In this article, Clive Read identifies capital development issues that financial directors will need to be aware of.
1. Planning Ahead
Start from the academic year by when you think you want a development to be ready… and then work backwards.
Allow sufficient time for negotiation and discussion, securing planning permission (including any JR challenge period), procuring your advisers and contractor, obtaining funding, and any contingency. You always need more time than you think.
2. Getting Buy-In
This means getting internal regulatory issues aligned and also making sure funders are comfortable with timing and cash-flow and the planning cycle.
Early and regular discussions keep your advisory team on board and should help head off any last-minute issues.
3. Expect the (Un)Expected
The best laid plans can be de-railed by something unexpected.
These all have direct or indirect financial consequences - the key is managing those risks.
Fixed price construction contracts, dealing with rights of light claims, or removing third party occupiers are all examples which can be assessed and planned for.
The key is knowing what you own, what could go wrong and heading them off before they become a problem.
4. The Perils of Project Creep…
Major developments have a tendency to take on lives of their own so good and robust project management is a must.
External advisers can help but there’s no substitute for regular dialogue with key tasks assigned to people and specific follow up to ensure the project remains on track and budget.
5. Remaining Flexible
The importance of seeing the bigger picture should not be under-estimated.
The law should be an aid to the project delivery not an end in itself.
Good advisers will help you manage risks and enable you to make informed decisions on the commercial issues that matter.
For more information, please contact Clive Read in our Commercial Property team on 0121 227 3712.