Ten Steps to Master in the Land Development Process
This multi-part Blog series will highlight how to mitigate risk and avoid issues that commonly plague land development projects. We will help you understand how to properly navigate the main phases of the land development process to help avoid cost overruns and delays (and a whole lot of stress and anxiety). This is a collection of observations, recommendations, and advice from the perspective of a civil engineer who has worked side-by-side with a diverse set of developers on hundreds of land development projects over the past 25 years.
If you are a real estate developer, broker, or land use attorney you will find the series to be of particular interest.
Topic 3: Time to Get Real – Preliminary Design
In my last blog, we talked about the basic due diligence process and strategy to undertake once you have a piece of land under contract. If you have now gotten through those surveys, studies and investigations and still have a deal that seems viable, then it’s time to “get real”. What does this mean? Well, it’s rarely advisable to dive directly into formal design plans and permitting from here, since doing so will inevitably lead to wasted costs, substantial revisions, time delays and pro forma blow-ups. Now is really the time to utilize all the great information that you compiled during your due diligence activities and do some selective preliminary design work which will enable you to further refine many aspects of your project.
Selective Preliminary Site Design:
The decision on what amount of preliminary design work to undertake is project-specific but performing at least some level of this work is going to help you mitigate risk and allow you to move into the more cost-intensive design and permitting phases with better confidence in the expense portion of your development pro forma. In each of the below items, I will outline the ways in which they can be leveraged to do just that.
Preliminary Grading Design:
- What is this? A preliminary grading design involves utilizing the topographic survey (or web-based LIDAR topography if you don’t have your survey completed yet) to assess the rough grading necessary to achieve the desired site layout and yield. During this process, the building finished floor elevations will be established, areas needing retaining walls will be identified, and transitions to existing grade will be worked out. This is typically an iterative process in order to achieve the desired grades to make the project work best and to consider rough cut/fill quantities to ensure that earthwork costs are minimized.
- How does this help me? The preliminary grading process often results in changes to the project layout or site plan and can also impact development yield (all of which are obviously good to know as early on as possible). It will also identify areas of large cuts and/or fills that may warrant further geotechnical investigation to assess things like rock depth which can have a huge impact on construction costs. This process will also yield valuable information that your sitework contractor can use to further refine construction costs.
Preliminary Stormwater Management Design:
- What is this? A preliminary stormwater design builds off the preliminary grading design by establishing the general scheme required to meet the applicable stormwater regulations that will govern your project. This typically involves identifying rough basin areas and sizes, identifying outfalls (ie. where and how your stormwater will leave your site) and establishing a schematic stormwater conveyance routing (ie. where the collection system of pipes and inlets will go). Stormwater is a major design consideration on almost every project and this needs to be planned out strategically at this point in the project.
- How does this help me? The preliminary stormwater design process is critical for several reasons. First, it is often the largest sitework cost item, so having this system roughed out will allow your sitework contractor to better estimate the cost that you should be carrying for this item. This work will also bring to light potential off-site connection issues such as insufficient pipe capacity, no system to tie-in to, easement requirements, etc. This process will also provide enough information such that the necessary infiltration testing can be performed (needed for hard design and permitting).
Preliminary Utility Design:
- What is this? A preliminary utility design utilizes the information obtained from the utility due diligence research along with the survey to prepare a rough design of how the necessary utilities are going to be routed to the proposed building. While this step is not needed for every project, it can be useful in certain projects where utilities such as sanitary sewer need to be run long distances and over varying grades/depths. In such situations, preliminary profiles of the service lines can be generated to assess depths, the need for pumps, crossing conflicts with other underground features, etc. This process can also assess impacts to existing structures, such as utility poles, underground vaults/lines, etc.
- How does this help me? The preliminary utility design process can uncover (and allow you to budget for) potential issues such as rock excavation (which may be needed to achieve required pipe runs), unforeseen expenses (the need for pumps or utility pole relocations) and allows you to start the proper dialog and permitting processes with the utility companies in order to press forward any long-lead items.
Preliminary Earthwork Calculations:
- What is this? This work utilizes the above preliminary design work along with appropriate design software to generate quantities of cut and fill to assess earthwork balance (or lack thereof). There are varying degrees of accuracy in which this can be performed depending on the nature of the project and desired use of the information.
- How does this help me? Especially for large sites, earthwork is a major cost, especially if import or export of soil is required. It is obviously important to know this early in the project as it can have a significant impact on sitework costs and construction timing. Based on the resulting earthwork costs, this exercise may drive alterations to the development layout or yield.
- Pre-Application Meetings: Performing some or all of the above will yield a much better understanding of the design and regulatory compliance issues. As such, this is typically an excellent time to engage with the various review agencies via pre-application meetings. Such meetings are typically informal meetings at staff level to review and confirm permitting requirements, discuss possible deviations from standards and to get clarification on any items that require engineer-to-engineer discussion. These meetings, when properly conducted, can be hugely valuable. Time and cost savings can be realized by reducing future revisions, meetings and hearings. They are also great ways to develop and strengthen relationships with the reviewers, get local intel on possible resident opposition, learn of other competing projects that may be in the works, etc. Walking out of these meetings, you will almost always take away some information that greatly outweighs the cost of having them.
- Sitework Contractor Preconstruction Services: Now is the time to engage with a good sitework contractor. Too often we see a developer hold off on engaging a construction company until design plans are done and ready for bidding. Engaging a contractor for preconstruction services is almost always well worth it. While we can provide our opinions as engineers as to what the sitework costs are likely to be, this information is best provided by a suitable sitework contractor experienced in the location and type of project envisioned. The preliminary design work produced above will allow them to prepare a preliminary sitework construction estimate. It is also a good time to have them do a close review of the preliminary design and offer their feedback relative to any design items that could be reworked to achieve a more cost-effective product. If they have such ideas, now is the time to discuss them, since changing plans after they have already been approved is often a time-consuming and costly endeavor. A good contractor should be part of the team throughout the design process, not someone who is only engaged once the design is completed.
Performing the above items before diving into full design and permitting efforts will inevitably save time and money as noted above. It will also provide you with a more refined and concrete development plan, which will allow your design and permitting team (Civil Engineer, Architect, Traffic Engineer, Geotechnical Engineer, etc) to prepare/refine their respective contracts for their services; now is the time to tighten the scope, exclusions, and assumptions in such contracts as appropriate. Additionally, the above will give you key information with which to refine your development pro forma prior to launching into the soft-cost-intensive efforts that come next (a good time to confirm you still want to plow ahead!). Similarly, this is also the time for a reality check on the project timeline. After going through the proper due diligence, preliminary design, and pre-application meetings, you should have a relatively firm handle on the steps and timing needed to get to construction (and if such timing is in sync with the terms in your land contract and/or leases). Once you have navigated this portion of your deal, it’s time to get your design/permitting strategy and team in place and push forward. For some insights on doing just that, stay tuned for our next blog.
The above article is the third in our series of “10 Steps to Master in the Land Development Process”. Previous articles are linked below. Subscribe to the Blog to be notified of future articles in the series.
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