By Andrew Ngo, Principal Engineer, PEAKURBAN A hot topic in November last year was the outlook for Queensland civil construction rates in 2021. This remains a hot topic so almost 8 months on we take the opportunity to revisit some of the predictions and look at what the rest of 2021 might hold. The original … Continue reading ‘Where are Greenfield Development Costs in QLD heading?
Infrastructure Agreements: Negotiating the Right Deal.
Posted at 11 Nov 17, 10:57
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 for long periods of time. The last few IA’s we have seen are unnecessarily complex and in our view, if executed as proposed would be an implementation nightmare.
So why do IA’s need to be so complex? We don’t think they need to be and have a few key principles that we found useful in simplifying them.
- Experience Matters: it’s essential that you have an experienced team undertaking the negotiations. Limit the number of people as too many at the table usually means more time and a “process” focus as opposed to an “outcomes” one. Assembling an experienced team means a greater pool of knowledge from which to draw from. Understanding what’s worked and what hasn’t in previous deals is critical in overcoming impasses and reaching agreement, and to keep the focus firmly on the outcomes. Breaking the negotiations down “network by network” helps to isolate and resolve key issues.
- Set the Ground Rules Upfront: right at the outset be very clear about what a successful negotiation looks like. Is there a maximum contribution or charge that renders the project unviable? What’s acceptable from a development timing perspective? Establish the rules that define trunk and non-trunk infrastructure. Is trunk infrastructure to be based on size and function? Or size only? Agreeing the principles of an infrastructure agreement early prevents negotiations becoming derailed.
- Establish the Desired Standards of Service: too often agreeing the desired standard of service is neglected or left too late in the negotiation and “gold plated” infrastructure / solutions become the standard. Gold plating results in excessive costs. For example, does a collector road external to the site and performing a movement function, require parking lanes or a 2.5m wide footpath on both sides of the road? Why not use land more efficiently and negotiate to have WSUD form a key part of the open space strategy? Seek to negotiate ‘fit for purpose’ infrastructure solutions commensurate with the underlying economics of the project (particularly with respect to the sale price of the land!).
- Adopt an Iterative Process: the most successful IA outcomes usually involve an iterative process. There are often several infrastructure solutions available for each of the key infrastructure networks (roads, drainage, water and sewerage) and it’s important that options are developed, costed and refined to achieve an acceptable ‘value for money’ solution. It’s important to properly plan, design and cost all trunk infrastructure items so that risk can be quantified and minimised and costs not artificially inflated through the adoption of high contingencies and other excessive risk allowances.
- Consider Land Fragmentation and Multiple Owners: the best technical solutions mean nothing if you are delayed or prevented from constructing infrastructure by not obtaining right of access consent from downstream owners. When there are multiple land owners and where practical, develop infrastructure solutions that locate key infrastructure so that each site can be delivered separately. Where this isn’t possible and especially if the site forms part of a larger structure plan area, ensure that appropriate provisions are included in the IA that allows for right of access through downstream properties.
- Focus on Ease of Implementation: Simplicity should be a key design principle. Introduce regular “simplicity” checks for readability and usability. You shouldn’t need 5 planners, 4 engineers or a Doctorate of Law to implement an IA. If you do, it’s way too complex. In our view, implementing an IA shouldn’t revolve around the ongoing involvement of 1 or 2 people. Administering an IA should be possible even when those people who developed the framework and agreed to it are no longer around.
The above are a few key principles that we’ve found assist in IA negotiations. Get the right team, agree the rules up front, establish the objectives and standards of service then employ an iterative process to work towards what was agreed.
This should help in simplifying IAs and not wasting many months of negotiation only to arrive at an overly complex, unviable commercial agreement.
How Best to Manage Drainage Authority Approval Times
By James Barker – Manager Water & Environment PEAKURBAN VIC Drainage solutions are a critical part of the land development process, requiring approvals from the planning phase of the project, through to detailed design and construction. Any delays across these phases can affect the overall timeline of the project. Authorities have statutory requirements to meet … Continue reading How Best to Manage Drainage Authority Approval Times
The Outlook for Victorian Civil Construction Costs in 2021
By Chris Gallaugher, Senior Engineer, PEAKURBAN VIC It is no secret that the combination of government grants, prolonged record low interest rate and COVID-19 induced lockdowns have spurred major activity in greenfield subdivision works. But what does this mean for Victorian civil construction costs and developers feasibilities? PEAKURBAN reviewed our tenders and canvassed construction and … Continue reading The Outlook for Victorian Civil Construction Costs in 2021
LD Eng and PEAKURBAN have merged!
We are very pleased to announce that effective 1 January 2021, LD Eng Pty Ltd and PEAKURBAN Pty Ltd have merged. Even though we held a series of intense workshops and engaged world leading marketing consultants, we still failed to come up with a name – so we flipped a coin…….it’s going to be PEAKURBAN. … Continue reading LD Eng and PEAKURBAN have merged!
How Smart Stormwater Solutions Can Pay Off in a Big Way
By Kelly McKendry -Director of Water & Environment We often have clients approach us seeking guidance around stormwater management. Quite often the key focus is on the size of stormwater basins. Unfortunately, we see many examples of stormwater reports that simply aim to comply with the standard and comprise of pages and pages of technical … Continue reading How Smart Stormwater Solutions Can Pay Off in a Big Way
What’s the Outlook for Civil Construction Costs in 2021?
By Andrew Ngo, Principal Engineer, PEAKURBAN Several clients have recently approached us seeking our views on the outlook for civil construction rates across Southeast Queensland. Whilst we are in a good position to share our observations of the market, we also thought it was worthwhile reaching out to several reputable civil contractors for their input. … Continue reading What’s the Outlook for Civil Construction Costs in 2021?
Tips for Developing Steep and Sloping Land
By Troy Schultz (Principal Engineer) & Kerry Saron (Senior Urban Designer) It’s hard to believe that there was once a time in SEQ when developers could readily buy flat and serviceable land. Now we see that development sites tend to be steeper and harder to service. Despite these sites being more challenging, with some careful … Continue reading Tips for Developing Steep and Sloping Land
Plan Sealing – Tips and Tricks
By Ryan Ashworth The Federal Government’s Homebuilder stimulus package has really ramped up projects with many due for completion late this year or early next year. This means a heap more plan sealing requests over the coming months, placing enormous pressure on Authorities and plan sealing timeframes. In a previous article, we looked at how … Continue reading Plan Sealing – Tips and Tricks
Different Sites Require Different Stormwater Solutions
By Kelly McKendry, Director – Water & Environment, PEAKURBAN It is par for the course that when preparing a Development Application in Queensland a Stormwater Management Plan (SMP or SWMP) is generally required. However, a SWMP shouldn’t give you the same solution for every site. For instance, stormwater detention may not be required for all … Continue reading Different Sites Require Different Stormwater Solutions
Where are the next Masterplanned Community projects going to be?
By Troy Schultz, Principal Engineer, PEAKURBAN In recent years I’ve noticed an increasing trend of developer’s seeking acquisition sites with minimal planning risk (inside urban footprint, appropriately zoned and preferably with an approval in place). Who could blame them given the political and regulatory minefield they are facing these days. More and more clients tell … Continue reading Where are the next Masterplanned Community projects going to be?
Managing Costs and Value in the “New World”
By Andrew Ngo, Principal Engineer, PEAKURBAN There is little doubt that cost control is a hot topic now. While it has always been important to manage costs regardless of the market cycle, the question though is whether the necessary spending was more than it should have been in the first place. We previously wrote an … Continue reading Managing Costs and Value in the “New World”
Key Points when Negotiating Infrastructure Agreements
By Brent Thomas A well-constructed Infrastructure Agreement (IA) provides certainty for the developer and Authority regarding the delivery of various trunk infrastructure items. A good IA will clearly set out the obligations of each party, the funding and extent of infrastructure to be provided, identify any offsets and mechanisms for refunds, specify trigger points and … Continue reading Key Points when Negotiating Infrastructure Agreements
PEAKURBAN welcomes Brendon Bolt to the Water & Environment Team.
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.
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.
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 for long periods of time. The last … 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?