Regulated by RICS

Partner Christopher Sullivan shares his top tips for successful development in the student housing sector.

Student accommodation is currently one of the most thriving development sectors. However, it has been the subject of recent negative press, with 22 private university student blocks not ready for the start of term.

This isn’t just an inconvenience for the students – it can have huge financial implications for the developers and their funders. Most of the delays are avoidable, however, if a project is monitored properly.

A sector like no other

The student housing sector works under a unique set of challenges. If a development is not ready for freshers’ week, there is no easy way to simply “push it back” until the next term, without significant cost burden and reputational damage.

There are many very experienced student housing developers and operators that have finely tuned development models, tried and tested systems, trusted suppliers and a tranche of specialist advisers on board from the start of a project. These are corporates with multiple projects on the go, strong pipelines and valued reputations. While there are also lots of stringent SME developers, sadly many do not have the resources or patience of the bigger corporates.

Experience tells us that most delayed student housing developments are the result of issues with an imbalance of the project manager’s “project management triangle” of time, cost and quality. Whether through inexperience, overconfidence or a lack of realism over what is deliverable on time, almost every failed project can be traced back to the neglect of one – or a combination of all three – of these key influences.

Time

The project finish date should be set in stone, though often this can be as late as two weeks before occupation. However, wider project timings can have a major effect on a project. These must be factored into a plan and scheduled so that deadlines for specific phases can be met or potential sticking points tracked.

One of the first timing issues arises close to demolition and mobilisation: party wall, rights of light and neighbourly issues. Experience tells us that these key negotiations are not to be taken for granted, as they can often become protracted and have the potential to ruin a scheme’s timetable before a spade has been put in the ground. Disputes at this stage can delay a project start date by weeks or months. Cutting corners at this point also opens up the potential for even bigger and more costly delays later on. But with the right advice at the design and planning stage, delays at this time marker can be minimised through pre-emptive work.

In fact, having a specialist team to make weekly visits to a site once construction has started is prudent for predetermining any upcoming timing issues before they
arrive – and advising on the best measures to be taken to avoid them.

Cost

With a clear and fixed end date, plus a known income stream level, cost becomes an important factor for anyone funding a new project. It can also have a huge impact on timing. Schemes generally aren’t started earlier because funding often isn’t available until the last minute.

No matter who the funder or developer is, everyone wants to get the best price. For opportunistic and SME developers, this often means finding the cheapest contractor, even if they don’t have a proven track record in this type of scheme. This can be counterproductive, because without the experience and proper guidance, the contractor is unaware of the potential pitfalls that await.

Quality

When schemes are being rushed, quality is the first casualty. Most of the construction disputes I see are due to hurried schemes resulting in poor build quality and cut corners. The most basic slips in quality come with the operation and maintenance manual not being produced properly, slackness in testing and commissioning certificates, and lapses in securing building regulation sign-off. All of this is basic stuff, but a responsible investor will want to see this before signing off on practical
completion.

When all three collide

Poor project management usually means that it is not just one factor that slips in isolation. These variables often work together, compounding one issue and turning it into innumerable separate problems.

It is often the simplest of mistakes that lead to lengthy delays. When dealing with party wall schemes, developers often leave the design of foundations to contractors, which is fine – until it comes to supplying detailed design and method statements to neighbours to prove their building won’t be damaged during piling. This type of minor delay often turns into multiple minor delays, which in turn become a major delay. All of which could have been avoided with better project management and monitoring.

A recent case saw a delay in handover, leaving students in hotels for a month. In a rush to complete the building and get it reoccupied, corners were cut. Students were let back in too early and there were 9,000 snagging items identified, ranging from seriously inadequate fire stopping to poorly laid flooring. Between 200 and 300 snagging items is more typical.

The university responded by evacuating the building and refusing to allow reoccupation unless all snagging items were completed and their concerns allayed. With the developer failing to act, the funder stepped in to get the building reoccupied. All of this was entirely avoidable.

Delivering successful housing

When it comes to prevention, careful planning and realism must be introduced from the outset. Conducting proper risk assessments before breaking ground on the project can significantly reduce delays. It is far easier to adjust a wall or a window when the building is still in the design phase than when that wall or window is
partially built.

Acknowledging that things do go wrong in the building process – and taking pains to get ahead of all of those issues while accepting they will still occur – is key to developing student housing successfully.

As published in EG on 09 November 2019 – page 59.