On sound foundations?

Recession may be a dirty word in the construction industry, but Ralph Dando, partner at construction and property consultants Robinson Low Francis (RLF), says project managers will have plenty of opportunity to shine in the pre-planning stages.

There is no doubt that times are tough for the construction sector, but the situation is not all doom and gloom projects that involve a pre-let are likely to go ahead, and there are still other deals to be done.

However, with many developers now in trouble and some portfolios being sold on at bargain basement prices to those with ready cash, it is time to put the years of extreme bidding behind us. It is more important now than ever for clients to proceed with caution and for all parties to engage in rigorous due diligence processes to ensure that a scheme is secure before commencing with the build. It is fair to say that some projects recently completed would never have been started had the true costs and risks been fully understood at the outset this makes it vital to appoint a project manager at the pre-planning stage. This will make sure a scheme starts on the right tracks and then stays on those same tracks, reducing the chances of late completion that is over-budget.

Yet even today many clients cant see the full potential that a project manager can add to a scheme at this pre-planning stage and these same clients often express surprise at project managers apparently front-loading fee submissions. For some clients, the most important precursor to any investment in project planning is simply to achieve planning consent. But for us, being appointed from the word go is a strategic opportunity for a client to invest in the short term, ensuring a smoother, more efficient and lower-risk scheme in the long term.

In recent years land prices have been so high that even with dense development in a rising market, achieving the desired return has been a challenge. Furthermore, the reality is that without detailed analysis and informed pre-planning advice a client may well achieve planning consent on a scheme but then find it fails to deliver optimum value. The result is often that plans must be re-drawn and with the planning process costing on average 30 per cent of the overall fee budget, this is something clients need to avoid, however stable the economy.

Even worse, a project that is badly planned and ends up veering off track may ultimately cause sponsors to send in project monitors and/or rescue teams in order to bail the client out of trouble. This situation could harm a clients image, and that of the associated contractors, thus affecting future business opportunities.

However, by concentrating their skills and experience into pre-planning, construction project managers can add value and help the project stay on track in range of ways:

Holistic Risk Management

The key to managing risk is to ensure every risk that may have an impact on the scheme is taken into account. Further, truly holistic risk management includes a risk management plan with tangible solutions for implementation if and when a risk occurs. What constitutes a risk can be as varied as encountering a badger set that prevents a hedgerow from being moved, contractor insolvency or market fluctuations, but every risk has an associated consequence whether timerelated, cost-related, or both. Putting together a risk register that outlines each and every possible risk is a crucial part of the project managers pre-planning role, yet many clients still neglect the importance of risk and instead bury their heads in the sand until planning has been approved. What these clients perhaps dont realise is that in doing so, the scheme could incur additional costs of two to five per cent if the risks become reality.

Getting through the Planning Barrier

When a clients main objective is to obtain planning, one of the biggest mistakes is to embark on a badly-coordinated planning process which may result in the project never gaining planning permission or, that permission is achieved but doesnt truly suit the project. Yet by being appointed at the pre-planning stage, the project manager can provide strategic oversight and coordination by putting together a detailed planning programme. This will clarify every step of the process and the responsible parties from planning consultant to lawyer. There will also be a critical path, highlighting that X needs to happen before Y can. Crucially, the programme will be aligned with the risk register, as risk at the planning stage is just as important as risk at the construction stage.

In this way, the project manager can ensure that the right questions are asked of everyone involved in the process, so that the authorities make the right planning decision in the quickest time.

Design Management

There is a current trend for many development sites to be mixed use, which may be very complex and driven by the requirements of the planning to create a vibrant mix of functionality. In practice these sites can be difficult to deliver, as they often materialise naturally over many years of gradual change of use within an area. Even at purchase stage, such mixes are contemplated and factored in, requiring for example, residential on top of commercial offices on top of retail and leisure uses at ground floor level. Such a vertical mix is difficult to create in an optimum fashion in terms of a uniform structural grid layout throughout giving an acceptable net to gross ratio, without the use of expensive transfer slabs. Having an experienced design manager with commercial acumen, allows a value-driven judgement to be taken on the optimum solution.

So it may be that hard economic times are the incentive clients need to see the value in investing in a project manager from a projects inception. But hopefully this will become best practice of the future, resulting in more projects that stay on course and on budget, from start to finish.

• Robinson Low Francis (RLF) is a UK firm of construction and property consultants, with over 100 years of experience in the industry. The company provides services to public and private sector clients and is currently involved in projects with a total value well in excess of 1billion.