We have all heard horror stories when either reading or hearing about the different strategies like; property renovations, redevelopments, developments. Due to the time we have spent in this industry we have witnessed and heard of many horror stories which could have been prevented. Here is just one example:
A developer had purchased a 38 unit site when the developer reached 70% complete the builder and subcontractors submitted a load approval to local electricity supply authority for power to support the development site. The application was return rejecting the load and requested that the developer seek a design to install a pad mounted substation. This cost was ranging between $85,000 – $105,000 to supply and install such transformer. However, the time line to deliver such transformer was 5-7 months which basically had the project completed and sitting around without power, commissioning and occupation certificate for 3 months which had a carry cost of $26,000 per month to hold. This was affecting the purchase sales and was ultimately getting close to sunset clauses in pre-sale contracts which could have seen the purchasers walk away and seeing developer returning the deposits.
It is important to understand that this was not just the cost of supplying a transformer and interest costs equally around the $150,000 but the banks were nervous about the pre-sales falling over.
The project manager was called in as a consultant to see how he could fix such a dilemma. He arranged for a design meeting with the appropriate engineers and consultants and introduced an alternative solution to the overall power consumption for the project. The following alternative solutions where introduced to reduce power consumption;
Cross ventilation to remove car park exhaust fans
Introducing gas hot water, cook tops, gas heating
Re-designed the electrical lighting and the air conditioning units to the site
The amendments reduced the power consumption to a level that the electricity supply could supply the power which happened within the construction period. Therefore, no requirement for three months additional interest charges, no transformer, received occupation certificate within the right time and banks were happy. It is important to know that the developer was not installing gas on to the site as this was going to cost $28,000 to bring it down the street and was thinking about the dollars at the beginning. So the total cost including the consultants was $42,000 however, as you can see how important it is to have an experienced DM and PM on a project.