Frequent Development Mistakes Volume 1
Successful real estate development depends on two very different management approaches. As the owner of a firm, the primary concern must always be managing the big picture of your company’s business- finding new projects to add to the development pipeline, balancing financing considerations, relationship management, human resource considerations, etc. Many Developers excel at this upper management approach. Conversely, the success of any one individual development project requires a completely different management approach.
As developers know, development project management is exceptionally complex and requires an unwavering attention to the thousands of details involved. Unfortunately, balancing the oversight of architects, engineers, civil engineers, title companies, general contractors, Xcel Energy, Sales Brokers, City Inspectors, Plan Reviewers, etc. can be almost impossible to give complete attention to while also focusing on the big picture of a development business. Often, this split approach can result in simple errors that can cause budget overruns ranging from annoying to devastating. Below is Volume 1 of our Frequent Development Mistakes Series that can cause budget issues
We have seen Developers overpay for tap fees by $40,000 or more with no questions asked simply because their architect spec’d an incorrect tap size on the plans. Knowing the right questions to ask and ensuring proper review of the tap sizes your architect or civil engineer are specifying is essential. We explore this issue in depth in our blog post “Navigating the Waters of Water Tap Fees”.
Xcel Energy is frequently cited as the worst part of the development process. The process of applying for disconnects, infrastructure upgrades, and service reconnections is long, complex, and prone to frequent mistakes and errors from Xcel subcontractors that have high turnover and inexperienced designers. At last count, the entire process requires applications to shift hands no less than 20 times and delays can happen every step of the way. Properly managing this process requires constant attention, the right contacts and rapport with Xcel management, and the knowledge and experience to ask the right questions and follow up appropriately to get the designs in the shortest time period. With infrastructure costs that can range from $0 to more than $100,000 for townhome projects (and which can always be negotiated with the right know-how), having a mastery of this process simply can’t be emphasized enough.
This process is bureaucratic and absolutely full of red tape- something not all (if any) General Contractors have the time or patience to wade through effectively. RedT Homes has an expert on staff that has direct connections that help our clients navigate this process and can save developers that work with us from months of delay at every stage of their projects.