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Building Blocks

Building Blocks

From an investor turned developer, it is the build stage of the project which is the most exciting. In part three of NZ Property Investor’s four-part guide to development, Miriam Bell discovers the crucial things you need to consider at the build stage for your development project.

By: Miriam Bell

19 April 2016

It can be a heady time for any investor, let alone a novice. After journeying through the earlier, drier stages of a development – particularly the labyrinthine consent process – the time for the build finally arrives. This is when all the conceptual plans come to life, when the dream becomes reality.

Very few development projects unfold over a strictly linear time line. Often some components of the physical build will have been carried out during the consent process, for example. Others will have been underway from the beginning. Each of the experts consulted for this article emphasise the earlier they are involved in the project, the better.

A number of the different elements involved in a development – from engineering to design considerations to choosing tradies – make up the physical build stage. We cover all these in part three of our beginner’s guide to development.

Doing The Ground Work

Obtaining a geotech report should be the first stage of any build. Yet RDCL business manager Reuben George says people often start a project and decide to do the geotech work as they go along. He does not advise this approach because of possible issues with funding or consents.

“Engineers, architects and builders have to understand the condition of the land before they can embark on their plans, let alone the build itself,” George says. “It is necessary to confirm whether a site’s ground is good to build on, because if it’s too soft or if it’s fill material, like an old rubbish dump site, there will be problems.”

George says the Christchurch earthquakes demonstrated how critical it is to know about the risk of liquefaction; the slope of the site; the high and low areas; and the composition and condition of the soil.

Having this type of information allows other contractors on a build to understand what they can do and helps them to find solutions. George says it’s better to know what you have on your hands and might be able to do, as opposed to charging ahead to encounter problems later on.

“This is especially true in New Zealand as there is quite high susceptibility to things like liquefaction in some areas. For this reason, you need someone who understands this. Don’t just use the cheapest person. And be willing to understand that there is more that you need to know than you think.”

Local Knowledge

Another of the key early stages of a build is the engineering work. This can include civil (stormwater, wastewater, sewerage), and structural (exterior beams, lintels, etc). While many engineers specialise in one particular area, others offer a range of services.

ProBase Engineering’s James Harper says it’s a good idea to use an engineer who can deliver the whole package. “An engineer who can take care of everything in a build is helpful. It is more cost-effective and it saves having to employ and communicate with three different engineers.” Harper says.

To his mind, local knowledge is the most important consideration when employing an engineer. New Zealand has many different councils, all of which have different building work regulations and requirements. “You can get engineers in Christchurch giving advice in Auckland. It can make a huge difference to engage a local who knows the ins and outs of their council area.”

If you don't understand the terminology your engineer is using, make sure you ask questions.

Harper recommends clients ask their engineer to explain any difficult terminology, too.

“Sometimes we can take it for granted that the clients understand exactly what we are doing. Problems often come down to communication between clients and engineers. Sometimes we need to be more aware of the jargon that we use, which can be overwhelming. Clients need to understand what their engineer tells them, as well as what it will cost.”

Demand Driver

Architectural design is the third element of the build which comes into play early on. Decisions on the type of and style of dwellings that will make up a development need to be made. Architects or architectural designers can advise on the most effective use of the site.

Red Architecture’s Tane Cox says it is necessary to establish the demographics of the area a site is in. For example, is it an area dominated by families, young professionals, or older people?

“Find out what type of housing is most in demand in the area,” Cox says. “If it’s young professionals, town houses could be the best option. But if it’s older people, two storey dwellings are not a good idea. Then tie that information into the size of the site and establish what is going to work best on that site. This is a key calculation for the end use of the development – be it to rent or sell.”

Demand is not as likely to have an effect on material or style. But Cox says that, if a developer is building rental properties, it will impact on the complexity of the design. Further, some developers will also compromise on the materials used with rentals.

“This is because they get better returns, so it’s safer,” he says. “But it doesn’t have to be the way to go. A developer can actually get more value from their investment if they go for quality – because there is a big market of people looking for higher-end, on trend dwellings to rent. As New Zealand changes, and demand for smaller, smarter dwellings grows, better quality design will be required.”

Things like complicated rooflines run the risk of being leaky, don't look that good and date quickly. - Scott Cracknell

Identifying Characteristics

Great buildings don’t happen without a great working relationship between the architect and the client, Cheshire Architects principal Nat Cheshire says. Nor do they happen without an investment in quality.

“We are not talking about high end luxury, just good quality,” Cheshire says. “So it’s important to zero in on what quality means and how best to deliver it – because that is where the value lies. It’s not just about shepherding a client through the consent process. The real value is in delivering more bang for the customer's buck.”

In his view, an effective way of achieving this is by turning to the project site itself. This holds true whatever the planned size of the development, as there are opportunities on every scale.

A good design should establish what the single strong positive identifying characteristic of both the site and the surrounding area might be, Cheshire says. “Look at what makes a site special and work with it – even if there initially appears to be difficulties. It gives the development an identity immediately. Then you carry that through the project as a whole.”

He cites a recent job as an example. It was a collection of houses in a garden estate. There were some established big and existing plant environment that they worked around. “It gave us something to hang the development on.”

Communication with contractors is key to a stress-free build process.

Keep It Simple

There are certain elements that have to be considered in any development design. These include the slope and shape of the site, its solar orientation, access and parking issues, outdoor living spaces, existing trees and greenery, the space between different dwellings, height and boundary lines and privacy circles.

Context Architects associate director Scott Cracknell says sticking to the design basics and doing them well can be a sensible option. Go for simple forms and roof lines, Cracknell suggests. “Many architects will go for a greater degree of complexity than they need to in their design,” Cracknell says. “But things like complicated rooflines run the risk of being leaky, don’t look that good, and date quickly.”

He also says it’s best not to use too many materials and that good quality materials should be used. “This is particularly important if you are doing denser developments because as the spaces get tighter the materials will encounter more wear and tear. You want to use robust materials that will hold together well over a longer term period of time.”

It is crucial to keep the pressure on whoever you employ. Make sure your building company or contractors follow through with what they have committed to. - Jeff De Leeuw

Managing The Build

Once engineering and design consideration have been worked through, decisions made and plans drawn up, it’s time for the build to get underway. At this stage, a comprehensive timeline and work schedule should be drawn up.

Hamilton-based developer John Menneer says developers should work with their builder to draw up a “critical path” of tasks and then map out the associated time frames for the build. Sub-contractors then need to be scheduled and their commitments obtained.

“If a step on the path goes over time it will delay the project and can lead to extra costs,” Menneer says. “It can also lead to on-site clashes and conflict crises. However, you need to be flexible and constantly update your critical path accordingly.”

This calls for good management of sub-contractors. In order to do this effectively, it is necessary to communicate well, without being condescending or pushy.

“But you must get sub-contractors to stick to your timeframes and deadlines. There are times when you have to put your foot down. Everything relies on each person fulfilling their particular role – and, if they don’t, it will impact on your schedule and your budget. So keep the pressure on, diplomatically.

“Be on site, but don’t be overbearing. Don’t dictate the sub-contractors work to them. Trust their skills. You have given them a job, let them do it – don’t micro-manage. You can do this and still ensure that work is progressing along your critical path as planned.”

Doing things like the traditional roof shout, providing fish and chips for tradies working late or morning tea for the whole crew, and just chatting to people onsite also go a long way, he says.

Going Professional

For many investors working on a development, employing a reputable building company to carry out and manage the build process makes sense. They have experience, an established network of sub-contractors and tradies, proven design plans and make economies of scale.

Keith Hay Homes national sales manager Barry Walker says it will often cost an investor more in the long run if they choose to manage it themselves. “What people don’t understand is that building companies have their own scheduled rates for everything, like tradies and suppliers,” Walker says. “Whereas with one-off projects, there will be greater charges.”

But, whether an investor opts to DIY or goes with a building company, they should always nail down fixed costs upfront, Walker adds. “Cost overruns usually come down to provisional sums. And they can get you into trouble.”

Taking the DIY approach tends to have disadvantages for an investor, GJ Gardner Hamilton/Waikato franchise owner Jeff de Leeuw agrees.

“You might be able to source good contractors and tradies yourself, but it will all take longer and you will end up spending more money,” de Leeuw says. “But if you get a building company, you just need to hold one person responsible. You can still be involved, but talk about the level you want upfront.”

Cost Effective Process

But remember time is money, De Leeuw says. “That means it is crucial to keep the pressure on whoever you employ. Make sure your building company or contractors follow through with what they have committed to.

“Once you hit go, keep the pressure on - especially as many builders and tradies require a level of progress payments. And act immediately if something slips, because it all impacts on the size of your returns.”

Building companies can also offer an understanding of the complexities of the requirements and processes involved.