The pressure is well and truly on for the development and construction community. Developers are seeing rising land prices, material prices are fluctuating, the labour force is stretched, and it’s putting increasing pressure on the feasibility of developments – as I’m sure you’ve seen in the media recently.
We are seeing clients across the development spectrum looking for the return on their investment and this is now largely dependent on early involvement from reputable contractors and the quality of procurement processes being used.
Contractors are no longer the ones leading the work: it’s a sub-contractors’ market. The projects and contractors that are most successful in the current climate are the ones who manage their subbies well. The contractors that don’t manage their sub-contractors well will see the impact on their project delivery and budget. Keep in mind that what worked for a project two to three years ago will not necessarily be effective today.
What are the takeaways from the current market situation?
- Plan your project beyond the construction phase
- Spend the time upfront on feasibility and due diligence before you take a project to market
- Embrace good design management early on
- Get your feasibility checked by a quantity surveyor
Wasting time is sacrilege in the development world, but the industry needs to adapt to the new market realities and get project feasibility checked before the spending starts. With the requirements of the amendments to the Construction Contracts Act becoming ever-more pressing and retention funds having to be held in trust early next year, there’s change in the air and those who don’t respond and act will get caught out.
There is a multitude of opportunities emerging for astute developers and contractors across all property types and throughout the regions. So, take the time to plan and fund your project and reap the rewards.