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 out of projects.
At PEAKURBAN, we’re big advocates of ensuring projects are delivered as efficiently as possible and at the lowest construction cost regardless of the market cycle. Whilst not rocket science, we’ve found that with some creative thinking and a focus on key areas, significant cost savings and value add can be realised. These include:
1. Maximising infrastructure credits / offsets: this is a big needle mover and can make a huge difference to feasibilities and land values. We have noticed a lot of Authorities are removing trunk infrastructure from their trunk infrastructure maps and conditioning developers to deliver what would have otherwise been trunk infrastructure. Rather than renegotiate approvals, lodging conversion applications are a good way to get the credits / offsets you might be entitled to. Click here for more information.
2. Optimising the earthworks strategy : the right earthworks and retaining strategy should be developed cognisant of geotechnical conditions. Rock plays havoc on feasibilities, especially so if an earthworks strategy has been developed that doesn’t consider the strength and extent of it. Broadly speaking, earthworks for sites should be either major bulk earthworks and minimal retaining, OR relatively minor bulk earthworks with substantial retaining – but not both.
3. Deal with rock effectively : Blasting and processing of rock costs a lot of money. Look for areas on site such as parks or interface batters where the disposal of larger unprocessed rock spalls might be possible. This avoids excessive processing costs which can be anywhere between $10-$15/m3. Also consider if its financially beneficial to process rock and create your own CBR15 material, instead of importing it for $70/m3.
4. Use unsuitable material wisely : first of all, determine whether the material is unsuitable (has organics) or just wet and needs to be dried out. Drying out wet material costs a lot less than disposing of it off site. Even if unsuitable is found, use as much as possible in the topsoil layer to reduce the export costs from site. Where possible, use park areas within the site to win good material and as a spoil site for unsuitable or excess material.
5. Smarter sequencing of Infrastructure : opening up new development fronts costs a lot of money. Looking at different options to defer and stage upfront infrastructure can dramatically improve feasibilities. For example, working with the Authorities to determine if latent capacity in the water or sewer networks exist to get the first 300 lots away before major works are required might be beneficial, considering low cost interim works to avoid bringing forward major infrastructure might also help. Looking at changing the sequencing of development might mean less infrastructure is required initially.
6. Design smarts:
- Shallow up the services – consider running sewer on both sides of the road to avoid deep sewer lines or deep stormwater lines (bought about by road crossings). This shallows up the whole network which can be particularly cost effective when in rock.
- Employ civil and built form solutions – some sites work better with a civil / built form solution in select locations. Rather than lose 4m – 6m with tiered walls, consider using a split level housing product to take up 3m level difference in the dwelling. Aim to keep walls <2m high also. They are cheaper.
- Plan the roads better – ensure roads run perpendicular to contours, double load them and employ reduced verges adjacent to parks and open space areas. This minimises side boundary walls and gets you back more developable area. Negotiate reduced road reserves and cross sections based on outcome and function.
- Import or Export – know what’s going on around your site and take a deliberate design approach. A nearby site might need a lot of import fill. Hence it might be cheaper to flatten your site, reduce walls and export spoil to the nearby site. The other site might even cover some of the costs.
- Co-locate services – co-locating services and infrastructure reduces land take and maximises yield. For example, combining drainage corridors with linear parks, integrating WSUD so the batters form a local park function, incorporating on line detention all help free up developable land and maximise yield.
7. Negotiate contracts properly : less haste, less waste. Don’t contract too early. Exercise your buying power to negotiate and remove ambiguity around latent conditions, geotechnical conditions, quantity checks, existing services validation, delay costs and risk allocation. By spending a little more time negotiating contracts thoroughly a lot of unnecessary variations and cost overruns can be avoided.
Whilst by no means exhaustive, the above are just some ideas to reduce costs and optimise value in a slower market.