography;
- Orientate lots with their side boundaries parallel to contours to reduce earthworks and retaining costs (use steps between lots to take the fall);
- Where practical, shorten the path of stormwater and sewer pipes to the outlet locations to reduce earthwork and pipe costs;
- Locate parks in lower areas of sites to reduce the volume of earthworks required (lower fill levels) due to a lower immunity;
- Look for opportunities to share costs with adjoining development where possible;
- Orientate roads and bridges perpendicular to waterways and creeks to reduce length and costs; and
- Develop an earthworks solution that is fit for the site. It may be more cost effective to ‘table top’ steep sites and move more dirt than it is to bench and retain. The geotechnical profile is key.
A different perspective on how a site can work, or how additional value can be created, can provide the edge needed. You only need to be willing to pay $1 more than your competitors to secure a site. The trick is to have the confidence to want to.
As mentioned, the above list is by no means exhaustive but just a few areas that we’ve found to be very effective in helping our clients acquire new sites and project.
PEAKURBAN expands into Water and Environment!
We are delighted to announce that Kelly McKendry has joined PEAKURBAN as Director of our newly created Water and Environment Team! Kelly has over 18 years’ experience in stormwater quality and quantity management as well as flood modelling. Notably, Kelly recently managed her own consultancy and is highly regarded in the industry having completed many … Continue reading PEAKURBAN expands into Water and Environment!
Getting Those Credits You’re Entitled to: Converting Non-Trunk Infrastructure to Trunk Infrastructure
By Andrew Ngo We previously wrote about the conversion application process and how to obtain the infrastructure credits that you are entitled to on your projects. Our previous article can be found in the link below. https://www.peakurban.com.au/conversion-applications-get-the-credits-you-are-entitled-to/ To recap, a conversion application is an application that developers can make under the Planning Act 2016 (Section … Continue reading Getting Those Credits You’re Entitled to: Converting Non-Trunk Infrastructure to Trunk Infrastructure
Unlocking Land and Delivering Affordability
By Brent Thomas (Published in UDIA Qld Establish Magazine #112 – Spring 2019) In all growth corridors across South East Queensland (SEQ), it is widely known that there are major land holdings in the urban footprint (UF) that have been identified as suitable for urban development, but have been locked up due to any range … Continue reading Unlocking Land and Delivering Affordability
What’s the cost per lot across SEQ Growth Corridors
By Troy Schultz We know that developers need to act quickly to secure development sites. Quite often a quick, informed assessment of a site using typical revenue and cost data is sufficient to enable a site value to be ascertained and a high level offer put in front of the vendor. To assist our clients, … Continue reading What’s the cost per lot across SEQ Growth Corridors
Updated EDQ Road Standards – What’s the impact on your project?
EDQ have released a new version of their ‘Street and Movement Network’ guideline. The new guideline can be accessed here. There are some significant changes included in the latest revision which may adversely affect development yield and cost. Some more notable changes include: Road reserve widths and pavement widths have changed for all road types, … Continue reading Updated EDQ Road Standards – What’s the impact on your project?
Launching PEAK Ai – Improving Project Design, Planning and Execution
The engineering and construction industry is at the cusp of a new era, with new applications and tools that change how companies design, plan and execute projects. At PEAKURBAN we are always trying to maximise the value and improve the level of service we offer to our clients. Quite often this involves developing smarter infrastructure … Continue reading Launching PEAK Ai – Improving Project Design, Planning and Execution
Changes to the Security of Payment Act
By Troy Schultz, Principal Engineer, PEAKURBAN At PEAKURAN, we aim to stay on top of key changes so that we are equipped to continue protecting our client’s interests. You may be aware that the Building Industry Fairness Act 2017 (Qld) (BIFA) commenced on 17 December 2018. This replaces the Building and Construction Industry Payment Act … Continue reading Changes to the Security of Payment Act
Managing Costs and Value in a Slower Market
By Andrew Ngo, Principal Engineer, PEAKURBAN There’s a lot of media articles about slower sales and a tighter credit market across the country, especially in Sydney and Melbourne. Having been through a couple of ‘challenging’ times previously, this inevitably affects market confidence with developers attentions more sharply focused on finding cost reductions and optimising value … Continue reading Managing Costs and Value in a Slower Market
PEAKURBAN Turns 2
It’s hard to believe that it’s been 2 years since we opened the doors at PEAKURBAN. You never really know how things will turn out but the journey thus far has been both exciting and fulfilling. We started PEAKURBAN believing that the old way of doing business (at least in engineering circles) was fast disappearing … Continue reading PEAKURBAN Turns 2
PEAKURBAN Planning and Survey
We are delighted to welcome Tim Connolly (Director – Planning) and Nathan Wilson (Principal Planner) to the PEAKURBAN Planning and Survey team. Tim has over 30 years’ experience in statutory and strategic planning and has worked on many large and complex projects including Warner Lakes, Riverbank, Riverparks, Park Vista, Capestone, Brentwood, The Meadows and Ridgeview. … Continue reading PEAKURBAN Planning and Survey
How to Get Your Survey Plans Sealed Earlier
A key milestone for any urban development project is plan sealing, that critical event that facilitates registration of titles and settlements, and the trigger for project revenue to be realised. In talking with several developers, they describe an increasingly arduous and frustrating process of back and forward, multiple inspections, delays and inefficiencies. Whilst there’s always … Continue reading How to Get Your Survey Plans Sealed Earlier
Can’t get stormwater discharge consent? You may not need it.
Whether or not a Legal Point of Discharge (LPOD) exists has been for a long time, a very grey and murky area. The consequences of this ambiguity have meant stalled projects, refusal of development applications, cost over-runs and quarantined development sites. We have heard of some developers even needing to store or pump out stormwater! … Continue reading Can’t get stormwater discharge consent? You may not need it.
Conversion Applications – Get the credits you are entitled to.
In talking with several developers recently, it seems that the issues around trunk and non-trunk infrastructure and what’s creditable v. non creditable is alive and well. A few developers that we’ve spoken with are quite frustrated in having received development approvals imposing conditions that require them to deliver (without credits) what they believe to be … Continue reading Conversion Applications – Get the credits you are entitled to.
Infrastructure Agreements: Negotiating the Right Deal.
By Andrew Hunter, Civil Engineer at PEAKURBAN Negotiating the right deal in an Infrastructure Agreement (IA) is critical in ensuring the commercial viability of a project. On too many occasions we have seen IA’s that are one sided, impose excessive infrastructure standards and as a consequence result in works or financial contributions that stall projects … Continue reading Infrastructure Agreements: Negotiating the Right Deal.
Is Poor Contract Administration Costing You Money?
By Ryan Ashworth, Civil Engineer at PEAKURBAN Poor contract administration can lead to lower development profits, protracted disputes, missed settlements and sub-standard infrastructure. Whether it’s a lack of site experience, a poorly constructed contract or just a lack of understanding of what’s required, it seems to be a common problem we hear throughout the development … Continue reading Is Poor Contract Administration Costing You Money?
Engineering value in a tough market – the site acquisition challenge
By Andrew Ngo, Principal Engineer at PEAKURBAN 2017 so far has been an intensely competitive year when it comes to buying development sites. Despite this, over the last couple of months we’ve helped four clients successfully acquire new projects – three residential development sites (1,830 lots) and one retirement project (145 sites). So, what have … Continue reading Engineering value in a tough market – the site acquisition challenge
Giving up too much land?
A number of clients have come to us recently raising concerns about losing too much developable land, due to easements and wider infrastructure corridors being imposed by Authorities. The reason, they advise, is for future maintenance requirements. What many clients may not be aware of is the maintenance method of “pipe bursting” which in many cases, means the … Continue reading Giving up too much land?