There will always be obstacles, opponents, and setbacks along business development.
There are a variety of potential dangers for project schedules, some of which can be avoided and others that provide varying difficulties depending on whether the project is dealing with municipalities or challenging economic trends.
Let’s look at a few high-level factors that can significantly impact your project timetable and lead to even more significant delays in the commercial real estate development process.
Overlooking the Municipal Approval Process
Entitlement and approval processes can take anywhere from a few weeks to over two years, depending on the municipality.
For the simple reason that there is a long list of potential problems that you may encounter:
- Having a site plan or design approved at the outset
- Extra Permissions (not often known until various departments at the municipality start review)
- Rezoning
- Variances
- Use of permits
- Approval for road and infrastructure
- Certification for Utilities
- Special Zoning Overlay Districts
- Neighborhood groups and local opposition
- If the permission procedure takes longer than expected, it could negatively impact the project’s timeline and budget.
Communication Gap
Municipal bodies should be briefed on the realities of new development projects early to prevent setbacks and extended delays. The failure to communicate with municipalities and the local community might keep such entities in the dark and cause delays. If you do not engage the community, you can lose their support, which could be crucial to your project’s success.
Inadequate or delayed information transmission among the tenant, developer, and the general contractor is another common cause of project delays. When parties are unsure where they are on the project, it leads to disjointed development and possibly mistrust of the developer.
Material Availability and Price Increases
Certain construction supplies and components for a commercial project will inevitably have lengthy lead periods.
If those lead periods aren’t accounted for in the construction timetable, other parts of the build could be delayed while waiting for necessary materials. To make up lost ground and keep the project on track, you’ll need to multitask as much as possible and work on multiple aspects that need clearance.
Contractors and developers have had to contend with rising material, fuel, and other non-labor expenses in recent months and years due to several factors, including natural disasters in the Gulf region and international trade tariffs. The PPI for timber and plywood increased by 13.7% from March 2017 to March 2018, the PPI for aluminum mill shapes increased by 11.4%, and the PPI for steel mill products increased by 4.9%.
When do rising material costs force construction projects to be put on hold or scrapped altogether? And that’s where the real problems start.
Scarcity of Workers
There is still a significant scarcity of construction workers, causing project delays, although some labor data show signs of recovery.
An overwhelming majority (87%) of construction industry financiers are concerned that their projects would be delayed due to the current pricing and labor concerns. Furthermore, 77.5% of respondents mentioned that they occasionally or frequently face shortages of both materials and labor.
Because of a shortage of available talent and a crowded job market, many ongoing projects have encountered unexpected delays, incurred additional expenses, and run over budget.
It’s not easy to keep initiatives on track. However, if you put the time and effort into preparation, research, and consultation with experts, you can protect your project from being impossible.
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