Property Development Finance – Why a QS Helps

Quantity Surveyor, defined as ‘a person who calculates the amount of materials needed for building work, and how much they will cost’

When it comes to property development finance, a lender will generally always use their own Quantity Surveyor (QS) to monitor the project and agree the level of works completed prior to the next tranche of funds being released. But, that means you already have your project funded so how can a QS help before the finance is agreed? A good QS as part of your team can make obtaining that development finance a lot easier.

The QS Before The Finance

A Quantity Surveyor (QS) can be instrumental in helping first-time property developers in various ways. Their expertise in construction cost management and project planning can contribute significantly to the success of a property development venture, which is why having a good QS on board is a big tick in the box, especially for first time developers looking to borrow.

Cost Estimation and Budgeting

One of the most critical aspects of property development is accurately estimating costs and creating a realistic budget. A QS can assess the project’s scope, materials required, labour costs, and other expenses, helping the developer avoid underestimating or overspending on the project. For a lender this gives them more confidence that your figures, spend, cashflow and GDV are likely to be accurate.

Risk Management

Property development involves several risks, such as cost overruns, construction delays, and unforeseen issues. QS professionals can identify potential risks early on and devise strategies to mitigate them, ensuring that the project stays on track and within the allocated budget. The key parts here are about cost, delay and budget. All words which a development lender has at the top of their list.

Tendering and Contract Management

QS professionals can help first time developers with the tendering process by preparing tender documents, bids, and negotiating contracts with contractors and suppliers. This ensures that the developer gets competitive pricing and favourable contract terms. Getting these points across and into your finance proposal will put you streets ahead of other borrowers.

Value Engineering

QS professionals can suggest value engineering options to optimise costs without compromising on the project’s quality. This involves exploring alternative materials or construction methods that achieve the same or better results at a lower cost. Here we are again, ‘cost’. The lower your cost the higher your profit.

Progress Monitoring and Cost Control

Throughout the development process, a QS can monitor the project’s progress and expenditure to ensure that it stays within budget and time constraints. They can also identify and address cost variances promptly. Bear in mind that the lender QS will be looking at this area, if things differ from plan (like they always do) then you want to be addressing it before the lender QS picks it up. The project will deviate from plan, it is about controlling and remedying it.

Compliance and Regulations

A QS is familiar with building regulations and local codes. They can help the developer navigate through various compliance requirements, avoiding legal issues and costly delays. Check out a local Taco Bell that fell foul of water neutrality rules, you question how early this could have been picked up, it also summarises nicely the things that could, with good planning, have been avoided.

Overall, a Quantity Surveyor’s involvement can bring professionalism and cost efficiency to a first-time property developer’s project, helping them achieve higher returns and reducing the risks associated with a first time property development.

For any questions about financing your first development then please get in touch, we would love to talk your options through.

By Dave Farmer