The last twelve months have seen massive changes in pricing and the construction industry has not been immune.
As reported in the Financial Review in January, figures from ASIC show a rise in Australian companies appointing external administrators for the first time. Appointments in construction were up nearly 90 per cent in comparison to the previous twelve-month period. It seems as though there is an announcement about companies going under each week, which is making it a tricky time to be commencing a building project.
Because of this, industry stakeholders have become extra cautious. If you’re part of a team overseeing the construction of a residential development or a new building at your school, hospital, retirement village or aged care facility, you may notice it’s taking a while for things to get going, even though a DA has been approved. There may be hesitation from the board, or key stakeholders may be procrastinating. This could be because of concern about costs, difficulty knowing where to start or genuine worries about the viability of the project.
Time is money, and waiting for a project to get the green light doesn’t benefit anyone. It can help to bring in a development project advisor and consultant to provide an independent analysis and find a way to move forward.
At the end of the day, numbers don’t lie. When you have the right figures on paper, it will be easier to make a decision and either get the ball rolling on your project, revise the drawings and specifications, amend the budget or decide once and for all not to go ahead.
Is your project still viable?
Budgeting for a development project has become increasingly difficult thanks to the changing costs of finance, materials and labour. A price quoted for work even six months ago is unlikely to apply today and will affect the final outcome.
With the goalposts moving so regularly, it is important to conduct an analysis and put together a business case with evidence that the project still makes financial sense.
A development project consultant and advisor can share their expertise as they:
- Analyse and update cost expectations
- Identify alternative strategies to reduce expenses
- Review liabilities and uncover risks
- Recommend reliable suppliers and contractors
- Update timelines
- Make recommendations for changes to the budget or the specifications so the project does not end up in limbo
Even if your board is hesitating before giving the final green light to a project, it’s worth noting that the further out you push the start date, the more it will likely cost. It’s better to take action sooner rather than later if it is still possible to do so.
Give the board peace of mind
Impact Group was recently approached by a client who needed to know if it made financial sense to go ahead with a planned development project.
Our team had previous knowledge of the site and was able to complete research about the work and costs involved to put together a report for the company’s board. This made the decision about what to do next a great deal easier.
It’s all about gathering the information you need, making sure you are working with the right people (including architects, engineers, suppliers and contractors) and determining if the budget really matches the requirements of the project. For a small investment, you can save your company the trouble of having to halt a project mid-way due to budget constraints or a lack of labour and materials.
Talk to Impact Group today
To ensure you receive the best advice for your project, you need access to a professional consultant or advisor who has a diverse skill set and a depth of expertise across the entire lifecycle of a construction project.
Impact Group offers decades of experience in development management and project management for property development, allowing us to provide a dedicated advisory and consulting service for a range of sectors, including Retirement Living and Aged Care, Health, Social and Affordable Housing, Education, Hospitality, Industrial and Residential development.
Talk to us for a project audit and viability report that will help you move forward in 2023.
Contact Impact Group to connect with a reliable and experienced consultant and advisor for the property industry today. Please contact Alyssa Lanning on alyssal@impactgroup.com.au or phone 1300 630 063 for a no-obligation discussion.