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The Developer Chronicles: Master-planned Projects

In this series, I describe master-planned projects. The discussion focuses on the difference between a one-off project and a multi-stage, multi-year planned development. I explore the factors that great development teams grapple with every day. I hope you find it of value.

AND you can also contribute to this opensource education by commenting with your own experiences, strategies, tactics and ideas here on LinkedIn. That’s where we can really embrace group network effects for continuous improvement in development management.

The DC: Master-planned Projects #6 Architectural Design

Like any one-off project, for a master-planned project, you have to come up with architectural design. A site plan, building floor plans and some elevations. One key difference with a master-planned project is there are multiple layers of design.

Urban Design

First, and most different from a one-off project, you have the overarching layer of urban design. This is (or some say informs) the general layout of your site, all its key amenity, roads (we looked at roads in detail here), geographical constraints and the stages and/or super-lots within.

All developments have some aspect of urban design. Building design and urban design often morph into a grey zone, where both building architects and urban designers claim it’s their space. Where on the site do you place a condo tower? How does it interact with the public-facing street? What connectivity to the neighboring streets does it enable? And so on. But with a master-planned project, by virtue of nothing else but its size, duration and having to build transport corridors, we are designing a completely new urban environment.

There is a tonne of definitions out there. The Urban Design Group in the UK have summarized plenty here. I quite like the following two as they cover both space and time in the context of a development project.

“Urban design involves the [spatial] design of buildings, groups of buildings, spaces and landscapes, and the establishment of frameworks and processes that facilitate successful development.” – UDGUK

“The process of molding the form of the city through time” – Peter Webber

At the end of the day, regardless of how theoretical we muse, urban design produces a number of practical outputs. The big one is the master-plan or master-site-plan. This is the picture of where all the roads, lakes, parks, shops, offices, homes, warehouses or factories are located. To get there might have been quite a process, and like Mr Webber above describes, it can change over time. Something a bit more detailed than the high level one we discussed here.

The more diverse your master-planned project, they more complications urban design must embrace. Flat is easy. Hilly gets difficult. 1,000 standalone replica 200m2 houses on 400m2 lots on the same road grid, surrounded by clones where sales agents can’t even touch the sides of demand is easy. 700 houses comprising of seventy-eight different floor plans across a range of lot sizes with a town center, a small industrial park, and all next to an existing airport on a peninsula in a soft housing market is not so easy.

One way urban strategists in the project team approach creating the master-site-plan is to break each ‘complication’ into an overlay. The objective of each overlay is to create the best response to that complication. Then you lay them on top of each other. In the perfect world they all line up and then you can start drawing your response – the master-site-plan. Of course, they rarely do and compromises need to be made. That’s where the priority comes into play.

What’s the biggest priority? Profitability – certainly if you are a private or corporate developer. So one of your overlays – the most important obviously – is financial. Obvious to developers and bankers at least. Unfortunately, urban designers are typically architects and profitability might not be always so obvious to them. Master-plans can be heavily influenced, if not dictated by infrastructure, geo-technics and traffic – again profitability might not be so obvious to the engineers either. So the urban design process needs a financial overlay. That means your financial feasibility (as we talked about a few editions ago) is an integral part of the urban design process. As your designer starts drawing site responses to complications, the development manager/ feasibility manager needs to fire the feaso up. You can’t simply leave the urban design to the designers!

You have to start somewhere though, and there is a short-cut that gives the urban designer somewhat of guiding spatial light as to what could constitute maximum profit: maximum density. Thus zoning is an important overlay. In many rising real estate markets, especially over the long term maximizing the allowable Net Developable Area, and then the Gross Floor Area on top of that will be a good proxy for maximizing profitability. If your site already has zoning determined, then much of your urban design framework may be set in stone. Retail here, commercial there, residential elsewhere. If you are starting with the purest of greenfield sites and have the flexibility (and deep pockets) to create your own zoning then each other overlay becomes that much more important.

Let’s look at some other overlays:

• Transport links. Rail stations, freeway access, arterial roads, bus-stops, ferries, and other big-ticket transport connections. This overlay will certainly influence where you place retail and commercial activities. Housing not too close, but not too far (unless lifestyle or rural blocks are your taste). Higher density at the nodes, lower away.
• Topography and physical geography. Hills and valleys. Flat, rolling or sheer cliffs. Streams, rivers, lakes, the coast, and native forests. Some natural features present opportunities and others constraints.
• Sunlight. North-facing or south-facing slopes. Shadow lines from hills, trees or any buildings across the boundary.
• Amenities. Proximity to town centers, places of recreation, schools, medical facilities, beaches, centers of employment, tourism and industry.
• Infrastructure. Where the ‘big’ pipes have to go. What areas can be serviced, which can’t? Powerlines in the way?
• Views, outlook, privacy, quiet, areas where you can enhance profitability, by charging higher rent or sales prices.
• Geo-technical. Soil type, overland flow paths, flood-prone, flood management areas. Yes, you can build on anything, just depends on the expense to do it.

Like almost everything in real estate development, nothing is crystal clear and many overlays influence each other. Where the relationships are not clear, break them down into the simplest layer possible. For example, break topography and physical geography down to buildable areas and non-buildable areas. Or school zones might be deserving of its own overlay.

And you will note that when you look to stage a development, many of the same influences crop up. The urban design will evolve over time. As each stage proceeds, you might be reevaluating urban design for the next stage. This is where Peter Webber’s quote above comes into play.

It’s an iterative process of working through each overlay and its relative priority to maximize opportunities and minimize negative effects of constraints. This alongside constantly analyzing the income potential and the cost ramifications to help prioritize.

With the overlays in place the urban designer can draw a first-cut of the master-site-plan. Then the team must refine, and refine and refine and refine…..fully aware that as time goes on, what you are refining now might not come to be. Refinement never sleeps in a master-planned project.

Superlot Design

Super-lot design is the next layer. A super-lot is defined as a contiguous piece of land within public roads. You can sell it on its own, or you can subdivide further into individual plots for houses, a block of shops, an apartment tower or a logistics facility. Regardless you need to have an idea of the types of buildings -almost always the highest and best use of that super-lot – that will occupy it.

Roads (as we discuss here) have a big part to play determining a super-lot’s external boundaries. But now we must think about the specific buildings and sellable parcels of land within. A single super-lot might be so complicated to require specific urban design all on its own. This is especially so if you are mixing uses in the same super-lot. You may need to apply an overlay approach to the design within the super-lot.

With that in mind now you can design the most efficient, most profitable super-block. And once again, get your calculator out. Crunch the super-lot’s own feasibility as the architects put forward design options.

Additional considerations for super-lot design:

• Sellable land efficiency. Are we allowing for the most efficient and sellable lot sizes and layout?
• Flexibility. Somewhat contradictory to the previous item, does your super-lot allow different types and shapes of plots and buildings that could adapt as markets change over time?
• Is the super-lot efficient and flexible in terms of infrastructure? The cheapest approach will be to provide as many individualized service connections (think driveways, wastewater, stormwater, power & utilities) at the same time as you construct the super-lot. However, this may preclude flexibility (at least at a cost) within the super-lot later on.
• Streets. Roads that surround the super-lot contain elements that cannot be adjusted very easily – and when publicly owned, moving anything might prove next to impossible. Streets can constrict the design within the super-lot, despite how much future-proofing you are trying to cultivate. Street trees, parking bays, rain-gardens, utility ‘boxes’ (like power transformers & sewage pump stations), power lines, street lighting, leased billboards, cellphone towers and bus-stops to name but a few.

Building Design

The stuff that everyone really looks at: the vertical build. What can be different between a one-off project and a master-planned project? That depends on how as a development company we are structured to deliver:

1. Land subdivider. We are creating the urban framework and developing all the land, but we intend to sell all parcels/super-lots off and let others build at their discretion.
2. Land to letterbox. We are developing, designing, building and selling everything.
3. Bit of both.

Whichever development approach, a master-planned project requires additional thinking that a one-off project is rarely concerned with. If you intend to sell land to others, building design is all about control. Controlling the branding, the look and feel, the quality and most importantly the master-planned project’s long-term profitability. If you have rezoned the entire estate then that is one control. Albeit, that might be limited to density and bulk and location restrictions. The other often used control is to create and enforce design guidelines.

Design Guidelines

Design guidelines can be legally attached to the titles as covenants and/or stipulated as part of the sale and purchase contract and/or included in the rules enforced by an incorporated society representing owners in the master-planned estate. Tieing the guidelines to current and future owners is important – so the rules run with the land. This often means that design conditions in the sale and purchase agreement are not legally sufficient to protect the developer from a subsequent future transfer of ownership.

What’s in these design guidelines?

It’s your project so pretty much anything that doesn’t contravene the law! I recall one subdivision in Phoenix tried to ban people flying the American flag – that didn’t go down to well, with pretty much everybody except the committee who dreamt up the idea. However, in the context of a master-planned project, design guidelines are more than just resident restrictions. Rules like no parking on the lawn, don’t put washing drying over the front balcony or limiting dogs to less than 50cm long. All the impediments to daily life. Saying that though, design guidelines and resident rules do overlap. No tarpaulin (poor man’s sailcloth) over your pergola – is a rule (yes a real one put in place by a least one government housing provider) to protect neighbors from the unruly design-inconsiderate antics of those living next door.

We’ll start with the objective of having design guidelines. And if we strip it back to its core, it’s fairly simple: design guidelines are to protect the master-planned project’s developer’s profit. You can spin this a different way of course and say “design guidelines protect the home buyers investment” or are the “design guidelines enforce quality and reputation of your working environment and shopping experience” or “design guidelines to protect the integrity and desirability of the ‘Blue Vista Estates’ brand and name” – all of which might be true, at least in the beginning.

You see when you commence a development you may have very strict design guidelines. ‘Guides’ (which are actually rules) that prevent builders or mini-developers – that you onsell super-lots and parcels of land to – from designing and building any old visual debris. Design rules that are typically over and above what the local jurisdiction allows. Here are two common, albeit blunt, examples:

• “Minimum floor area of 250m2.” This rule sets a minimum size, which indirectly pretty much guarantees a higher price point.
• “Must build by 1 December.” This rule ensures development occurs as quickly as possible – both so empty sections are not left growing weeds and to stimulate demand.

Then there are design guidelines that take it further and prescribe building forms and aesthetics:

• “Allowable cladding materials include brick and timber weatherboard. Timber or commercial grade aluminum window joinery only. PVC siding and windows is prohibited.” This rule attempts to prescribe higher specification exterior materials.
• “No hip or flat rooves.” This type of rule attempts to restrict architectural styles seen not in keeping with the overall development.
• “Garage doors must not face the street.” A rule where the developer is trying to create the illusion of no cars, or at least prevent the dominance of garage doors on front elevations.
• “The upper level must not exceed 50% of the floor area of the lower level.” A guide intended to create an architectural style that forbids boxy developments.
• “Fencing is to be 50% permeable and no higher than 1.2m along the front boundary.” Intended for looks or passive ‘eyes on the street’ surveillance.
• “Front facades must contain a minimum of 50m2 of glazing and a fully landscaped front yard.” Think of the industrial park trying to push a half-decent looking streetscape.

The list of guidelines can run deep. And to help explain you might need to include example drawings and pictures. Guidelines can easily morph into a hefty design manual if you are not careful – in an attempt to fully describe the architectural response the master-planned project developer is looking for. Fairly soon though you run into design rules that are open to interpretation, and potential abuse or technicalities (from the master-planned project developers perspective). So to protect the master-planned project a formal approval process often accompanies the documentation.

The approval process might be as straightforward as ‘all plans must be signed off by the developer prior to construction’. Or it may be a bureaucratic multi-step approval board rivaling (or occasionally with permission replacing) local authority design review panels. A panel might have a representative from the developer, the city and a few architects thrown in for good measure.

Then there is the extreme version of architectural prescription. Not really design guidelines as much as ‘this is the design, now go build it’. Like a book of allowable concept designs or consented plans with no option to modify. This is where the master-planned project developer wants micro-management control over the design (and quite possibly retail selling prices), without actually building and selling the end product.

Design guidelines, especially exacting ones can work quite well when the following circumstances exist:

• The market is booming, demand outstrips supply and generally, everyone is prepared to pay for the privilege to live or operate in a design guideline adjudicated environment, and
• The urban design guidelines accurately reflect the real market for the product to be developed.

However, when the market softens it takes a very stoic developer (and investors/funders) to stick by the design guidelines, especially when they are causing (short-term) profit pain. I have seen countless subdivisions that start with all sorts of restrictions and the nicer (more profitable) homes are first of the rank to be sold and built. Then as the market deteriorates they (or the receivers) throw the design book away to make land sales. Inevitably lower ‘quality’ product gets built. And at that point, the project is on a race to the bottom. The ability to turn back to design higher-end (and more profitable) product as the market improves may now have been severely compromised.

But sometimes, in false hope, you create ‘design misguidelines’. This is when the vision and the reality don’t quite gel. Often in an area where gentrification is before it’s time, or a greenfield site that doesn’t support the underlying value proposition: amenities, schooling, socio-economic wealth, employment etc. Yes, you can sell land that enforces such quality controls at the peak of the market, but in all other times, you are effectively handicapping your potential land buyers.

So the takeaway is to produce design guidelines that are both sustainable and enhance profitability over the lifetime of the master-planned project.

Design at Scale

Is this one project of 1,000 homes or 1,000 home projects?

If you are developing and building the entire master-planned project then you have to think of design at multiple levels. The overall urban design – the big picture. The stage level. The super-lot level. And the individual plot (or lot, or section or whatever quasi-legal term you use) level – the nitty-gritty detail.

With a residential subdivision project of say 3,000 semi-detached homes, or 30 apartment blocks or 20 office towers, you have the opportunity to think at scale. Something you don’t get (as much) with a one-off project.

‘Thinking at scale’ has plenty of positives for efficiency and productivity, in design – for example:

• If we build a consistent volume of 300 houses a year, every year for next ten years, what sort of bulk supply agreements can we enter into with architects, engineers and other consultants?
• What if we just design one office tower and replicate it 20 times?
• What about 5 standard house plans, that we replicate 600 times each?
• What about the exact same configuration for each superlot?
• Can we get a global building consent so we don’t have to apply for each individual building?

And that all works where you are taking a cookie-cutter approach. But there are design drawbacks, especially in projects with a large residential component. This is what I call ‘at scale complacency’.

At scale complacency occurs when the details are glossed over, just because there is a big number. And in a master-planned project, one of the biggest offenders are architectural designers.

Consider this scenario, you hire an architectural firm to design three super-lots of 100 terrace homes each. The architectural firm charges a fee based on a per-home basis. You get the designs back and it all looks the same. The colors are similar. The plans are similar. The windows are in similar positions. The roof forms are similar. The decks are in the same place. The designers have put plenty of thought into the big picture look and feel but have they adequately addressed the detail?

Your modus operandi may have been to cut costs and boilerplate everything. Standard floor plans. Standard colors. Everything a carbon copy. That is a valid strategy if it truly reduces your costs and your master-planned project branding and ‘look and feel’ and most importantly the buyer pool that you are targeting can handle it. But often it’s not. Even if you have brought into the architect’s ‘vision’ that they have designed a cohesive design that links all the homes together in a symphonic melody, you need to check out the detail.

As development manager or design manager, you might only be interested in the stratospheric perspective of each super-lot or stage. From that high-level design view the architect may have done an exemplary job.

All the same the home buyer might not think so. And who is your real customer – the architect or the home buyer? The designer or the tenant? And what do they really care about?

I won’t keep you guessing.

They ONLY CARE about their new home, new office or new shopfront. Sure you might like to skite to your friends about being part of a brilliantly designed award-winning masterpiece courtesy of starchitect so and so. But how is that going to go down when you are sitting on your deck, toasting a chardonnay with all your mates looking out onto a big ugly confronting retaining wall? Especially whilst your 5-year-old daughter, sitting in her bedroom, without even straining, has a panoramic view of the city skyline!

The buyer cares about all the details. They are going to live or work with the details. On a site plan with 100 homes, the buyer is not going to see the finer points in the design. But once the property is built, every detail will be out in all its glory. Unless you have pre-sold or pre-leased and have a thick skin to suffer the abuse from an irate buyer or tenant and the market is so hot, replacements will line up regardless, then I suggest you pay attention.

No not just you, the architect needs to. Train them, coach them, politely remind them, throw their fee letter back at them, whatever, but get them to look at every single individual building and unit to maximize value. Have they imagined themselves on every deck on a summers evening? Do they pay attention to what one will see from the kitchen window, and every other window? Does the fence block a potential parking space? Could the trash can go in that corner? Why not put the transformer around the corner, out of sight? Can a kid play on that gradient? Will we get more sun if the window is higher? What does the room feel like with that metal detail over the window? Yep buyers have emotional attachments to what could be their biggest investment.

Yes, a big list of design considerations, applied to every single unit can be intimidating. Does your architect even have a checklist for such concerns? Don’t let them become complacent with scale. Especially if you are paying them a similar per-unit rate regardless if it’s 10 or 100 units. Even if you have a bulk discount, this level of spatial thinking needn’t take that long. But it does take the mindset to think like the eventual occupier for every space that is designed.

When you are designing your own home, you and your family are across every single detail arent you – from light sockets to window sills? So get your architects to take a similar approach when designing ten thousand!

Now, what if you don’t buy into the architect’s design consistency argument? You actually want your master-planned project to have architectural variety. You might be creating the city’s next suburb, but that doesn’t mean it has to all look the same nor should scale mean compromised individuality. You have told the architect but you are not sure if they are getting the message. You know when the architect comes back on the third attempt and terrace block 15 still looks the same as terrace block 12,13,14, 16 and 27? When apartment tower X looks surprisingly similar to office tower Y. In this situation not only are the design team suffering from ‘at-scale-complacency’ they are caught in a vicious case of tunnel vision. Well, from experience there is only one way out.

Hire multiple architects.

And on that note, look out for our next edition where we explore everything else about scale.

Cheers

Andrew Crosby

The DC: Master-planned Projects – All published editions.


#1 Roads
#2 Net Developable Area
#3 Feasibilities
#4 Stages
#5 Team Collaboration
#6 Architectural Design
#7 Scale Thinking
#8 Selling the Dream Location

P.S.

Now in this blurred world of social media versus professional media, my opinion versus my employer(s), salary versus side-hustle, middle of the business day versus 11pm on a Sunday evening, it can all get a bit confusing. So, here is my value proposition, and both complement and benefit each other.

• If you have a development site that you would like to sell some or all of, to develop yourselves, or to build houses then Universal Homes www.universal.co.nz might be able to help. We focus on delivering value-for-money homes in the ‘relatively affordable’ range, like the 1300 home westhills.co.nz or the 600 plus homes we have built at Hobsonville Point, or the thousands of others around Auckland over the last 60 years. Message me on LinkedIn at any time
  linkedin.com/in/ajcrosby .
• If you want to learn more about real estate / property development and a continuous improvement approach, with books and courses in development management to maximize profit and decrease risk then visit www.developmentprofit.com

The Developer Chronicles: Master-planned Projects

In this series, I describe master-planned projects. The discussion focuses on the difference between a one-off project and a multi-stage, multi-year planned development. I explore the factors that great development teams grapple with every day. I hope you find it of value.

AND you can also contribute to this opensource education by commenting with your own experiences, strategies, tactics and ideas here on LinkedIn. That’s where we can really embrace group network effects for continuous improvement in development management.

Master-planned Projects #5 Team Collaboration

Question: What’s the difference between a good team and a bad team?

Answer: Team WORK!

Specifically: Team working very closely together.

If you thought team collaboration was important for a one-off development then wait until I tell you about a master-planned project.

Who’s on the Team?

Firstly we’ll describe the team. The greater team will consist of internal staff, external consultants and contractors and intermittent exposure to external agencies. Let’s define the core team as those members who meet regularly and together have responsibility for delivering the project.

In a small outsourced team, (typical of nimble private developers) it might be the developer and/or development manager an assistant or two and everyone else is an external consultant or building contractor. In a large corporate where you do everything (design, consent, build and sell) except for specialist consultants (like traffic or acoustic engineers) all of the core team might be in-house.

And on large complex master-planned projects, the core team might constitute a whole layer of internal management, directing a bevy of consultants and contractors.

In all cases will be those agencies like city council, utility network operators, and other quasi-government entities where you must collaborate, but often will feel like a one-sided negotiation (their side!).

Here are the usual suspects for any core development team. Some roles may be done or governed by the same person, effectively a project manager, or some roles might need to be split further.

• Developer/development manager/project director.

Whether its the CEO, the Vice President, Mr Jones, or any of the descriptions above, if this project is your ultimate responsibility, and you are accountable to the investors, funders or board then this is you. We’ll refer to you as development manager (or leadership) moving forward. If that’s your title, but you don’t call all the day to day project shots, then that’s not you. Somewhere down the line, you work for this person and you are one of the following:

• Architect/Design Manager (architects: urban design, interior, outside and landscape)
• Town Planner / Planning and Consents Manager
• Land Engineer / Infrastructure Manager (All things on and below ground: Civil/ Surveying/ Traffic/ Geotech/ Environmental)
• Engineering Manager (Structural, and to a lesser extent fire, acoustic, HVAC, vert, facade)
• Construction Manager (All things built above ground)
• Sales & Marketing Manager / Agency
• Cost Estimator/Quantity Surveyor
• Financial Analyst/Feasibility Manager

Depending on which country you are in, and the complexity of what you trying to achieve the team might need someone dedicated to insurance and in-house legal counsel.

Collaboration Explained

Now that we know our core team, what exactly does collaboration – to collaborate- mean?

Here is a definition I have borrowed from the dictionary.

The words I particularly like to draw upon are the synonyms: Conjoin and Unite. In a master-planned project, it is not merely enough to work together. The team, at least the core team, must unite, conjoin and effectively become one.

Although many developers often feel like they have waded into definition [2] above, items [1] and [3] are spot on. [1] means you work together as a team (think staff), and [3] infers many of those you are working with not in your direct control (think contractors and consultants albeit you have some financial control, and local authorities, utility providers and government where you have zero control).

Bear with me as I go into deep cerebral contemplation. In a master-planned project, because we have multiple layers of design, across multiple stages, across an extended time horizon with high uncertainty, there needs to be a core team that moves in mental unison as the project develops. When things change, like a stage gets re-prioritized or a new risk develops (market heads south), or more certainty is gained (local authority approves a public road) everyone in the core team needs to know. More than ‘know’, they need to understand ‘how’ it affects them and how it affects each other team member. And importantly how their response to such change will subsequently affect the work of each other.

A residential estate scenario to illustrate.

At a project control group meeting, the infrastructure manager explains that the local authority is ready to approve a new road layout. It is in a location that differs from the original master site plan. The urban design architect updates the master site plan. This affects the size of the super-lots, so the building architect updates the super-lot site plan.

This affects the location of services so the civil engineer must update their services drawings. Similarly, the surveyor updates their boundary drawings. But the services now conflict with all a hillside packed with retaining walls, so the structural engineer needs to revise those walls. The walls get higher. She has to obtain clearance from the geotechnical engineer who decides that the retaining walls will require deeper foundations and further moving of boundaries.

This all adds additional expense so the estimator updates their schedule of costs. Sales values in later stages are now negatively impacted by higher than desirable retaining walls. The feasibility manager adjusts the financials and finds out not only does this combination of higher costs and lower values decreases profit but we are below the investment hurdle rate. That’s not going to work.

So the feasibility manager asks – “What happens if we move the road to a different location?”

The infrastructure manager replies, “Of course the local authority will accept a range of locations” (unlikely to be a true story!).

And there you have it, that circular problem is now solved.

This whole process can play out in a variety of ways though, linked to just how collaborative the team really is:

• If everyone in the team is on their A-game and understands their own role sufficiently (aka is not just a business development manager attending the client-facing meeting and actually knows very little) and the meeting is treated as something to get things done, not merely make instructions or pass information, then the net cost might only be a couple hours of everyone’s time, right there and then. I.e. plans are updated/marked up conceptually with team members immediately cognisant of the implications (or at least likely implications) so they can advise in real-time.
• However, if the team has an ingrained inability to do, challenge, or offer anything without first going back to their respective office and spending a week to mull it over. And then spending another week assigning the work to someone else. And not talking to anyone else in the project team during this period. And then waiting to present the changes at a regular monthly meeting another week later. And this approach continues down the line of affected team members. You could have lost many weeks or even months.
• Ideally, in a unified, thinking as one, ‘Vulcan mind-melded’ team, the infrastructure manager has anticipated the potential such issues and sorted it out with the rest of the team before this meeting even took place!

If the team has a central development manager/ project director, then they may mitigate the second linear approach somewhat. But if the second way above is the prevailing team attitude, the development manager will be forced to micromanage the communication between every team member. And they have to be across everything. When this is the case, then there is a tendency for team members to simply default to the development manager for an answer on everything. Effectively that’s everyone in the team absolving personal responsibility. For many development managers that’s how they like it – a pure command and control structure. Often that is necessary for the really difficult, risky and expensive decisions. But for everything else, I say that is an inefficient waste. The project team should be responsible and accountable, not just for their own work but also for considering the work of others. And the development manager’s prime role is to strategically pave the way for the rest of the team to do their jobs.

Three Degrees of Collaborative-ability

I’ll label what I see as the three improving degrees of core team collaborative-ability.

1. Silo mentality
2. War room
3. Mindreader

Silo mentality. In a silo’ed, everyone works on their own, focusing on the impacts on themselves only environment, sorting anything out takes a lifetime. Problems crop up, no one gets notified and the negative impacts are amplified. People crucial to the process might only find out when it’s too late. No one cares about the work of anyone else, except where it directly impacts them. In fact, it is all too convenient when someone else doesn’t deliver, as you now can use them as the excuse. Documentation and expertise is hoarded, or worse, secretly protected by the prying eyes of anyone else on the team. Tom Peters has a lot to say on removing silos (which I apologize for the overused cliche) and aligning teams (read here).

War room. This is where people come together to work together and make critical decisions together. Meetings are workshops to sort issues out. Team members have deliverables and they deliver. The core project team members understand their own part of the puzzle intimately. And each of them is responsible to push those within their sphere of control to deliver. Everyone who needs to be present is there, or just a phone call away, and all are empowered to make decisions and advice from their respective entity. War room orientated project team members have no problems organizing themselves into sub-teams. They can create a platoon with its own sergeant to tackle a specific task. And they communicate the results (aka solution) clearly back to mission control to make sure everyone is on the right page.

Mindreader. The mindreading team is (should be) the utopian goal for any master-planned project. [I have described something similar before with regards to consultants – read here ]. Core team members know the detail in their field and comprehend the bigger picture. They know how to deliver their contribution and have the authority and inclination to influence those under their management to think in a similar, anticipatory way. They know when to cull ineffectiveness and circumvent silo’s that form in their own departments. They can self organize and delegate tasks to solve issues concurrently. They are everything that the war room approach brings. But in addition, critically, they have taken a quantum leap forward. They appreciate and are empathetic to how others in the team might think. They pay attention and learn from the concerns of other team members. “Not my problem,” is their problem. They make it a project problem to be jointly solved. Delivery is faster, more accurate and certainty is achieved early. The infrastructure engineer understands that moving services could impact retaining walls that could add additional expense that could look ugly and deflate property values that will negatively affect the project profitability. They might not on their own be able to figure out the exact implications but they all think and act in a holistic way. Never do they sit back and judge “I will leave that up to the sales team or the architect or the development manager”. In fact, many of the core team are positioning themselves to be the next development manager.

How about some specifics to take your core master-planned project team to mindreading prestige?

• Authority. A mindreading core team member has been given the power and authority to act this way. By the client, the developer, the project director, the development manager – whomever. It starts from the top: a command and control type client will not be able to create the conditions for a mind-reading team.
• Trust is paramount. Everyone on the team must trust that both, others are delivering, and others are working to make everyone else’s job easier. That takes time and leadership that encourages trust. Trust is a two-way street. For leadership to give trust, team members must demonstrate they can be trusted to take their own leadership position. Leadership needs to be satisfied that core team members will persist to find solutions and absorb learnings from critical feedback or challenges. Trust is not built when leaders see someone taking the easy way out or defending mediocrity.
• Open communication. Each core team member takes responsibility for communal understanding. They know to express the implications on their own work so that the rest of the team understands. Leadership encourages open debate so team members do not close up ranks when problems surface. Team members consider other team members perspectives. For example, if you as a construction manager replace an integrated brick letterbox with a standalone metal stick in the ground from the big box hardware store to save cost, you have first cleared that with the sales team to make sure it doesn’t negatively affect sales price by a greater amount. Or if marble has been specified in the office bathrooms but it adds no value to the lease rate, then rather than you -as leasing agent- just accepting it, you indicate to the architect that it can be removed to improve profitability.
• Team stability. People are more important than companies. When people leave the team, not only does intellectual property leave, but so does trust, familiarity, and the ability to cognitively read each other. A new team member has come up to speed, not only in project know-how but also in their assimilation of the ‘group responsibility culture’. That takes time. Master-planned projects are notorious for lack of team stability. Part of the reason is obvious practicalities. Master-planned projects take a long time. Team members leave jobs, get promoted, move overseas, the market goes up and down and everything else in life has a habit of getting in the way. Even so, whatever leadership can do to reinforce and incentivize stability the better.
• Challenge. Question. Search until you find a solution. Everyone has (or grows) the confidence to challenge each other, upwards, sideways, downwards and the status quo. To question the reasons why. Team members don’t assume it has to be this way. Yes, they acknowledge others are experts, but they push for answers. Everyone arrives at the boardroom table on an equal footing. They seek constant improvement. Team members don’t wait for the development manager or client to push them. They have analyzed the options already and can present the pros and cons. They understand the more the team challenges themselves, the more likely the project will be more profitable. The more profitable the easier the project will be to deliver.
• Create cross-department/expertise groups. One way to break silos and help instill trust and confidence in the core team is to create teams within the team for individual workstreams or tasks. Rather than the development manager directing each team, give leadership to a team member. Where your core team may have 6 to 10 people, a smaller workstream team may only have 3 or 4. Each of those individuals will then be naturally closer to the action of other team members, and more willing to challenge and contribute. This helps team members understand how different issues impact others. It also forces the team to work together to find a solution, and analyze the alternatives, before asking before approval.
• Force decisions upon the team. If team members have earned the right to be trusted then make the team members responsible for key decisions. Start small and up the ante.
• Document control and workflow. Collaboration is often thwarted by poor communication. Poor communication is inhibited by poor documentation sharing, version control, and workflow management. Get this sorted.

Where you have a largely internal management team running a master-planned project, led by a development manager then an employer/employee relationship exists. Assuming people in the team are not tainted with silo orientated habits this should make it easier to achieve seamless collaboration. On the other hand, if these team members are also themselves running teams of internal staff and external consultants then they have to embed the same mind-reading collaboration mindset down throughout the team they guide.

If the core team is largely outsourced, (or for any external consultant or build contractor) then you have another little thing that gets in the way: contracts! More specifically big fat disclaimers in contracts. Especially the ones that say ‘the client is responsible for the work of others’. That gives externals a convenient out. You could include a contractual clause which makes each consultant responsible for evaluating the effect on their work of any changes by any other consultant or contractor. And a clause stating that they must advise the project team and client of any impacts immediately. But of course to achieve this you need buy-in and you need diligent consultants. With external builders and their voluminous contracts, it gets more difficult. And if things aren’t going that well and the contract has been dusted off, with attorneys mulling around then it is probably impossible. That is where a project manager between the core team and build contractor has to embed themselves in the psyche of the contractor in order to create a unified project mind.

I didn’t say it was easy.

Use this quote from John Carmack, a legend in video game programming, as inspiration,

“A strong team can take any crazy vision and turn it into reality.”

[A development is a little like a video game: you have to overcome obstacles and defeat increasingly outrageous foes as you work through the levels searching for the elusive treasure.]

Teamwork Control Mechanisms

To make it easier to create a collaborative environment, quality control mechanisms were suggested above. I say suggest because sometimes they can go too far and backfire. They need to be managed in the reality of the development situation. [ Note we’re talking about controlling delivery, not controlling people!]

Key Performance Indicators can be effective so long as they currently relate to the contracted project deliverables and one person’s KPI’s don’t conflict with another’s on the same team! This can often happen, when KPI’s have been set in departmental silo’s or when corporate goals and project goals are not perfectly aligned (for example short-term annual profit versus long term project profit). Whatever you call your targets/ KPI’s/ milestones/ objectives/ goals/ budgets it is important the team is all on the same page. Property development has a lot of targets pre-built in. There is plenty of obvious ones without you needing to concoct any arbitrary ones.

• Settle all houses, one week after they are complete
• Lodge stage two consents by Xmas
• Start building by Easter
• Finish civil works by Mothers day

Of course, to achieve each of these deliverables will be a number of intertwined steps to get there. There should be a comprehensive programme/schedule which lists everything on the critical path. And who is responsible to hit those milestones along the way. And most importantly that the system/software pushes notifications out to everyone that needs to know when there is a change.

When something changes, then everyone’s future KPI’s should be modified to reflect that change. KPI’s that are only decided once a year can become really messy, given the inherent variability of a development project, especially a master-planned one. Sometimes it is easier just to link KPI’s to project performance: ultimate profitability.

Meeting minutes are a control measure that goes without saying. And the team should be expected to run and take meetings with the simple, ‘who, what and when by’ noted to meet their objectives. At a high level, two effective measures are the monthly report supplemented by weekly workstream management. We will talk all about reporting and delivery management in a future edition.

Collaboration software – maybe, if you have someone internal dedicated to administering it and the team has full and contractual buy-in to its use. Ironically this is getting difficult these days with companies own email systems and other communication channels popping up every year or so (Messenger, Dropbox, Wechat, Whatsapp, …). Sometime in the future I will write about founding and running a Collaboration software business, but for the time being, I will say:

• Managing online collaboration systems is difficult in the early stages when you in the pre-developed design conceptual and planning phase. Everything is fluid and changing and you are running multiple feasibilities concurrently with bulk and location and concepts. In fact, such systems can be pointless, to a large degree. Sometimes they can actually detract from the work being done as they can create their own inefficiencies when you are trying to deal with change.
• During detailed design through consenting and construction, a full-blown total immersion collaborative system is easier to implement. That’s because contracts and budgets, programmes and authorities are largely sorted out. There is less room for movement and you can tie workflow to contractual requirements.

Team no, no’s.

When any of the following occurs, you know the team still has work to do, to achieve mindreading collaboration status.

1. Minor issues are constantly sent to the development manager to rule on.
2. The development manager requires they must receive every piece of correspondence between other team members.
3. Team members are not sure what the development manager will be interested in. Therefore to cover themselves, cc the development manager on everything.
4. Development manager wants to attend every meeting.
5. Development manager goes beyond challenging, questioning or searching for solutions and provides technical advice.
6. Development manager can’t escape from technical detail and spends a lot of time focussing on minor points.
7. Development manager has to show themselves around external consultants to demonstrate ‘who is the boss’. Similarly, development manager requires team member to seek approval from them before instructing external consultants and contractors.
8. The development manager is running from fire to fire, rather than setting strategic priorities, deliverable dates and evaluating future opportunities.
9. The development manager is always following up where things are at before due-dates.
10. Team members are not communicating where they are at on particular task, if that task is heading to be late – which if a pattern is established, can give rise it #9.
11. Development manager does not set up teams to work together to solve issues or evaluate opportunities on their own – i.e they always have to be part of the working group, just to make sure.

You will see many of the above points revolve around the development manager essentially micro-managing the team. Some might say this is necessary for control. Others (like me for instance) will argue, that approach is not scalable to adequately run a master-planned project. Nor does it allow team members to grow in their own leadership or become the next development manager. But it does take time for the team to develop where the development manager can sit back and purely focus on the big picture. [Is this really a secret list to remind myself….?]

However, where items are of paramount importance, carry considerable risk, team members have already been given ample opportunity (or lack the requisite experience or expertise) or the horse has already bolted then the development manager might be given a hall pass to insert themselves to manage the situation. That’s just the nature of property development. With the caveat, that coaching (training/teaching/demonstrating/pushing) is provided along the way. So the team member(s) can learn and grow to sort out the next similar situation on their own.

Annnnnnnnoooooooooooyyyying!

Here a list of pet peeves which should irk anyone. This behavior needs to be stamped out immediately! [OK, OK, I mean resolved empathetically with self-control equal to her Majesty the Queen no less.]

• “Which work would you like us to prioritize?” This will happen more on a master-planned project than a one-off, primarily because there are likely to be a lot more work streams running concurrently in a master-planned project. When I hear this my blood boils, especially if it emanates from a consultant or contractor who has taken on the role, fully aware of the size and responsibility of the project. It’s not necessarily a size thing either, as I have heard the same thing from medium-sized companies through to international conglomerates. There are likely two related things wrong. One, they have done a sales job on you, pulling the wool over your eyes when you engaged them and now they are not able to meet your commitments – the resource doesn’t exist. Or two, they are using the complexity and size of your project (or organization) against you so they can serve other clients – they have plenty of resources it’s just not directed your way! In both cases, if the problem persists, get a new consultant or contractor who can handle what they promise.
• “I can’t do that. We can’t do that. They won’t let us. But this. But that.” Really? Things might have changed (time certainly has), so let’s give it a go. Get three new opinions. You might surprise yourself and discover an improvement. Better still reframe to find an alternative. “Not sure if we can do that, but we can do this”.
• “I know this” Where a team member is the world’s self-appointed expert on a topic and there is no other way besides their own. Now, they might be the foremost person in the field. But odds on, they aren’t.The self-important often have a powerful weapon that they love drawing to reinforce their self-designated expert status, if given half a chance: “I told you so”. The problem arises when someone believes their own aura of invincibility and refuses to entertain anything different.
• “We have always done it that way.” Fine. Now can you at least think about doing it a different way? And while you are at it, please explain exactly why have you always done it this way. Caveat: The last three well-known annoyances come with an all-to-common fish-hook though. And not a lot of construction industry change evangelists will want to hear this. If you are one of those who -via self-interest are plugging their own agenda or product and not considering the total picture or any of the associated risks- then plug your ends. In property development and construction there is often a very good reason why it can’t be done and why we have always done it that way!!! That should not stop you challenging though. And if there is really no other way, demonstrate with the evidence, so the team understands.
• “That’s not my department” Where every report and communication from one team member mentions the specifics of everyone else’s contribution so that team member has effectively passed on responsibility for everything. One big self disclaimer. The question then becomes, why do we need this person, if everything they do has an excuse clause, “So and so said this”. Sometimes this is a just a temporary phase for newbies and those less experienced to a project team. The sooner everyone is singing the ” we are all in this together” tune the better.
• “That was all me”. When a team member likes to take all credit for themselves. Or that time when they take credit for something they actually never did. Or when they get jealous of the credit given to another. That same type of person often shies away as soon as there any problems. Leaders should give credit for wins downstream to the team. Conversely, good leaders have no problem admitting responsibility and taking the blame.

The Collaborative Conversation

Let’s end with a positive spin on our conversation. If whoever is leading the team plays their part, and is allowed to play their part from those above, then a truly mindreading team can be created. You know you have reached your collaboration destination when you start overhearing things from the team, without leadership prompting, like this:

• “Here are five options, with pros and cons – lets debate”
• “I agree we probably can’t do it that way. But what are we missing that allows us to do it more effectively?”
• “Who do we need in this team to figure this one out, who is the best in the industry we can ask for help?”
• “Why don’t us three get together, and try and find a solution before approaching the development manager?”
• “I think the client is wrong. Let’s find the evidence and see if we need to challenge that thinking.”
• “This is a major risk and one of the things the project director needs to know. We need to notify immediately and then work quickly to propose a contingency plan.”

To wrap it all up, I kinda like this quote:

“Collaboration is like carbonation for fresh ideas. Working together bubbles up ideas you would not have come up with solo, which gets you further faster.” – Caroline Ghosn

Next time we will talk about the differences between a master-planned project compared to a one-off project when it comes to all things ‘design’.

Cheers

Andrew Crosby

The DC: Master-planned Projects – All published editions.


#1 Roads
#2 Net Developable Area
#3 Feasibilities
#4 Stages
#5 Team Collaboration
#6 Architectural Design
#7 Scale Thinking
#8 Selling the Dream Location

P.S.

Now in this blurred world of social media versus professional media, my opinion versus my employer(s), salary versus side-hustle, middle of the business day versus 11pm on a Sunday evening, it can all get a bit confusing. So, here is my value proposition, and both complement and benefit each other.

• If you have a development site that you would like to sell some or all of, to develop yourselves, or to build houses then Universal Homes www.universal.co.nz might be able to help. We focus on delivering value-for-money homes in the ‘relatively affordable’ range, like the 1300 home westhills.co.nz or the 600 plus homes we have built at Hobsonville Point, or the thousands of others around Auckland over the last 60 years. Message me on LinkedIn at any time
  linkedin.com/in/ajcrosby .
• If you want to learn more about real estate / property development and a continuous improvement approach, with books and courses in development management to maximize profit and decrease risk then visit www.developmentprofit.com

The Developer Chronicles: Master-planned Projects

In this series, I describe master-planned projects. The discussion focuses on the difference between a one-off project and a multi-stage, multi-year planned development. I explore the factors that great development teams grapple with every day. I hope you find it of value.

AND you can also contribute to this opensource education by commenting with your own experiences, strategies, tactics and ideas here on LinkedIn. That’s where we can really embrace group network effects for continuous improvement in development management.

The DC: Master-planned Projects #4 Stages

A master-planned project, at least in my definition, is so large, complex or takes so long that it needs to be divided up into manageable chunks. Very few master-planned projects start everything at the same time but even if they do, they are likely to have their own characteristics that need to be split out. I call this ‘stages’. Others might call it phases, precincts, sectors or any other term to represent one portion of the development pie.

Stage Types

Stages can be interpreted in a number of ways, I don’t believe there is any formal categorization out there so here is mine:

• Type One. A discrete geographical portion of the total site. Let’s say a 100ha site is divided into ten, 10ha parcels. Each parcel represents one stage. So we have stages one thru ten.
• Type Two. The total development is broken down according to the chronological order of each stage proceeding. Each stage corresponds to the timing of development. Much like if each of our stages in the feasibility cashflow (described here) followed after one another. So Stage One is first, then Stage Two then stage three and so on. Each stage has its own period of development. For example, Stage One could be one year, Stage Two, three years and Stage Three, two and a half years.
• Type Three. The total development is broken down to the chronological order measured in calendar (or financial) years. So if the project starts on 1/1/20 then Stage One is 1/1/20 to 31/12/20, Stage Two is 1/1/21 to 31/12/21 and so on.
• Type Four. Product type. Stage One might be a mixed-use town center. Stage Two might be all the houses. Stage Four might be apartments.
• Type Five. Work type. Stage One might be demolition and bulk excavation works across the entire site. Stage Two might be public infrastructure offsite. Stage Three might civil infrastructure onsite. Stage Four might be above groundworks.
• Type Six. Consent type. Stage One might be subdivision consent. Stage Two a further subdivision consent. Stage Three might be an approval for infrastructure. And Stage Four a permit for building consent.
• Or, more than likely a combination of the above.

Thus, the concept of staging involves geography or timing, or both. Within stages, you might have sub-stages or super-lots or some other way of chunking that stage. And you might choose to combine stages to create mega-stages or mega-lots. And then within that you have individual site parcels.

Stage Naming

The art of naming stages, substages, super-lots and individual plots can get complicated real quick. It can end up perplexing in various ways, for example:

• Team understanding in general. We will talk about this more in a future edition but team collaboration on stage definitions is all-important. For example, a civil engineer is going to easily relate to the staging definitions given in Type Five and Type Two: a combined chronological staging of site works. So they name their plans accordingly. The architect is more attuned to what is happening above ground and takes a Type Four (Product Type approach) and names the stages as precincts, further subdivided as super-lots. The accountant only cares about staging as far as Type Three is concerned. Everyone has their own interpretation. Labeling plans and references within reports can get out of control as project team members understand stages in their own terms. I have seen it first-hand plenty of times, you can be sitting in a meeting and consultant X is referring to a particular stage, with consultant Y agreeing to everything, except X is talking about a completely different piece of land, scheduled at a completely different time than what Y is thinking about. Everyone on the team needs to be on the same -clearly understood- page as the project proceeds, and diligent in their updating of documentation. If you are in control of the project don’t assume this will be the case.
• Stages change. If you start off with a beautiful architectural master-site-plan that has every stage clearly delineated and all the definitions are time-specific synchronized in a glorified spreadsheet, I can guarantee you one thing: it will get messed up! If you were taking a sequential Type Two approach to stage names then Stage One is first off the rank. Let’s say Stage One is to do all site preparation and construction for 100 homes in one corner of your site. Stage Two is similarly 100 homes in another corner and Stage Three is a retail center located in between the two. But 3 months into planning, you decide to build Stage Three first. The conundrum is do you get the team to understand that chronologically Stage Three is occurring before Stage One? Or do you rename all your stages? Or do you add-in another definition like ‘Phase 1’ to represent timing only and ‘Stage’ represents geography or product?… See what I mean.
• Team understanding of priorities. People will naturally think Stage One starts first. So if a consultant is late to the project team party and sees a big plan on the table with Stage One emblazoned in one part, she might assume that is the highest priority. However, everyone else knows Stage Three is the priority! It’s just a matter of making sure everyone is acutely aware.
• Substages naming can conflict with master stages naming and vice versa. Take this example, you to start with Stages 1, 2,3,4 & 5. And Stage 1, includes super-lots 1,2,3,4,5,6,7,8,9 &10. Stage 2 has Super-lots 1,2,3 & 4. In a meeting if someone is just referring to super-lot 4 are they referring to the one in Stage 1 or Stage 2? There is a way around that, you simply have a numbering convention that starts at one and doesn’t repeat. Just be sure everyone knows you are talking about Stage 4 or Super-lot Four. You could have separate identifiers for stages and superlots: Stage A, contains Super-lots 1,2,3& 4. Stage B includes Superlots 5,6,7&8 for example.
• Within super-lots you might have building numbers, unit numbers and/or plot numbers. Stage A, Superlot 4, Building 3, Apartment 16. Boy that is getting confusing! If you try and use sequential numbering for plots (the individual sellable lots in a residential super-lot ) then think about the later stages: Stage Q, Super-lot 34, Lot 1256. And what if stage L is going to include 80 lots instead of 79 – do you renumber the whole sequence?
• Now, why don’t we just muddle the stormwater pond further: Super-lots might not neatly fit within master stages. So during your development Super-lot 13 which was part of Stage C, is now half in Stage D and half in Stage C. Do you break Super-lot 13 into 13a and 13b? Or what about the situation 6 months into the project when you discover a more efficient super-lot layout and combine super-lots 13 and 14? What do you call that now ‘1314’?
• And to cap it off, the arbitrary convention that created the name ‘Stage A, Superlot 4, Lot 56’ now succumbs to a formal legal definition once Title is issued You may of may not be able to control what name becomes. You certainly won’t if you don’t coordinate with your lawyer and your land surveyor (or whoever is preparing Title documents). For example ‘Stage A, Superlot 4, Lot 56’, becomes Lot 14, DP 13598.

What’s the moral of this discussion (that you will have rapidly lost interest in) about convoluting numbers turning something that should be simple in an algebraic mess?

Well, you need to control your numbering conventions on a master-planned project and keep close tabs on them. Someone should be in control of numbering. You will be amazed at how confused the wider project team will get if you don’t. [This is also a plea for someone out there on the interweb to let me know the best way to number master-planned projects…]

Here is our master plan from the last edition with the naming upgraded to reflect some of the issues.

Staging

You have developed a foolproof robust numbering/definition system for all the stages/super-lots/plots on your master-planned development. But, where do you actually start bringing in the bulldozers?

On a 200ha, 3,000 home and 50,000m2 of mixed-use (apartments + retail + office), do you just go and build the whole thing? In most cases, of course not. That’s why we have stages. But why do we choose a particular stage to be the first, the last or seemingly somewhere random in the middle?

Here is what the development team needs to consider when deciding, where to start. And be warned, different members of the team will only see their part as the priority. So depending on the outcome desired (which in the ideal world should really always be distilled to maximize total project profitability) any one of these factors may take precedence over the other. Sometimes it will be a no brainer, other times a hard decision will be required.

• Market velocity. What can I sell the fastest? You might need the cash or to give investors a little upfront faith in the market. If the housing market is flat but the office market is booming, then you might have to compromise your original plans and start with what will bring in some contracts. Of course, everything has a…
• Market pricing. Price. Yes, everything has a price. Sales velocity is typically related to pricing. Without reducing quality or speed, the lower the price the more sales. Not always. But where you and your competition are all doing the same thing – and your development product is essentially a commodity – price matters. And when real estate markets retreat, lower price and affordable often trumps high price and luxury. So you decide the first place to start is where you can deliver the lowest price-point properties. Or, in an upwardly accelerating market, it could be time to capitalize on all the loose money and sell more expensive homes – the waterfront stage first perhaps.
• Brand establishment. One big difference between master-planned projects and one-off projects is ‘estatewide’ branding. The first stage of your project will set the scene for what lies beyond. It’s your project curb appeal. Do it nicely, and you can build up sales momentum to continue to the other stages. So the decision might be to start with a stage that includes high specifications, stamping the seal of quality on the project from the outset. The brand is more than just your product though. It is also what else your master-planned project can provide. And that includes…
• Amenity. A common formula is to build parks, lakes, waterfront esplanades, ski-lanes, golf courses, wetland sanctuaries, playgrounds, public plazas or whatever ‘drawcard’ your project has upfront (like these). That helps your brand, by providing buyers or tenants amenity to use from day one. So your first stage may simply be all of the communal amenity with immediately ensuing stages those that are close to those features. Conversely, you may first need product to be developed to establish market demand. Think of the shopping center in the middle of a new housing suburb. You need the people living there, to build a customer base before you can attract retail tenants. Retail follows roof-tops is the old adage (but not always applicable).
• Profile. If your first stage is to set the scene, for a decade or so of fantastic developing ahead, then the place where your project site gets the most profile could be the best place to start. Maybe that’s beside the main road. Top of a hill. Viewable from the freeway. Next to an existing shopping center.
• Public Relations. Perhaps the profile you are harnessing is not physical but something more ethereal. Do you need to make a statement and build the publically aware affordable housing scheme first? Or the more ‘green and sustainable’ parts of the project? Alternatively, could this be a development where you want to keep a low profile, say a heavy industry, industrial park? So you begin with whatever is furthest from sight and mind.
• Demand. In a purely private profit-based development, demand is linked to both market velocity and market price. However, if you are developing in conjunction with a government housing provider then you might need to satisfy demand from a homelessness waiting list. That stage of the development might be first off the rank. Or post a natural disaster, the commercial section of your site might now be the place for businesses to relocate from their damaged offices. I recall Christchurch where the entire CBD had to up and leave for the suburbs. A similar situation happened in the wake of 9/11 in New York.
• Livability. Few people like living or working next to a construction site. No one really wants their kids strolling to the local primary school while 18 wheelers motor down your suburban street full of rubble leaving a dust trail in their wake. Your high profile tenant taking 20,000m2 of your suburban office park is going to lose their patience if you are detonating rock in the hillside next door 9 to 5. The staging may have to take explicit account of post-occupancy livability (or workability).
• Access. It might be a simple as getting stuff in and out. Perhaps there is only one road to your master-planned project and Stage A is where that road first hits your boundary. Or perhaps there are multiple access points to choose from, so you choose the one that allows the most efficient construction. Sometimes – especially with urban brownfields- you must keep the end in mind and start in the deep reaches at the back of your site, so you don’t box yourself in
• Civil works constructability. There could be other constraints on your site which dictate where you build first. It might be necessary to excavate a hill first to fill in a valley elsewhere. Otherwise, you are stuck with a pile of dirt you can’t get rid of. Or, the soil on part of your site might be the highly expansive peat (think dirt in an ancient swamp or bog) and you need to compress and let it dry for months or years to ‘settle down’ to a natural level.
• Above ground constructability. Maybe you want to get rid of difficult construction on a hillside, next to a river or along the coast first. Or perhaps, at this initial point in time, only building single level family homes sits within your development sphere of expertise. The apartments you have planned will need to wait until later stages when you expect you will be better equipped.
• Civil construction cost. If your site has no redeeming features, no locational value differential, one product type and not a lot else – imagine a sea of standardized homes, with the same beige roof, in the same grid-like (or so 60’s cul-de-sac type pattern) – then it might be as simple as focussing on what purely is the most efficient and economical way to build out the site.
• Seasonality. In wet climates, you may be restricted to bulk earthworks to the summer months. That could impact your staging to make the most of your earthworks season. Similarly, for snow, you might not be able to do any construction – how do you maximize the summer? Or in extremely hot climates, how to do you maximize the cooler winter construction season? And then there are those pesky holidays like Christmas and Chinese New Year that for human resource reasons determine a different staging agenda.
• Infrastructure. Let’s say you have to build a main arterial road through your site, but you haven’t quite agreed with the authorities its exact location. Without a resolution. you might be precluded from developing areas adjacent to that road. It might prevent you from developing areas a long way away from that road as well, due to having to allow for levels and the flow-on effects of one roads location on other roads in your intended site network. Roads (as we have discussed before here) can have a big impact on staging. Or what if your project is limited in allowable retail square footage until the local authority has upgraded the intersection on the main road out the front? Or the wastewater authority tells you they only have the capacity for homes on the half of your site closest to their existing network? And that just happens to be the half you originally wanted to develop last – and the rest has to wait until the neighboring developer builds a new pipe.
• Neighbors. Talking about boundary buddies. Neighbors can influence which stage you commence for a variety of reasons. Look at those NIMBY’s where you simply can’t get permission from them for whatever reason (to buy their piece of land, push height to boundary rules, require an easement for access or services, want to build a shared retaining wall, must get their permission to shore up their building foundations etc). That may compel you to commence a different stage earlier, as you wait them out, or simply buy time to think through a new strategy. Or perhaps your neighbors at one end of your site are in the swankiest zipcode in town. So beginning the development closest to them helps your project from a prestige and profile point of view. On the other hand, maybe your site straddles a complex which at best, is politely described as Hotel California. This neighbor might give you reasonable cause to start your development as far away as possible.
• Existing buildings & land tenure. You may have to stage works around parts of your site because there are tenants still in business, leases still left to run or rental agreements with home occupiers. You may want to continue some leases or lease out existing space to create a revenue source whilst you undertake your design and planning. Sometimes existing buildings are a cost-effective construction headquarters or make for an ideal shell for a marketing showroom. Typically, the ideal structure is to move all tenants to periodic terms and a ‘demolition clause’ that allows you to remove them with say up to 6 months notice.
• Flexibility. Maybe there are just so many issues to deal with, that retaining maximum flexibility for future planning, is the top priority. So you focus on the stages that have no alternative option first.
• Clarity. Similarly, the first stage you start with has the most clarity. The market is certain, the risks exposed, the issues are sorted. Subsequent stages are based on the level of clarity you reach, by the time you need to start the next stage.
• Risk and certainty. In the same vein, what stage represents the lowest risk? – let’s start with that. Which stage do have close to zero visibility on what we are going to do -let’s leave that to last.
• Timing. Speed could be your prime aim. What staging is going to get this project finished in the shortest amount of time? It might be a self-imposed restriction. Or imposed by your investors, funders or government regulations (like when zoning could expire or you are subject to government-imposed investment controls). Or is patience your forte? You want to stage the project so you do the absolute minimum to cover costs, whilst you go for the rezoning profit jugular with a planning application that might take half your children’s school years to get approved. Or you are simply content (and wealthy enough) to wait it out until the market improves, and your land value with it.
• Profit. All things considered, what makes us the most profit? – Isn’t this the only reason to choose a place to start? It can get hazy though. Does your profit include assumptions about value escalation created by early stages that will hopefully increase the value in later stages? Is it this financial year’s profit you want to maximize? Or maybe you are a listed company, you can only see as far as the next quarter’s profit (not always the best focus for long term real estate developments)? Is it the total overall project profit to be maximized? Are you measuring that in absolute dollars – the highest number of suitcases filled with greenbacks this project will deliver? Or are you measuring it in cash on cash return? Or the internal rate of return? That could lead your staging strategy to focus on maximizing net revenues versus expenses over time.
• Cashflow. Finally, (at least for this list) how does your staging take into account project cashflow? You might have plans for lakes, an aerodrome and an equestrian park to rival badminton, but your bankers simply aren’t going to pony up the money for all this extravagance (in their eyes, in yours it’s all value-add!) until you get some revenue in. Your staging plan may then have to focus on those stages that create higher revenues and lower costs early on and save stages with larger costs (like public infrastructure upgrades) to later in the project. Or do you have the financial clout to take advantage of lower costs for expensive items now rather than face cost escalation in the future?

If you have had the pleasure of working on a master-planned project of any significant size then you know, it’s likely many of the above factors are going to play a role. Some appear obvious (in the absence of complications who doesn’t want speed and profit?). Most overlap in multiple ways. And that list above is not even the half of it.

This is not a one-off decision though. It’s not just where you start, it’s everywhere you continue. You might need to consider all the same factors multiple times throughout the development timeline. Or some factors may need to be set in stone, because of long lead times, or commitments. Then, regardless of what makes the most sense (perhaps from a profitability perspective), you are forced to stay to course.

A master-planned project requires you to make a lot of decisions regarding staging and the timing of those stages. That makes it significantly different from a one-off project And it takes a whole lot more teamwork and coordination – which leads us to the topic for next time.

Cheers

Andrew Crosby

The DC: Master-planned Projects – All published editions.


#1 Roads
#2 Net Developable Area
#3 Feasibilities
#4 Stages
#5 Team Collaboration
#6 Architectural Design
#7 Scale Thinking
#8 Selling the Dream Location P

P.S.

Now in this blurred world of social media versus professional media, my opinion versus my employer(s), salary versus side-hustle, middle of the business day versus 11pm on a Sunday evening, it can all get a bit confusing. So, here is my value proposition, and both complement and benefit each other.

• If you have a development site that you would like to sell some or all of, to develop yourselves, or to build houses then Universal Homes www.universal.co.nz might be able to help. We focus on delivering value-for-money homes in the ‘relatively affordable’ range, like the 1300 home westhills.co.nz or the 600 plus homes we have built at Hobsonville Point, or the thousands of others around Auckland over the last 60 years. Message me on LinkedIn at any time
  linkedin.com/in/ajcrosby .
• If you want to learn more about real estate / property development and a continuous improvement approach, with books and courses in development management to maximize profit and decrease risk then visit www.developmentprofit.com

So we have crossed the digital divide – get all your inspiration and motivation using a Kindle or read from any device using Kindle applications

Click here to buy on Kindle.

Of course if you prefer you can still get the paperback here.

A book of inspiration, motivation and the plain truth in the property, construction, architecture, development and real estate industries.

In this light-hearted dose of satire and truism, Crosby unearths illuminating proverbs from real estate’s billionaire club and revealing maxims from industry stalwarts. Drawing on a life persevering in property, he even attempts his own literary imagery.

This book is coffee table fodder for every business in the real estate and building industry. If you sell, market, invest, develop, fund, build, manage, engineer, design or simply love architecture and reading about lavish lifestyles, falls from grace and theories of leadership then this book has words for you (literally!).

Quotes to inspire and learn from.
Metaphors to make you think twice.
All with the power to hit home harder than a two ton wrecking ball !

And they say it’s as safe as houses…

Cheers

Andrew Crosby
www.developmentprofit.com

The Developer Chronicles: Master-planned Projects

In this series, I describe master-planned projects. The discussion focuses on the difference between a one-off project and a multi-stage, multi-year planned development. I explore the factors that great development teams grapple with every day. I hope you find it of value.

AND you can also contribute to this opensource education by commenting with your own experiences, strategies, tactics and ideas here on LinkedIn. That’s where we can really embrace group network effects for continuous improvement in development management.

The DC: Master-planned Projects #3 Feasibilities

The financial feasibility is the guiding light for any real estate development. And the very bottom line represents everything about the project: the profit. I have written here about the profit before describing how it represents more than most people think. But at the end of the day profit drives projects. And at financial feasibility stage no profit = no project.

Profit and the Return on Cost

Everything you need to know about a project’s financial status is wrapped up in a single measure of profitability: the return on cost. The Return on Cost calculation is basic. The Return on Cost (RoC) is the Net Income (Total Sales less Total Costs) divided by Total Costs. Net Income is another way of saying Profit.

RoC = Profit / Total Costs

For example, if you proforma $10,000,000 of sales, and incur $8,000,000 of costs you have $2,000,000 of Net Income. That’s $2,000,000 of Profit. The Return on Cost is $2,000,000/$8,000,000 = 25%.

Some developers will calculate the Net Income slightly differently. They might use Gross Margin (margin is really just another word for profit) before sales commission, include commission in the costs, or take it from gross sales, either look at pre or post finance, include or exclude various taxes and place contingency outside of the equation. Similarly, the Return on Cost might have variations to it. It doesn’t really matter. I like to include every cost, including an allowance for finance and contingency and internal overheads and development management in the total cost denominator. Everything except income tax on net profit. That best represents the cash residual at the end of the today you can put in your pocket before having to pay the taxman.

Financial Feasibility

From hereafter I will simply refer to feasibility. What I specifically mean is the financial feasibility*. Not to be confused by an architect’s feasibility, which is just a bunch of drawings to demonstrate what and how many buildings could fit on the site. The feasibility can come in all shapes and sizes** but at the end of the day will include a summary something like this:

This simple feasibility is calculated in today’s dollars. It ignores the time value of money effect, except that the longer the project takes, the higher the finance interest cost will be. In today’s low-interest-rate environment, the time value is less meaningful anyway.

*For most of you reading this, I have not described anything new. If you are a novice and want to understand everything that needs to be included in a development project financial feasibility and how to build one then I have two suggestions: House, Land, Love & Money and Turnaround Success. In both books, I dive deep, fully deconstructing development project financial feasibilities.

**I also don’t buy into the need to have specialist proprietary software to create a financial feasibility. The software vendors will argue, that a spreadsheet can introduce too many errors. And they are right if you don’t either make the spreadsheet real simple, or integrate checks and balances. But my two main peeves with proprietary software are, one, it can be difficult to understand the assumptions under the hood. And two, no development project is the same and often the proprietary software doesn’t give you the flexibility as you require it. I prefer Microsoft Excel. Each to their own. The other thing I will add is that the size or complexity of your spreadsheet does not mean you are any better at predicting the future. Often a ten year feasibility broken down into monthly cashflows is no better predictor of the actual outcome than a few notes on the back of an envelope – keep this comment in mind later on. However, a more detailed feasibility does help you identify and quantify risk. This is another area where forcing yourself to to create your own feasibility is preferable to relying on input boxes where you don’t quite know how the outputs are calculated.

This type of feasibility is all you need for a one-off project. Assume the above represents an apartment tower (homes=apartments) built, in say three years, with presales before construction starts and a fixed price contract. The effect of time is all captured in the finance cost and presales and the fixed price construction price, prevent inflation or deflation having an effect. (This, of course, is rarely the case, even for a project that takes six or 12 months, but for feasibility purposes, it is a valid assumption).

Now let’s consider a master-planned development feasibility. The summary might be no different. However, in my definition, a master-planned development takes place over several years, even decades and in various stages. Imagine something like this diagram.

If we cashflow our summary out according to each stage (probably easier to think about stage and year as one and the same ) then the feasibility expands to look something like this:

It’s the same Profit $ and the same Return on Cost %. Nothing different to see there. But we have expanded the detail to show what revenue we expect to receive and expenses to be paid in each stage. If you want you could discount future stages and calculate the Present Value and the Internal Rate of Return, but I am not going there in this article. The main difference is the master-planned project typically takes a lot longer than the one-off project, all things else equal. (Plenty of standalone projects can be delayed years and decades because of market conditions or issues. I have plenty of examples here. But that doesn’t mean they become a master-planned development, it’s just they are a one-off with delays!).

Escalation

So let’s assume you have done all your due diligence, created a master-site-plan and are happy with all your sales projections and costings – in today’s dollars. And let’s assume each of the five stages shown above takes two years. That means this is a ten-year project. Do we really think we know where the real estate market will be in ten years time? No one has that power of prediction – despite what one might try and convince you. But, we are in the development business and we must make some financial projections to satisfy investors and funders. The tendency is to allow for inflation by escalating cashflows. I.e. we forecast (guess) that sales prices will rise and costs will also. That is an attempt to give us a more realistic view of the actual cash coming in and out in later stages. When we do that the feasibility will look like this.

Did you notice something? And every developer would have instantly. Even though we have escalated both income and expenses at the same 3% rate, we have magically created additional Profit and a higher RoC That is a function of two things: one, simple maths – revenue is higher than costs therefore if you escalate both at the same rate the profit gap will increase. Two, you typically incur costs in advance of sales, so there is less time to escalate costs and more time to escalate sales revenue. For one big-ticket item – the land purchase -it’s price does not increase. Infrastructure construction costs – bulldozing dirt and building roads – is also incurred in advance of above-ground building.

Few forecasters limit their optimism though. Especially if you have had previous years of sale price growth in the market place at five or more percent. It will be difficult to do anything but continue to forecast that trend into the future. Ironically few forecasts temper their pessimism regarding construction costs, even with five percent or more increases in previous years. The tendency is to limit future increases to inflation plus. Put those two optimism-bias based factors together and your feasibility might end up like this.

Look at all that profit! Note that we haven’t increased density and sold more properties. We haven’t value-engineered the design. We haven’t found a cheaper method of construction. We haven’t added marble tiles to the bathrooms to increase the sale price. No, we created 24.5 million dollars simply through the power of innocent escalation.

Now our escalation guesstimate might prove correct, you will never know until stage five is complete – in this case a decade later. But equally so the market might deteriorate. Why not put this feasibility forward?

I have never seen a feasibility presented to anyone who is going to make a decision to fund or invest into a development project which would be so bold to suggest sales prices will go down, and construction costs will continue to rise. But those exact circumstances can and do happen – most often just prior to the peak of a cycle, when peak development feasibilities are being created! That pessimistic approach is just as realistic assumption as the better looking pink and peach(y) feasibilities above.

The moral of escalation (and similarly deflation) is this. Use it to look at your upside versus your downside – sensitivity – but be weary of only showing sales prices that escalate in excess of costs to make decisions or to set inflated investor expectations. In master-planned projects, due to their longer time horizons as compared to a one-off project, the impact of escalation can easily trump all other assumptions. And at the end of the day, it’s just a big fat guess. Sure property prices always eventually rise you say, and in many growth cities of the world you might be eventually proven true, but in your ten year project will that happen in year ten or year twenty?

I prefer to use the todays-dollar feasibility, without escalation to make decisions. It’s one less assumption that is required. It also makes you appreciate the risks you need to control more – like construction costs, good old value-engineering and market appropriate design.

Reforecasting

When you sign off on the feasibility for a one-off project and start construction the feasibility typically turns into the budget. You monitor the budget as you move forward and at the end of the project review where it all ends up. Unless your one-off project has come off the rails or morphed into a master-planned project with a number of stages to be completed over multiple years, there is no need to re-forecast the feasibility.

A master-planned project requires constant re-forecasting however. Rarely do you get funding or investment permission for every dollar the project will need over the master-planned projects lifetime. And from a risk management point of view neither should you. Even if you did, you need checks and balances. Re-forecasting the feasibility is the best way. At a minimum, you need to comprehensively re-forecast at each stage, to show the actuals of what has been achieved and the projections for the stages to come.

Here we put ourselves four years down the track, at the completion of stage two. We re-forecast in unescalated dollars: that is the actual dollars that were received and spent and the forecast of what is left to deliver, in today’s dollars.

It looks like we are doing a little worse than the original overall unescalated prediction (orange above). Not an uncommon site in property development! But that can reverse later down the track with a spike in the real estate market selling prices – it’s just that we are not predicting that here.

The project fundamentals haven’t really changed. We are assuming the same number of homes and shops in the same area of land. But, another big difference between a one-off project and a master-planned project is master-planned projects can evolve dramatically.

A decade is a long time for your prediction to stay the course. In all but the most fringe suburban plain vanilla – no room ever for negotiation or replanning – zoning environments, you should realize that you might have to change your product mix. And sometimes quite substantially. So four years down the track in our little scenario we find the development is still making a profit and it’s only down a few million from our unescalated original assumption. But the general area has seen an influx of businesses and office space being built. The shops we intend to sell next year look in good financial shape but a new opportunity has emerged: a mid-range hotel for business travelers. The plans have been drawn up, the numbers crunched and fed into this feasibility.

By using some of the land previously dedicated to homes to build a hotel, we can improve the overall profit by $9 million. This is a simple example, the reality can often be stranger than the fiction you predicted years earlier.

Depending on your company structure there might be a tendency to ignore the past and simply re-forecast the future. I like keeping them in the same overall master feasibility. Analyzing where you have been will lend more accuracy to your projections moving forward, especially as risks become better known.

Re-forecasting is another way of saying, get your feasibility up to date for the highest and best (aka most profitable) use of your land. The more you reforecast the better. In a good market, and you are surpassing your profit target, it might seem less urgent. But don’t rest of your laurels – reforecast to take advantage of new opportunities. Yes draw a line and keep the delivery engine running hot but don’t forget to test even better alternatives that may surface. In a poor market, you might have no option to but to spend all day testing the viability of alternative schemes, re-forecasting to save whatever profit was first predicted.

Live Feasibility

I am a strong believer in live feasibilities. This is when significant changes, new risks or risks solved are integrated into the feasibility as soon as you know about them. As soon as an assumption is clarified then you update the feaso. A cost increase – update the feaso. You can push the sales prices higher – update the feaso. Council are going to sting you for infrastructure not previously allowed – update the feaso.

This is a risk control mechanism. Even if you do this outside your normal budgeting processes. But updating the feasibility is your best way of seeing where your budget currently lies, and dealing with a potential short-fall early.

A master-planned projects overall feasibility might be massive and something you are reluctant to have open to change on your desktop every day. But someone in your team must be doing this, so you know the true financial picture of your project. Probably you! If you can’t get your head around that, then make a conscious time to update the feasibility – once a week, a month, god forbid once a quarter. Don’t leave it until you are formally required for investors, funders or the board – surprises don’t go down that well.

Now, you might not actually change anything when you update the feasibility. Because no new information warrants a change or no assumption is clearer clarified. But the key is you have gone over it and checked what you did previously assume still holds. It’s a good discipline to be regularly updating the risks and clarifying their potential financial impact and testing against the summary feasibility. Even if you only formally integrate it when there is more certainty or a significant change in the $$$.

Multiple Projects, Multiple Options, Multiple Feasibilities

A one-off project has one financial feasibility and so should a master-planned development. But the reality is a master-planned project is a collection of subprojects that will typically traverse multiple financial years and potentially multiple investors and funders. In our feasibility, maybe each stage is not a couple of years, but indeed a separate subproject determined by its location in the masterplan.

Different product types often need different types of feasibilities. If for nothing else to determine their own relative profitability amongst alternative options. For example, in our project ‘shops’ might be a small retail mall on the main road at the entrance to the development. At some point in time, it should be broken out and examined on its own. Is it 10 shops of 100m2 or 15 at 75m2? Are we selling shop condo’s to business owner-operators for a fixed rate, say $500,000 each. Or are we selling to investors who will in turn lease the space at 40,000 NNN per annum? And what yield do those investors demand? What about a few retail outlets and the rest as serviced office space? Do we really need the shops, should it be an apartment building instead? Having separate sub-project feasibilities makes it easier to handle this analysis.

Consider a billion-dollar project with a master summary feasibility where, within, each of 11 stages (based on civil infrastructure sequencing) each had its own feasibility. That was further broken down into the 36 super-lots. Big-ticket cost item issues that affected the overall development were updated in the stage feasibility, automatically updating the summary feasibility. Analysis of different product type options was done at a super-lot level – with each feasibility standing on its own. And as soon as a new product type made more profitable sense, that super-lot feasibility replaced the old one in the master.

In a flat market that involved looking at different feasibility options on different super-lots all day long trying to itch out the best profit. A new architect might have some creative ideas – so we do a feasibility. A competitor might have launched a new type of layout down the road – so we model it for our site and do a feasibility. Something a bit different comes across LinkedIn – lets test that here and do a feasibility. One day artificial intelligence might be able to automatically generate all the potential feasibilities on a site (I go into detail on that here), but until the future arrives….we do a feasibility!

So within your master feaso you need to be able to separate out the sub-projects. But they still need to link back. Always be conscious of testing a change in one sub-project’s effect on the master feasibility. Land creep is one such reason.

Creep

Land creep occurs when in order to improve one particular stage’s feasibility (usually the current stage you are ready to obtain budget approval for) land is stolen from the future stage in order to build more houses/shops/offices/stuff. The current stage’s feasibility now looks great, but what damage have you done to subsequent stages. Only by integrating it into the master (or having both stage feasibilities running side by side) can you be sure of the overall Profit and Return on Cost implication.

Density creep is another reason. This is where one stage steals gross floor area, number of units, height or whatever cap from another stage. You may have a zoning induced ceiling for the entire development. And stealing some now for short-term gain may decrease your overall long term gain.

For example, let’s say your master-planned project has ten apartment towers planned. Three have sea views. The rest won’t and everything else is basically the same. Your zoning allows you a maximum of 250,000m2 of developed floor area across the total project. [Just multiply it by ten if you are American and prefer square feet] You are leaving the sea view towers until the very last stage and are allowed to go up 50 stories and 25,000m2 each (total 75,000m2). The stage you are currently looking at includes the fifth and sixth towers, both without views. Originally you had them at 30 stories each, but you are allowed by planning officials to go up to 50 levels. You have already developed 145,000m2 and originally these two towers, in the worse location were going to be 15,000m2 each (total 30,000m2).

But the profit on this stage is not looking too smart. To improve the profit you steal 20,000m2 from the last stage and add it to this stage. Towers six and seven are now 50 stories high and 25,000m2 floor area. The profit on this stage looks great: $3,000 per m2. But the last three towers, the ones that will command the highest prices with no additional incremental cost, are now reduced to a total floor area of 55,000m2 at a higher relative profit of $5,000 per m2. When you look at the overall feasibility, you have essentially sacrificed 20,000m2 at $2,000 per m2 of profit. What’s $40mil between friends? Best to always look at the impact across the master feasibility.

Infrastructure creep is similar to density creep. Your master plan site might have restrictions or caps on the amount of sewage/traffic/power/stormwater. The allocation of this creep between stages needs to be carefully considered. Don’t use it all up in one place and leave the last stage hanging – or whatever other implication it could have.

And there probably are a dozen other creeps which you can find on your own project (Political opportunity creep, annoying neighbors creep, public amenity creep…..).

That’s enough about financial feasibilities for the time being.

Since we have introduced the concept of stages, that important difference between master-planned projects and the standard one-off development will be our next topic of discussion.

Cheers

Andrew Crosby

The DC: Master-planned Projects – All published editions.



#1 Roads
#2 Net Developable Area
#3 Feasibilities
#4 Stages
#5 Team Collaboration
#6 Architectural Design
#7 Scale Thinking
#8 Selling the Dream Location

P.S.

Now in this blurred world of social media versus professional media, my opinion versus my employer(s), salary versus side-hustle, middle of the business day versus 11pm on a Sunday evening, it can all get a bit confusing. So, here is my value proposition, and both complement and benefit each other.

• If you have a development site that you would like to sell some or all of, to develop yourselves, or to build houses then Universal Homes www.universal.co.nz might be able to help. We focus on delivering value-for-money homes in the ‘relatively affordable’ range, like the 1300 home westhills.co.nz or the 600 plus homes we have built at Hobsonville Point, or the thousands of others around Auckland over the last 60 years. Message me on LinkedIn at any time
  linkedin.com/in/ajcrosby .
• If you want to learn more about real estate / property development and a continuous improvement approach, with books and courses in development management to maximize profit and decrease risk then visit www.developmentprofit.com