Construction picks up, new challenges emerge

The flood of news about developments in the housing market can hardly have escaped anyone's notice. Construction is reviving after years of crisis due to the high demand for new homes. There is work in abundance for construction companies, making it almost impossible for manufacturers of building materials to keep up, too. If a builder wants to start construction on a certain date, it is therefore important to order the necessary materials and secure subcontractors early in advance. However, the often lengthy administrative procedures can throw a spanner in the works, resulting in a lot of uncertainty. Here are some tips to mitigate the associated risks.

The devil's dilemma

Because producers of precast elements and other building materials cannot keep up with the high demand, scarcity occurs and delivery times and prices rise. Also, the time standing to reserve cranes, for example, is getting longer and longer. The need for construction workers also exceeds supply. For construction companies and developers, it is therefore necessary to know early on exactly when construction can start, so that all materials and other supplies can be delivered on time and personnel are available. However, knowing exactly when construction can begin is proving to be a major stumbling block. The lengthy objection and appeal procedures initiated by local residents, for example, cause many delays. As a result, it is not uncommon for the construction date to be pushed back further and further. The dilemma is then whether or not to secure the materials and personnel at an early stage, with the risk that no start can be made and sky-high costs arise, or to arrange for the personnel and materials only once the permit is irrevocable, with the result that the work cannot be started quickly and the prices increase further.

Fortunately, there are ways to reduce the uncertainty surrounding administrative proceedings.

Pre-consultation

On the front end, an attempt can be made to avoid objections by consulting with local residents/interest groups at an early stage. In practice, this is not always done for fear of objections or lengthy discussions. However, by presenting a building plan at an early stage and sounding out how it is received, any points that are important for local residents and do not cost the builder a lot can be included in the building plan. It can also be agreed that the downside is that no objections will be made.

Starting to build

In the event that no irrevocable permit is required in connection with financing, it is of course possible to simply begin. After all, an objection or appeal does not suspend the decision. It is of course important here to be reasonably certain that the permit will stand. This requires an analysis of the grounds being put forward. Of course this can only really be done once the objections have been made, but in a number of cases it is already clear in the preliminary stage in which direction objections can be expected and an estimate can be made of whether or not the objections make sense.

Provisional facility and short-circuiting

If the risks are too great to start or this is not possible because of the necessary financing, an attempt can be made to obtain a preliminary injunction during objection or appeal proceedings against an environmental permit. However, there must be an urgent interest, which will usually be the case if construction is actually to begin very soon. If a preliminary injunction is sought pending the appeal, shortcuts can also be sought. If the court goes along with this, it means that a decision in the main case and in the proceedings for injunctive relief will be made simultaneously. This saves a lot of time. To give you an idea: instead of a turnaround time of one year for the appeal procedure, a judgment will then be rendered within two to three months.

Making appointments

Finally, attempts can be made to reach agreements with those who have filed objections or appeals. Sometimes the objections can be resolved with a limited adjustment or financial compensation. Although this may not always feel right, it is sometimes a considerably cheaper solution than the damage that would be caused if construction could only start much later.

Conclusion

The rapid rebound in housing markets and the accompanying rising demand for new construction is not all good news for construction companies and developers. These companies can be trapped by the long delivery time of building materials combined with long uncertain legal proceedings. We don't have the egg of columbus, but there are several ways to reduce the risks in committing staff and materials early on.... Hopefully this will prevent another construction crisis.