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HEI major developments, a practical guide

VWV's Clive Read explains the secrets to successful large-scale projects

Posted by Hannah Oakman | October 25, 2015 | Finance, legal, HR

We have all seen the wow factor that accompanies a brand new campus or building: students enjoy the environment created by a state-of-the-art facility, as do staff; accolades can be won, student satisfaction figures can go up and reputations enhanced as the university cements its reputation as a seat of learning and a great place to live, work and play. However, we all know that basking in the afterglow of a successful project has often come at a price in terms of long hours, massive commitment on behalf of staff and the odd testing time along the way. There are no easy answers but there are some things to do or, more importantly, not to do, in order to make your life easier. Here is VWVs guide based on many years experience, some pain, and plenty of happy days when it all goes right. 

Plan ahead

Complex projects contain many different strands and even the best managed projects can go awry.  The best place to start is at the end: when do you want to open the new facility? Timing invariably revolves around the start of an academic year so you need to work backwards from an intended opening and then good project management will help you clarify whether youve allowed enough time to secure the relevant consents, build and fit out in time for a new academic year. More complex arrangements where you may be selling premises and re-investing the sale proceeds into paying for a new build can be tricky, so missing a deadline can (but doesnt always) mean putting things back by 12 months. So the key is to check and build in room for manoeuvre with the other side where you can. A delay can have a massive impact on cashflow so a project needs constant checking for affordability.

Check what you own

This is basic but fundamental and its easy to slip up. Check the legal boundaries – do you own absolutely everything? What about access rights? We have seen instances where the building is within a red line but a canopy overhanging the main entrance fell outside the legal boundary. Or another where a new, wider development scheme meant a client needed legal rights of access across land it didnt actually own nor, despite raising the question, had it been thought fit to ask for rights of pedestrian access at the time of the legal transfer. Its also vital to make sure that the boundary for the development as used within the planning application precisely matches the legal title. These issues can usually be fixed but invariably cause delay and cost money. 

Getting buy in

This works internally across the governance, strategy and financial parameters within which you operate. Make sure you factor in times for executory approvals, and delegated authority outside those meetings. It also means getting the support externally: does the finance stack up with your funders and regulators; is a development likely to go through planning smoothly – an early conversation with advisers but also the planners as part of pre-app discussions will help identify any likely pressure points.

And whose (regulatory) consent do you need?

Planning, building regulations and listed building consents are the principal regulatory issues to address. Less obvious ones might be legally driven around your title: development near a boundary might mean you need party wall consent from your neighbour (remember foundations, too) and in a built-up area could mean rights to light need checking. A failure to address these early on can be expensive in terms of time and money, just when you need to be saving both.

Can you (legally) do what you want…how you want?

Sadly, the world has become a more litigious place and its important to make sure any project is legally bullet-proof. Part of this turns on the planning authority granting a decision that is immune from challenge (something which is largely out of your control but good advisers can spot something left of field). It might also be, however, making sure that you have procured a contractor and professional team in a legally compliant way or at least understood the nature of risks. Usage of sector-wide panels is more prevalent but you need to make sure the terms of appointment of contractors or the professional team ideally fits your intended project, so an early assessment of the detail is recommended.

And how are you going to pay for it?

Using your own funds is fine, as is conventional bank finance. Increasingly we are seeing more joint venture arrangements where a third-party developer is committing funds and possibly expertise. Whatever the funding model, you need to ensure the terms of finance are adhered to and to be aware of what might happen in the (unlikely) event of any breach.  This is where project planning and cashflow forecasts can be invaluable (see above).

Expect the (un)expected…

Quite often things will come in from left field. In pretty much all major developments, something will happen which might impact on funding, timing, need for consent or sometimes all three. It might be a ribbon of shifting sand which was undiscovered when a contractor was doing trial boreholes, which then meant piling foundations (luckily a fixed fee construction contract had been entered into) or the need to cap off redundant service media (if buying a brownfield site be sure to make a seller practically responsible or allow a deduction from the purchase price). Whatever the situation, the moral is allow for a sufficient contingency because something will invariably happen; you can expect it.

Keep on top of the detail... but don't lose sight of the bigger picture

The ultimate aim should be to develop out new academic, leisure buildings or student accommodation on time and on budget. Good advisers will help you get there and should advise on the risks of doing or not doing things in a certain way. At VWV, we have plenty of experience of advising senior managers and governors on a host of risks but the aim should be to make sure the project happens.  The law should be seen as an aid to project delivery not an end in itself.  Grandstanding by your professional advisers is to be avoided at all costs.

Have a good team and be organised but also flexible

You will have an experienced team within your organisation, a handful of whom will be involved in a major project, but they also have a day job to do. This is where experienced advisers and good project planning comes in, internally but also feeding off what your advisers bring in. An experienced development lawyer should work with your project managers to ensure the legal documentation is negotiated and settled in a timely way, working within the time frames for planning, funding and overall deliverability. Yes, the (un)expected might happen but hopefully you have allowed sufficient contingency into the programme. We always recommend an early meeting to tease out likely issues. We also recommend having regular project team catch-ups (sometimes even daily at times of great activity) of advisers and the client with identifying key action points and tasking individuals to make things happen. In that way, you can adapt quickly and with little fuss.

Did we mention timing?

Be clear about timing from the outset and what are the likely matters that could send the project awry. Have all relevant time frames been built in or insured against? A common issue can be the time it takes from obtaining a resolution to grant planning and then securing planning contingent on completing an s106 agreement. The grant of planning will follow completion of the s106.  It is only then that period within which a third party can challenge the grant of planning starts to run.  You have a choice of either waiting for that six weeks to expire or obtaining insurance against the risk of challenge. Either way there is a cost – of time or money.

Embarking on a major project is exciting if a little daunting.  There are plenty of traps for the unwary. With good planning, good organisation and practical and experienced advisers around you, you can deliver a major development on time and on budget.

Clive Read is a real estate partner at leading education law firm Veale Wasbrough Vizards. Clive can be contacted on 0121 227 3710 or at cread@vwv.co.uk

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