Development Process and Risk Management

Residential vs. Development Process

  • Residential development is different from other types, but the development process is crucial.

Risk Management and Decision Making

  • Why have a development process? It's all about risk management and commitment.
  • Objective: Maximize value with minimal spending.
  • Decision-making: Use a disciplined approach to decide whether to proceed with a development without spending excessive amounts of money.
  • Analogies: Use analogies like a funnel to explain the process.
  • Case studies: Use case studies as examples to illustrate points.

Exam Focus: Development Process Stages

  • A common exam question involves outlining the main activities of one or two stages in the development process.
  • Each stage represents a progressive refinement.
  • Design refinement: Moving from schematic to developed designs and working drawings.
  • Consenting: Includes authority scans, Environmental Impact Assessments (EIA), and resource consent applications.
  • Building consent applications.
  • Risk management.
  • Feasibility studies as benchmarks at the end of each stage.

Feasibility Studies

  • Indicative feasibility: Determines if the project is a runner.
  • Detailed feasibility (Stage 3): Decides whether to proceed, as significant money is spent beyond this point.

Assignment-Related Questions

  • Simple questions related to assignments may appear in the exam as "throwaway" marks.
  • Focus is on learning from the assignment rather than re-examining it in detail.
  • Knowledge of drawings and editable areas is important.

Development Profit Calculation

  • A recurring exam question involves calculating development profit:
    • Given total project cost, revenue, and cap rate, calculate the development profit.
  • This is considered an easy mark.

Gearing and Borrowed Money

  • A follow-up question may involve borrowing profit:
    • Development profit as a percentage of the developer's invested money.
    • If money is borrowed, the development profit percentage increases.
    • Simple calculations are essential.

Commercial and Investment Assessment

  • Common question: Why is investment assessment needed?
  • Certain developments cannot undergo commercial assessment.
  • Tool for asset development: Determines the scope of refurbishment.

Master Plans

  • Importance and purpose of master plans.

Premium Development Factors

  • Authority consents are crucial.
  • Resource consents: Their importance and challenges.
  • Environmental impact reports.
  • Urban planning: Its influence on development.
  • Case study example: A shopping center development influenced by urban planning.

Resource Consent Process

  • Council processing methods:
    • Non-notified (ideal).
    • Limited notified.
    • Notified (most difficult).

Building Consents

  • Focus on the details and proving compliance through drawings.
  • Compliance Certificate (CCC):
    • Essential for project completion.
    • Releases money from presales.
    • Indicates project completion.

Communication Skills

  • Awareness of different communication styles.
  • Importance of briefing teams and leadership.
  • Choosing appropriate communication methods (face-to-face vs. email).

Consultation and User Groups

  • Consultation: General engagement.
  • User groups: Determining building needs (e.g., hospitals, sports centers).
  • Stakeholders: Neighbors, Iwi (Māori tribes).

Engagement with Māori (Tangata Whenua)

  • What constitutes good Tangata Whenua engagement?
  • Typical key effects on development.
  • Case studies as reference.
  • Pōwhiri (welcome ceremony) on development sites.

Office Buildings

  • Workplace value for tenants (drives rent).
  • Changing trends in office spaces.
  • Attributes of good high-rise CBD office buildings.
  • Best practice workplaces: Non-designated workstations and premium features.

Risk Management

  • Typical risk-mitigating features commonly used by developers:
    • Pre-lease: Agreement for a building being defined by drawings for a sum of money paid in advance.
    • Pre-sale.

Sustainable Development

  • Carbon emissions and carbon footprint.
  • Greening of buildings.
  • Embedded carbon: Efforts to minimize it.
  • Green Star certification.
  • Examples of green building features:
    • Rainwater harvesting for garden irrigation.

Land Subdivision

  • Caveats and conditions related to future housing dwellings as part of resource consent.

Construction Contracting

  • Contracting at different times in the funnel:
    • PPP (Public-Private Partnership): High upfront involvement.
    • PM organization approach: Beginning of the funnel.
    • Design and construct: More than halfway down the funnel.
    • Construction only: Just before the construction phase.
  • Benefits and merits of each contracting type.
  • ECI (Early Contractor Involvement): Value it brings.
  • Project control groups: Important concept.

Construction Control

  • Basis for a contract and developer desire to contract broader risks to the contractors.
  • Collaborative strategies: Alliances and joint ventures.

Industry Sectors and Refurbishment

  • Hospitals and hotels: Similarities in handling refurbishment.
  • Challenges of refurbishment (increasingly important).
  • Triggers for refurbishment (related to revenue streams from tenants):
    • Lease review or lease expires coming up for major tenants.
  • Tools for refurbishment:
    • Investment assessment to define scope.
    • Risk assessments and compliance with authorities and regulations.
    • Tenant management during construction.
  • Special skills needed by contractors.

Team Briefing, Dynamics, and Leadership

  • Consultant fees: Where they come from.

Shopping Centers

  • Retail development challenges.
  • Funds flow.
  • Market research: Its application in sizing a shopping center.
  • Rent establishment for individual shops.
  • Tenancy guidelines: Agreement outlining the process.
  • Tenancy coordination: Process, outputs, essence.

Sustainable Development (Continued)

  • Green building examples: Meaningful features like rainwater harvesting.

Land Subdivision

  • Conditions on resource consent related to future housing.

Conclusion

  • Importance of commercial and investment assessment.
  • Stressed importance of communication skills.
  • Course aimed at first two years of professional development.
  • Skills will be needed a couple of years into your profession.