Starting a commercial build is a process that requires careful planning and a keen awareness of potential pitfalls to ensure a successful project that delivers on time, within budget, and with minimal stress.
In this article, we explore some common mistakes made during commercial construction projects and provide practical tips on how to avoid them.
1. The Importance of Self-Education
As a busy business owner, you might be tempted to leave much of the project management to the experts. While it’s essential to prioritise your time and rely on builders and contractors, having a foundational knowledge empowers you to make informed decisions and know when your input is required. Educating yourself helps you better understand the jargon, processes, and timelines involved.
Why It Matters: An informed client can contribute more effectively to discussions, making it easier to align expectations and prevent misunderstandings. For example, knowing the difference between structural and non-structural elements can help you make more educated decisions about design changes.
Action: Start by familiarising yourself with basic construction terms and principles. Consult online resources, talk to different builders, and ask questions like:
- What are the pros and cons of one product, material, or process versus another?
- Where are the risks of time and cost blowouts?
- How do you manage the design process and compliance of the build?
- From your experience, which parts of the build should I get involved in to achieve the best results?
2. Realistic Timeframes and Flexibility
One of the most common pitfalls in commercial construction is underestimating the time required for each project phase. Setting unrealistic deadlines not only puts undue pressure on everyone involved but can also lead to rushed decisions and substandard work. Factors like local council approvals, weather conditions, and material availability can significantly impact timelines.
Why It Matters: Many clients expect the process to move quickly and may underestimate or overlook potential delays. Contractors often view project timelines differently from business leaders, leading to misunderstandings about what constitutes an "on-time" project. Contractors may propose compressed schedules and later request extensions due to unforeseen issues, which can be anything from delayed consents to delayed client approvals. Understanding these risks is crucial to manage expectations.
Action: Develop a comprehensive timeline in collaboration with your contractor, factoring in all potential delays. Include buffer periods for unexpected challenges, such as supply chain disruptions or adverse weather. Being flexible with your schedule reduces stress, aids business planning, and allows for more thoughtful decision-making, ensuring a higher-quality outcome. Understand that buffers are for the unexpected—not to cover for insufficient resourcing or planning.
For more information on commercial construction times, read this article.
3. Structured Feasibility Studies
A thorough feasibility study is a critical first step in any commercial build. This process helps determine whether the project is viable from financial and compliance perspectives. Skipping or inadequately conducting this study can lead to unforeseen challenges that may compromise the entire project.
Why It Matters: A well-conducted feasibility study clarifies the project's objectives and ensures that all stakeholders are aligned. It helps prioritise goals such as sustainability, functionality, and cost-efficiency while identifying potential obstacles early on. For example, building plans that meet your budget and growth plans may still face significant consent issues, rendering the project unfeasible.
Action: Begin by evaluating the feasibility of your project at a high level across three key aspects: functionality, budget, and compliance. Identify which of these areas presents the highest risk and then conduct a more in-depth analysis of that aspect. This feasibility study should be structured and staged, with each phase thoroughly reviewed and approved before moving on to the next. Such an approach helps prevent costly rework and ensures that all elements of the project are adequately considered. Compliance is often overlooked, so it's important to address this area thoroughly from the outset—even though building contractors might be reluctant to focus on it early in the process.
4. Understanding Land Costs
Securing land for your commercial build is a significant investment, and overlooking associated costs can put your budget at risk. Many people forget to consider the costs of making land build-ready, which can vary significantly depending on the location.
Why It Matters: Failing to account for these costs can lead to budget overruns or, in the worst-case scenario, leave you with land that isn’t fit for purpose. For instance, purchasing rural land might seem cheaper than industrial-zoned land, but the costs associated with obtaining resource consent can be considerable.
Action: During the due diligence period, typically lasting 6-8 weeks, conduct a thorough investigation of the land. This should include assessing legal restrictions, environmental considerations, and the costs of necessary infrastructure improvements. Obtaining preliminary cost estimates will give you a clearer picture of the financial commitments involved and help you make an informed decision.
5. Comprehensive Planning Reviews
Navigating the planning and approval process is a complex but crucial aspect of any commercial build. A full planning review ensures that your project complies with local regulations and identifies potential risks early on. Neglecting this step can result in significant delays, fines, or even the halting of your project.
Why It Matters: Failing to address all regulatory requirements can lead to project delays and additional costs. For example, overlooking heritage protection laws, iwi involvement where required, or specific zoning regulations can result in costly redesigns or legal disputes.
Action: Engage with local council planners or independent consultants who can guide you through the regulatory landscape. They can help identify necessary approvals and permits, ensuring your project design meets all local and national requirements. Thorough documentation of all interactions and decisions will provide a valuable reference throughout the project.
6. Ensuring Adequate Firefighting Water Supply
Firefighting water supply is becoming a critical issue as Fire and Emergency New Zealand (FENZ) places more responsibility on councils to address it. While not a building code requirement, some councils, (such as Whanganui), include it in their district plans, potentially imposing significant compliance and cost burdens on landowners.
Why It Matters: Ignoring the requirement for an adequate firefighting water supply can lead to costly compliance issues and delays in your project. Additionally, in some cases, this requirement can become part of the resource consent process if you are seeking a resource consent for the land. This adds another layer of complexity and potential cost, making it crucial to address this early in the planning stages.
Action: Conduct a careful review of the district plan alongside your proposed design early on to identify what may be required. Consult with the council but be aware that many are not fully informed about the complexities of this process, as it is controlled by FENZ. The in-house team at XL has spent considerable time upskilling and building contacts to navigate this challenge.
7. Timing of Consultant Engagements
Engaging consultants too early in the process, before you clearly understand your project's scope, can lead to misaligned expectations and unnecessary costs. However, bringing them in too late can also result in considerable rework.
Why It Matters: Engaging consultants at the wrong time can waste resources and cause potential conflicts. For example, changes in project specifications after consultants have started work can lead to additional fees and delays. In some areas, like Taranaki, specific ground conditions require the right level of expertise, making it important to bring in consultants when they have enough understanding of the project.
Action: If you are managing the design yourself, clearly define your project's scope and requirements before engaging consultants. Outline the desired outcomes, budget constraints, and specific technical needs. Once the scope is established, select consultants whose expertise aligns with your project’s needs and ensure they are fully briefed on all relevant details. If you are using a design-build approach or an architect to manage the design, ensure they have the experience and process to manage consultants effectively. Some companies or architects may still expect you to engage sub-consultants directly, which can lead to additional management responsibilities on your part.
8. balancing Design and Cost Estimation
It’s easy to get carried away with design elements, but without a clear understanding of costs, this can lead to budget overruns. Integrating cost considerations into the design process helps maintain a balance between aesthetics and practicality, ensuring the project remains financially viable. As the design progresses, opportunities for cost-saving measures decrease.
Why It Matters: Over-designing can lead to unexpected expenses, and if the project exceeds the budget, compromises may need to be made, potentially impacting the quality and functionality of the final build. Conversely, underspecifying areas may result in missed opportunities for staying within budget.
Action: Implement a staged estimation process where costs are assessed at various stages of design development. Work closely with your design and financial teams to ensure design choices align with your budget. This integrated approach allows for early adjustments, avoiding large variations and costly redesigns later in the process.
9. Formal Communication with Local Councils
Relying on informal conversations with council representatives can lead to inconsistent information and misunderstandings. Formalising communication ensures that all requirements are clearly understood and documented, helping to avoid unexpected delays.
Why It Matters: Informal discussions can sometimes lead to conflicting advice depending on whom you speak with. Without proper documentation, resolving discrepancies can be challenging, leading to project delays.
Action: If you are working with councils yourself, schedule formal consultations with the relevant council departments to discuss your project. Document all meetings and decisions and follow up with written confirmations where necessary. This formal approach ensures clarity and accountability, reducing the risk of miscommunication. If you are not managing the design process yourself, ensure that communication with councils is directed to those who are, and if you do have conversations, relay the information to the project team.
10. Understanding Delivery Processes
The choice of delivery process can significantly impact your project’s timeline, cost, and overall success. Understanding the pros and cons of different methods—such as owner-build (where you manage the project), design-tender-build (where you design and then tender to the market), and design-build—allows you to choose the most suitable approach for your project’s needs and goals.
Why It Matters: Misunderstanding the delivery process can lead to misaligned expectations, management challenges, and even project delays. For example, a design-build approach may offer faster completion but requires a high level of trust in the contractor.
Action: Research various construction delivery methods and evaluate their suitability based on your project’s specific requirements. Consider factors such as cost, time, complexity, and your level of involvement. Engaging a project manager with experience in the chosen delivery method can help streamline the process and ensure that all aspects of the project are managed effectively.
In Conclusion
Building a commercial property in New Zealand requires careful planning and an understanding of potential pitfalls. By educating yourself, setting realistic timeframes, conducting thorough feasibility studies, and engaging the right professionals at the right time, you can navigate these challenges and ensure a successful build. Detailed planning and clear communication are the keys to avoiding costly mistakes and achieving your project goals.
