The Developer’s Shadow
We are in a country blessed with a vast landmass, a fast-growing population and endless real estate investment opportunities. The smell of success is evident as we have a fresh influx of innovative building professionals and property developers well-grounded, exposed, ready and willing to challenge the status quo. The future is no doubt bright as we gradually usher into the old, the new. This is very obvious when you glance at the skyline of megacities like Lagos, spanning its length and breadth.
At the center of this blissful and vibrant sector is the ideal property developer armed with ammunition to take on the insurmountable. More often, what the public gets to observe is the start to completion of amazing development projects, the glitz and glamour of open house ceremonies and the beautiful marketing material and adverts that fly around without experiencing what I term ‘THE DEVELOPER’S SHADOW.’
These are the unspoken words, weaknesses, vulnerabilities, stumbling blocks, issues, setbacks etc, all experienced in this interesting yet complex process. We typically always want to show off the success of a finished product and great design implementation, but rarely want to share the issues experienced. However, it is evident that sharing is important to prepare the upcoming, to encourage the current, and to celebrate the veterans.
Hopefully, revealing setbacks can trigger the seek for help or solutions to these issues if possible. We, therefore, will shoot with a handful of these frequently experienced
SHADOWS:
Government Regulation/Agencies and the Approval: Process: This is a very pungent issue that most developers experience frustration with, particularly those that want to
do things the right way and follow due process. This process can take a long time and may entail serious lobbying. For those that tend to cut corners, a stampede of agencies is
ready to frustrate your efforts on a regular basis throughout the entire development process thus, the seals and ‘stop-work’ orders seen on sites from time to time. A list of
some of these are the planning authority, the buildings control agency, insurance (for buildings higher than 2 floors), material testing, safety etc. It will be important to know about all these agencies and their requirement way before the commencement of projects to avoid unexpected delays during development.
Access to Funding: Funding is a very major issue as banks are wary of real estate transactions judging from past dealings and without adequate supporting documents for same. It is becoming a more stringent process for upcoming property developers. This has resulted in a constant search for more creative ways of seeking funding. Introduction of off-takers early in the project process seems to be an automatic solution. However, subscribers are now more careful as many have gotten their fingers burned and have experienced incomplete projects or extended delays. On the developer’s end, there are also issues with delayed payments from off-takers that also slow down construction, particularly, if this is the only source of funds. Day by day more innovative funding options are being explored such as crowdfunding and part ownership of properties by reducing the entry-level for investors in which case, several individuals can contribute to own a piece of real estate through innovative legal
framework and sharing options.
Personnel: A good number of graduates are seeking for jobs. However, a larger fraction of the new age of graduates are more interested in instant gratification or have a short fuse for swimming against the tides. Unfortunately, this industry strives on experience and constant exposure to which rewards are not automatic. This, therefore, informs a desperate search for the innovative, hardworking and dedicated staff that constantly thinks outside the box and understands the value of service.
Growth and expansion for development companies require a certain level of structure to be able to accommodate the growth unless there is the tendency to burn out and attention to detail reduced. It is therefore important to understand the right structure and recognise the need to put certain processes in place while anticipating future growth.
“We typically always want to show off the success of a finished product and great design implementation but rarely want to share the issues experienced.”
Suppliers: Your typical supplier of all types of sand, granite and blocks are normally part of an association around the area in which project development sites are located. There is normally a fixed price for such materials and when suppliers from other areas are introduced, the resident suppliers typically tax the newcomers in such a way that they end up delivering at a more expensive rate. These suppliers most times are part of the indigenes of the area and therefore tend to frustrate the effort of the struggling developer to which they sometimes bring in ‘area boys’ to stop work on site. It is important to investigate such materials/prices while comparing with other suppliers before commencing the project. There are also issues around quantity where suppliers tend to conspire with site workers to undersupply sites for personal gains. To this end, it is important to plan a proper supply
structure to mitigate and reduce this occurrence as it is amazing how much money is lost due to this singular but frequent act.
Family Land Administrators/Omonile: This has been a longstanding issue to which the government has introduced laws that guard against land grabbers and “Omonile” but directly linked to the actual development projects, there are several individuals that show up at the start of projects, particularly in areas that were originally owned by notable families and not within estates. If not carefully managed, the developer ends up paying to different individuals that show up at will. In most cases, the families have an administrator who is in charge of this process. It is important to find out who the legitimate administrator is and deal with the individual alone. This protects against unnecessary harassment and extortion.
Innovation/ implementation: Lovely innovative project designs ending up as a variation to the actual build is normally caused by various factors ;
• cost
• lack of strong will, creativity and determination
to see it through material/technology
It, therefore, takes passion, proper planning, experience and determination to ensure that what was conceptualized
Cost Overrun: A proper project/cost analysis against realistic sale prices before the joint venture sign-off or general project takes off is essential as this is a very important factor for project success. In addition to various unplanned expenses which can crop from any of the listed issues in this write-up. This I term as the silent pest on project cost. As it eats into the costs in bits but ends up as a colossal overrun and profit leveller.
Exceeding Stipulated Project Duration: This happens frequently due to so many reasons such as pressure from landowners on joint venture deals, lack of planning, funding
and a host of other reasons. It is important to take enough time to plan a proper structure and as professionals, it is the duty of the developer to explain this to other stakeholders that care to listen.
Quality Control/Waste: If you are passionate about quality it is important to put a strong eye on material wastage while ensuring quality control. It is inevitable to miss out certain aspects where wastage easily occurs such as sand/granite quantity supplied, cement storage/theft, material usage, supervision and project planning. A proper project management structure is key to staying afloat on avoiding wastage on site.
Variation: The war between what the final occupant wants and what the developer has in mind. It is important to be as clear as possible from day 1 and give room for flexibility by
delivering carcass options and opportunity for upgrades as this can be a nightmare since it could severe relationships that have the potential to bring in more business. The above amongst others are a few of the issues experienced by property developers, and different projects/locations will have their own peculiar story. What is important is that we know these issues exist and we constantly brace ourselves against them if well prepared ahead of time. This can also be useful to private builders, contractors and landowners as these shadows follow us around but only show up as a surprise when we don’t plan.
Author
Jide Adekola is one of the co-founders of Homework Development and a registered architect. He has gathered hands-on experience in architectural consultancy, project management and construction with some of the topmost architectural and real estate firms in the country. He holds two MSc. degrees in property development from Birmingham City University, UK and architecture from the University of Lagos.
